Adjustment Transactions for Notional ITC

The journal vouchers can be recorded by selecting the corresponding nature of adjustments, as detailed in this topic.

Nature of Adjustment

Additional Details

Journal Entry

Decrease of Output Tax

Adjustment of Output VAT Against Notional ITC

Debit: VAT/Surcharge ledger

Credit: Notional ITC ledger

Increasing Notional Input Tax

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Debit: Notional ITC ledger

Credit: Indirect expense ledger

Reversal of Notional Input Tax

Purchases Not Eligible for Notional ITC U/S 13(5)

Debit: Expenses ledger

Credit: Notional ITC ledger

Reversal of Notional Input Tax

on Account of no stock

Debit: Expenses ledger

Credit: Notional ITC ledger