Recording a Transaction for Reversal of Input Tax

Reversal of input tax can be recorded by creating a journal voucher. Use Reversal of Input Tax as the Nature of Adjustment and debit the expenses under the group Indirect Expenses.

To create journal voucher to reverse the input tax

1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal.

Note: You can create a journal voucher from Gateway of Tally > Display > Statutory Reports > VAT > select the VAT or CST form.

2. Click J: Stat Adjustment. In the Stat Adjustment Details screen,

o Select the option VAT in the Type of duty/tax field.

o Select the option Reversal of Input Tax in the Nature of adjustment field.

o Select the option Inter State Stock Transfer in Additional Details field.

Note: The options for Additional Details are provided as per state specific requirements of VAT/CST forms and annexures. In this example, Bihar is selected as the State.

o Press Enter to save and return to the voucher screen.

3. Debit the expense ledger.

4. Enter the amount in the Debit column.

5. Credit the VAT ledger, and enter the relevant details in the VAT Details screen.

6. Set the option Provide VAT Details? to Yes and enter the From and To dates, if required.

7. Enter Narration, if required.

The journal voucher appears as shown below:

8. Press Enter to save.

The states with Reversal of Input Tax available as the Nature of Adjustment are given below:

State Name	Nature of Adjustment	Additional Details	Voucher Entry
Assam	Reversal of Input Tax	---	Debit: Expense ledger. Credit: VAT ledger.
Bihar	Reversal of Input Tax	Goods Damaged/Lost	Debit: Ledger grouped under Indirect Expenses/Current Assets. Credit: VAT ledger.
		Goods Sold Below Purchase Price	Debit: Ledger grouped under Indirect Expenses/Current Assets. Credit: VAT ledger.
		Goods Specified in Schedule-IV	Debit: Ledger grouped under Indirect Expenses/Current Assets. Credit: VAT ledger.
		Inter State Stock Transfer	Debit: Ledger grouped under Indirect Expenses/Current Assets. Credit: VAT ledger.
		Intra State Stock Transfer	Debit: Ledger grouped under Indirect Expenses/Current Assets. Credit: VAT ledger.
		Sale of Goods in Schedule-I	Debit: Ledger grouped under Indirect Expenses/Current Assets. Credit: VAT ledger.
		Transfer of Rights to Use Goods, Gifts Or Self Consumptions	Debit: Ledger grouped under Indirect Expenses/Current Assets. Credit: VAT ledger.
Chandigarh	Reversal of Input Tax	Not Applicable	Debit: Expense ledger. Credit: VAT ledger.
		Apportionment of Input Tax for Tax Free Goods	Debit: Expense ledger. Credit: VAT ledger.
		Apportionment of ITC for Branch Transfer	Debit: Expense ledger. Credit: VAT ledger.
		Apportionment of Notional ITC for Manufacturing Tax Free Goods	Debit: Expense ledger. Credit: VAT ledger.
		Cash Discount on Purchase	Debit: Expense ledger. Credit: VAT ledger.
		Other Purchase Adjustment	Debit: VAT ledger. Credit: Purchase ledger.
		Stock Transfer	Debit: Expense ledger. Credit: VAT ledger.
		Trade Discount	Debit: Party ledger. Credit: Purchase ledger. Credit: VAT ledger.
Chhattisgarh	Reversal of Input Tax	Stock Transfer	Debit: Purchase/expense ledger. Credit: VAT ledger.
Dadra and Nagar Haveli	Reversal of Input Tax	Tax Credit Disallowed for Goods Lost Or Destroyed	Debit: Expense ledger. Credit: Purchase ledger. Credit: VAT ledger.
Dadra and Nagar Haveli	Reversal of Input Tax	Tax Credit Disallowed in Respect of Stock Transfer Out of Dadra & Nagar Haveli	Debit: Purchase ledger. Credit: VAT ledger.
Delhi	Reversal of Input Tax	Goods Sold Below Purchase Price	Debit: Purchase ledger. Credit: VAT ledger.
		Closing Stock	Debit: Expense ledger. Credit: Purchase ledger. Credit: VAT ledger.
		Interstate Sales	Debit: Expense ledger. Credit: VAT ledger.
		Tax Credit Adjustment on Sale Or Stock Transfer of Capital Goods	Debit: Expense ledger. Credit: VAT ledger.
		Tax Credit Disallowed for Goods Lost Or Destroyed	Debit: Expense ledger. Credit: VAT ledger.
		Tax Credit Disallowed in Respect of Stock Transfer Out of Delhi	Debit: Expense ledger. Credit: VAT ledger.
Goa	Reversal of Input Tax	Contingencies Covered U/S 9 Sub Sec 2, 3, 5 & 6	Debit: Purchase ledger. Credit: VAT ledger.
		Manufacturing of Exempt Goods	Debit: Purchase ledger. Credit: VAT ledger.
		Others	Debit: Purchase ledger. Credit: VAT ledger.
		Stock Transfer	Debit: Purchase ledger. Credit: VAT ledger.
Gujarat	Reversal of Input Tax	Capital Goods	Debit: Ledger grouped under Current Assets. Credit: VAT ledger. Credit: Additional tax ledger.
		Fuels Used in Manufacture of Goods	Debit: Purchase ledger. Credit: VAT ledger. Credit: Additional tax ledger.
		Manufactured Goods	Debit: Purchase ledger. Credit: VAT ledger. Credit: Additional tax ledger.
		Manufacturing of Exempt Goods	Debit: Purchase ledger. Credit: VAT ledger. Credit: Additional tax ledger.
		Others	Debit: Purchase ledger. Credit: VAT ledger. Credit: Additional tax ledger.
		Stock Transfer	Debit: Purchase ledger. Credit: VAT ledger. Credit: Additional tax ledger.
		Purchases Not Qualifying for Tax Credit	Debit: Purchase ledger. Credit: VAT ledger. Credit: Additional tax ledger.
		Tax Adjustments Towards Transfer of Right to Use	Debit: Expense/purchase ledger. Credit: Purchase ledger. Credit: VAT ledger. Credit: Additional tax ledger.
Haryana	Reversal of Input Tax	Capital goods forming part of gross block on day of registration cancellation	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Capital goods used in generation & distribution of electricity	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Capital goods used in manufacture of exempted goods	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Capital goods used in mining	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Capital goods used in telecommunication network	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
Haryana	Reversal of Input Tax	Fuels Used in Manufacture of Goods	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Goods are used for manufacturing and sold in interstate trade or commerce	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Goods purchased - Exported out of state	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Goods Sold Below Purchase Price	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Interstate Sales	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Liquor when sold in the state by Bar Licensees	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
Haryana	Reversal of Input Tax	Manufacturing of Exempt Goods	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Purchased from VAT dealers and sold by Canteen Store Department	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Purchased from VAT dealers disposed other than sale	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Stock of Goods purchased/manufactured/processed as on day of registration cancellation	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Used in manufacture/packing of exempted goods (except sold in course of export)	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Used in manufacture/packing of taxable goods disposed otherwise by sale	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Used in manufacture/packing of taxable goods exported	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Used in telecommunications/mining/generation & distribution of electricity	Debit: Expense/purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
Himachal Pradesh	Reversal of Input Tax	Fuels Used in Manufacture of Goods	Debit: Expense ledger. Credit: VAT ledger.
		Goods disposed off otherwise than by sale	Debit: Expense ledger. Credit: VAT ledger.
		Goods Given as Gift, Free Sample	Debit: Expense ledger. Credit: VAT ledger.
		Goods Used in Telcom, Electricity and Other Power Generation	Debit: Expense ledger. Credit: VAT ledger.
		Input Tax restricted Goods	Debit: Expense ledger. Credit: VAT ledger.
		Left in Stock on Closure of Business or Cancellation of Regn.	Debit: Expense ledger. Credit: VAT ledger.
Himachal Pradesh	Reversal of Input Tax	No Invoice or Non-availability of Tax Details in Invoice	Debit: Expense ledger. Credit: VAT ledger.
		Others	Debit: Expense ledger. Credit: VAT ledger.
		Purchased on Concessional Rate of Tax	Debit: Expense ledger. Credit: VAT ledger.
		Purchases from Un-Registered, Composition, Casual Dealers	Debit: Expense ledger. Credit: VAT ledger.
		Purchases Used in Mfg. of Tax Free Goods	Debit: Expense ledger. Credit: VAT ledger.
		Tax Adjustment Towards Transfer of Right to Use	Debit: Expense ledger. Credit: VAT ledger.
		Tax Credit Disallowed in Respect of Branch/Consignment Transfer	Debit: Expense ledger. Credit: VAT ledger.
Jammu and Kashmir	Reversal of Input Tax	Adjustment Towards O/s Tax Liability Under the J&K VAT Act	Debit: Expense ledger. Credit: VAT ledger.
		Others	Debit: Expense ledger. Credit: VAT ledger.
		Partial Rebating	Debit: Expense ledger. Credit: VAT ledger.
		Special Rebating	Debit: Expense ledger. Credit: VAT ledger.
		Stock Transfer	Debit: Expense ledger. Credit: VAT ledger.
		U/s 21(10)	Debit: Expense ledger. Credit: VAT ledger.
		U/s 21(4)	Debit: Expense ledger. Credit: VAT ledger.
Jharkhand	Reversal of Input Tax	Attributable Input Tax Towards Exempted Sales	Debit: Expense ledger. Credit: VAT ledger.
Jharkhand	Reversal of Input Tax	Reversal on Common Inputs	Debit: Expense ledger. Credit: VAT ledger.
Karnataka	Reversal of Input Tax	Partial Rebating	Debit: Expense ledger. Credit: VAT ledger.
		Pre-Registration Purchases	Debit: Expense ledger. Credit: VAT ledger.
		Purchase Return	Debit: Expense ledger. Credit: VAT ledger.
		Special Rebating	Debit: Expense ledger. Credit: VAT ledger.
		Under Section 11	Debit: Expense ledger. Credit: VAT ledger.
Kerala	Reversal of Input Tax	Not Applicable	Debit: Expense/purchase ledger. Credit: VAT ledger.
		Capital Goods	Debit: Ledger grouped under Fixed Assets. Credit: Ledger grouped under Current Assets.
		Deficit/Damage on Goods Sold	Debit: Purchase ledger. Debit: VAT ledger. Debit: Cess ledger. Credit: Party/cash ledger.
Madhya Pradesh	Reversal of Input Tax	Not Applicable	Debit: Expense ledger. Credit: VAT ledger.
		Goods disposed off otherwise than by sale	Debit: Expense ledger. Credit: VAT ledger.
		Goods Given As Gift, Free Sample	Debit: Expense ledger. Credit: Purchase ledger. Credit: VAT ledger.
		Goods Used for Packing	Debit: Expense ledger. Credit: VAT ledger.
		Inter State Stock Transfer	Debit: Expense ledger. Credit: VAT ledger.
		Manufacturing of Exempt Goods	Debit: Purchase ledger. Credit: VAT ledger.
		Others	Debit: Purchase ledger. Credit: VAT ledger.
		Stock Transfer	Debit: Expense ledger. Credit: VAT ledger.
		Tax Adjustment Towards Other Dealer's Dues	Debit: Party ledger. Credit: VAT ledger.
		Works Contract	Debit: Expense ledger. Credit: VAT ledger.
Maharashtra	Reversal of Input Tax	Non-Creditable Purchases	Debit: Expense ledger. Credit: VAT ledger.
		Non-Creditable Purchases (Capital Assets)	Debit: Expense ledger. Credit: VAT ledger.
		Purchases U/r 52A	Debit: Expense ledger. Credit: VAT ledger.
		Purchases U/r 52B	Debit: Expense ledger. Credit: VAT ledger.
		Purchases Used for Capital Assets U/r 54	Debit: Expense ledger. Credit: VAT ledger.
		Purchases Used for Others U/r 54	Debit: Expense ledger. Credit: VAT ledger.
Odisha	Reversal of Input Tax	Capital Goods	Debit: Purchase/expense ledger. Credit: VAT ledger.
		Exempted Goods	Debit: Expense ledger. Credit: VAT ledger.
		Goods Damaged/Lost	Debit: Expense ledger. Credit: VAT ledger.
		Goods Sold Below Purchase Price	Debit: Purchase ledger. Credit: VAT ledger.
Odisha	Reversal of Input Tax	Goods Unsold As per Section 16	Debit: Expense ledger. Credit: VAT ledger.
		Goods Unsold at the Time of Business Closure	Debit: Expense ledger. Credit: VAT ledger.
		Interstate Sales	Debit: Expense ledger. Credit: VAT ledger.
		Manufacturing of Exempt Goods	Debit: Expense ledger. Credit: Purchase ledger. Credit: VAT ledger.
Odisha	Reversal of Input Tax	Others	Debit: Purchase ledger. Credit: VAT ledger.
		Reverse Credit on Goods Sold Other Than Interstate Sales	Debit: Expense ledger. Credit: VAT ledger.
		Stock Transfer	Debit: Expense ledger. Credit: VAT ledger.
		Switch Over	Debit: Expense ledger. Credit: VAT ledger.
		Used in Mining and Electricity	Debit: Expense ledger. Credit: VAT ledger.
Puducherry	Reversal of Input Tax	Goods Lost, Stolen Or Destroyed, Used As Gift, Sample	Debit: Purchase/expense ledger. Credit: VAT ledger.
		Tax Adjustment Towards Other Dealer's Dues	Debit: party ledger. Credit: VAT ledger.
		Tax Credit Disallowed in Respect of Branch/Consignment Transfer	Debit: Purchase/expense ledger. Credit: VAT ledger.
Punjab	Reversal of Input Tax	Apportionment of Input Tax for Tax Free Goods	Debit: Expense ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Apportionment of ITC for Branch Transfer	Debit: Expense ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Apportionment of ITC U/s 13(4)	Debit: Expense ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Cash Discount on Purchase	Debit: Party ledger. Credit: Purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Goods Used in Manufacturing - Tax Free Goods (Exempted Unit)	Debit: Purchase ledger. Credit: Purchase ledger.
Punjab	Reversal of Input Tax	ITC on Goods Sent for Job Work	Debit: Ledger grouped under Current Assets. Credit: VAT ledger. Credit: Surcharge ledger.
		Other ITC Adjustments	Debit: Expense ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Other Purchase Adjustment	Debit: Purchase ledger. Credit: Purchase ledger.
		Purchase Tax Sch. H Items	Debit: Expense ledger. Credit: VAT ledger. Credit: Surcharge ledger.
		Trade Discount	Debit: Party ledger. Credit: Purchase ledger. Credit: VAT ledger. Credit: Surcharge ledger.
Rajasthan	Reversal of Input Tax	Interstate Sales	Debit: Purchase ledger. Credit: VAT ledger.
		Stock Transfer	Debit: Purchase ledger. Credit: VAT ledger.
		Switch Over	Debit: Expense ledger. Credit: Purchase ledger. Credit: VAT ledger.
Telangana	Reversal of Input Tax	Reversal on Common Inputs	Debit: Expense ledger. Credit: VAT ledger.
Uttarakhand	Reversal of Input Tax	Others	Debit: Expense ledger. Credit: VAT ledger.
Uttarakhand	Reversal of Input Tax	Stock Transfer	Debit: Expense ledger. Credit: VAT ledger.
Uttar Pradesh	Reversal of Input Tax	---	Debit: Expense ledger. Credit: VAT ledger.
West Bengal	Reversal of Input Tax	Goods Damaged/Lost	Debit: Purchase/expense ledger. Credit: VAT ledger.
		Goods Given As Gift, Free Sample	Debit: Purchase/expense ledger. Credit: VAT ledger.
		Manufacturing of Exempt Goods	Debit: Purchase/expense ledger. Credit: VAT ledger.
		Others	Debit: Purchase/expense ledger. Credit: VAT ledger.
		Stock Transfer	Debit: Purchase/expense ledger. Credit: VAT ledger.
		Transfer of Rights to Use Goods, Gifts Or Self Consumptions	Debit: Purchase/expense ledger. Credit: VAT ledger.