Withholding VAT was introduced in Kenya with effect from 1st October, 2003. It is a system which involves the declaration of VAT by both the supplier and his customer who has been appointed as a withholding VAT agent. Institutions appointed as withholding VAT agents are Government institutions, parastatals, banks, financial institutions, co-operative societies, insurance companies, and regular exporters.
Only taxable goods and services are liable to withholding VAT. No VAT is withheld on exempt goods, exempt services and zero rated supplies.
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .
2. Click J : Stat Adjustment to enable the required options in the Stat Adjustment Details screen.
3. Select Increasing Input Tax as the Nature of adjustment .
4. Select the Vat Withheld in Additional Details field.
5. Press Enter .
6. Debit VAT ledger and enter the amount in Debit column.
7. Credit the party ledger withholding the tax and enter the amount in Credit column.
8. Set the option Provide VAT Details? to Yes to enter VAT withheld details.
9. Enter Name of Agent , PIN of Agent. , Withheld Certificate No. , and Date of Payment details.
10. Press Enter . The journal voucher appears as shown below:
11. Press Enter to accept and save.