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GST Adjustments

ISD Credit under GST

When multiple services are received for businesses operating under a single registration, against a single tax invoice, the tax credit of such services can be distributed amongst each business as Input Service Distributor (ISD) credit. You can record a journal voucher to avail the ISD credit.

  1. Gateway of Tally > Vouchers > press F7 (Journal).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F7 (Journal).
  2. Press Alt+J (Stat Adjustment) , select the options as shown below:
    • Type of duty/tax – GST.
    • Nature of Adjustment – Increase of Input Tax Credit.
    • Additional Details – ISD Transfer.
  3. Debit the state tax, central tax, integrated tax or cess ledgers and credit the party ledger.
  4. Accept the screen. As always, you can press Ctrl+A to save.

Refund of Tax Credit under GST

You can claim the excess amount paid as tax, interest, penalty, late fee or other dues as refund using a journal voucher.

  1. Gateway of Tally > Vouchers > press F7 (Journal).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F7 (Journal).
  2. Press Alt+J (Stat Adjustment) , select the options as shown below:
    • Type of duty/tax – GST.
    • Nature of Adjustment – Refund.
    • Additional Details – Interest.
  3. Press Enter to save and return to the Journal voucher.
  4. Debit the bank ledger, and enter the amount of interest liability.
  5. Credit the GST ledgers or ledger grouped under Current Assets.
  6. Accept the screen. As always, you can press Ctrl+A to save.

Similarly, you can record the journal voucher by selecting the Additional Details in the Stat Adjustment Details as:

  • Not Applicable, for refund of excess tax payment made.
  • Penalty, for refund of excess payment made towards penalty.
  • Late Fee, for refund of excess payment made towards late fee.
  • Others, refund of excess payment made towards other dues.

 

TCS Adjustment in GST

An e-commerce operator can deduct TCS on the goods and services received. The deductee, who has supplied the goods or rendered the service, can claim the TCS amount as tax credit.

  1. Gateway of Tally > Vouchers > press F7 (Journal).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F7 (Journal).
  2. Press Alt+J (Stat Adjustment) , select the options as shown below:
    • Type of duty/tax – GST.
    • Nature of Adjustment – Increase of Input Tax Credit.
    • Additional Details – TCS Adjustment.
  3. Press Enter to save and return to the Journal voucher.
  4. Debit the integrated tax/central tax/state tax/UT tax/cess ledger and enter the amount that can be claimed as credit.
  5. Credit the ledger grouped under Current Assets.
  6. Accept the screen. As always, you can press Ctrl+A to save.

 

TDS Adjustment in GST

The government or government agency can deduct TDS on the goods and services received. The deductee, who has supplied the goods or rendered the service, can claim the TDS amount as tax credit. You can record a journal voucher to adjust the TDS amount.

  1. Gateway of Tally > Vouchers > press F7 (Journal).
  2. Alternatively, press Alt+G (Go To) > Create Voucher > press F7 (Journal).
  3. Press Alt+J (Stat Adjustment) , select the options as shown below:
    • Type of duty/tax – GST.
    • Nature of Adjustment – Increase of Input Tax Credit.
    • Additional Details – TDS Adjustment.
  4. Press Enter to save and return to the Journal voucher.
  5. Debit the integrated tax/central tax/state tax/UT tax/cess ledger and enter the amount that can be claimed as credit.
  6. Credit the ledger grouped under Current Assets.
  7. Accept the screen. As always, you can press Ctrl+A to save.

 

Adjustments Against Input Tax Credit (ITC) under GST

The tax credits of central tax, integrated tax and state tax can be used to set-off the liability of central tax, state tax/UT tax and integrated tax in the order specified under GST.

The order in which tax credit can be offset is given below:

Input Tax Credit

Set-off against the Liability

Central tax

Central tax (set-off complete liability) and then integrated tax (in that order).

Integrated tax

Integrated tax (set-off complete liability).

Remaining credit, if any, to be utilised to pay central, or state tax/UT tax, in any order and any proportion.

State tax/UT tax

State tax/UT tax (set-off complete liability) and then integrated tax (in that order).

  1. Gateway of Tally > Vouchers > press F7 (Journal).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F7 (Journal).
  2. Press Alt+J (Stat Adjustment) , select the options as shown below:
    • Type of duty/tax – GST.
    • Nature of Adjustment – Decrease of Tax Liability.
    • Additional Details – Adjustment Against Credit.
  3. Press Enter to save and return to the journal voucher.
  4. In the journal voucher, debit and credit the ledgers as per the scenarios mentioned below:

    Scenario

    Debit Ledger

    Credit Ledger

    Paying central tax liability, when only central tax credit is available.

    • Debit the central tax ledger
    • Enter the amount to the extent of credit available.

    Credit the central tax ledger to set-off the payable amount to the extent of credit available.

    Paying central tax liability, when central tax and integrated tax credits are available.

    • Debit the central tax ledger.
    • Enter the amount to the extent of credit available.
    • Credit the central tax ledger, and enter the amount to the extent of credit available.
    • If complete central tax liability is not set-off, credit the integrated tax ledger, and enter the amount to the extent of credit available. This is only when the integrated tax credit is not already utilised to pay state tax liability.

    Paying state tax liability, when only state tax credit is available.

    • Debit the state tax ledger.
    • Enter the amount to the extent of credit available.

    Credit the state tax ledger to set-off the payable amount to the extent of credit available.

    Paying state tax liability, when state tax and integrated tax credits are available.

    • Debit the state tax ledger.
    • Enter the amount to the extent of credit available.
    • Credit the state tax ledger, and enter the amount to the extent of credit available.
    • If complete state tax liability is not set-off, credit the integrated tax ledger and enter the amount to the extent of credit available. This is only when the integrated tax credit is not already utilised to pay central tax liability.

    Paying integrated tax liability, when only integrated tax credit is available.

    • Debit the integrated tax ledger.
    • Enter the amount to the extent of credit available.

    Credit the integrated tax ledger to set-off the payable amount to the extent of credit available.

    Paying integrated tax liability, when integrated tax, central tax and state tax/UT tax credits are available.

    • Debit the integrated tax ledger.
    • Enter the amount to the extent of credit available.
    • Credit the integrated tax ledger, and enter the amount to the extent of credit available.
    • If complete integrated tax liability is not set-off, credit the central tax ledger and enter the amount to the extent of credit available.
    • If complete integrated tax liability is not set-off even after utilising central tax credit, credit the state/UT tax ledger and enter the amount to the extent of credit available.

    Paying cess liability, when only cess credit is available.

    • Debit the cess ledger.
    • Enter the amount to the extent of credit available.

    Credit the cess ledger to set-off the payable amount to the extent of credit available.

  5. Accept the screen. As always, you can press Ctrl+A to save.

 

Interest, Penalty, Late Fee and Other Dues in GST

You can a record journal voucher to raise the liability towards interest, penalty, late fee, or other dues.

  1. Gateway of Tally > Vouchers > press F7 (Journal).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F7 (Journal).
  2. Press Alt+J (Stat Adjustment) , select the options as shown below:
    • Type of duty/tax – GST.
    • Nature of Adjustment – Increase of Tax Liability.
    • Additional Details – Interest.
  3. Press Enter to save and return to the journal voucher.
  4. Debit the expenses or party ledger, and enter the amount of interest liability.
  5. Credit the ledger grouped under Current Liabilities.
  6. Accept the screen. As always, you can press Ctrl+A to save.

Similarly, you can record the journal voucher by selecting the Additional Details in the Stat Adjustment Details as:

  • Penalty, for penalty payable.
  • Late Fee, for late fee payable.
  • Others, for other dues payable.

 

Reversal of Tax Credit under GST

Reversal of tax credit can be done for trading goods, capital goods, goods meant for self-consumption and services. You can reverse the tax credit, using a journal voucher.

  1. Gateway of Tally > Vouchers > press F7 (Journal).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F7 (Journal).
  2. Press Alt+J (Stat Adjustment) , select the options as shown below:
  3. Select the required Additional Details.
  4. Press Enter to save and return to the journal voucher.
  5. In the journal voucher, debit the expense or party ledger, and credit the integrated tax, central tax, state tax/UT tax or cess ledgers.
  6. Accept the screen. As always, you can press Ctrl+A to save.
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