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Record Purchases Within GCC Countries

In TallyPrime, you can record purchases of goods and services from registered or unregistered dealers in other GCC countries. When you select a party from another GCC country, the Nature of Transaction is automatically set to Intra-GCC Taxable Purchase. Under the reverse charge mechanism, you are liable to pay the VAT to the government.

Record Purchases of Goods Within GCC Countries

In the Purchase voucher, in Item Invoice mode:

1. In the Party A/c name, select the party from another GCC country, or a cash/bank ledger.
2. Select the Purchase ledger with VAT.
3. Select the stock item configured with the required VAT details, and enter the Quantity and Rate.
4. Provide other necessary details and press Ctrl+A to save the voucher.

Record Purchases of Services Within GCC Countries

In the Purchase voucher, in Accounting Invoice mode:

1. Select the party ledger and purchase ledger configured for the purchase.
2. Under Particulars, select the service ledger configured with the required VAT details and enter the Amount.
3. Provide other necessary details and press Ctrl+A to save the voucher.

Create Journal Voucher to Book Tax Liability

After recording the purchase of goods or services, book the tax liability as per the Reverse Charge Report. You can book the tax liability after each purchase or once for the return period.

To book the tax liability:

1. In the Journal voucher, set Nature of Adjustment to Increase of Tax Liability and Additional Details to Intra GCC Purchase.
2. Provide other necessary details and press Ctrl+A to save the voucher.

Create Journal Voucher to Claim Input Tax Credit

Under the reverse charge mechanism, you can claim input tax credit after booking the tax liability. You can record the input tax credit claim after each purchase or once for the return period.

To claim input tax credit:

1. In the Journal voucher, set the relevant adjustment details to claim input tax credit for the Intra-GCC purchase.
2. Provide other necessary details and press Ctrl+A to save the voucher.

Questions & Answers

1. Why is the Nature of Transaction not automatically changing to Intra-GCC Taxable Purchase when I select a GCC supplier?
   This usually occurs when the supplier ledger is not configured with the correct GCC country. Ensure that the supplier’s Country is set to a GCC country different from your company’s country, such as Saudi Arabia, Bahrain, Kuwait, Oman, or Qatar. If the supplier’s Country is set to the same country as your company or is left blank, TallyPrime will not identify the transaction as an Intra-GCC purchase, and the Nature of Transaction will not be updated automatically.
   
   
2. What happens if I do not book the tax liability for an Intra-GCC purchase under reverse charge?
   

   Under the reverse charge mechanism, you are responsible for paying the VAT to the government. If you do not book the tax liability through a Journal voucher: 

   • The Reverse Charge report will show the tax liability as Outstanding.

   • Your VAT return may be incomplete or inaccurate.

   • You will not be able to claim the corresponding input tax credit, as the tax liability must be booked before the credit can be claimed.

     You can book the tax liability after each purchase or consolidate it for the entire return period.
     To do so, record a Journal voucher with Nature of Adjustment set to Increase of Tax Liability and Additional Details set to Intra GCC Purchase.