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Record Inward Supply Under Reverse Charge (RCM)

For inward supplies liable to reverse charge, you can record inward supply under reverse charge in TallyPrime. Under reverse charge, you can account for advance payments, inward supply of taxable services, cancellation of advance payments, and purchase returns. The transaction details are captured in GSTR-2 and GSTR-3B report.

 

Set up for Inward Supply Under Reverse Charge

You can set up the following for inward supplies under reverse charge:

 

Configure Stock Item

  1. Gateway of Tally > Alter > type or select Stock Item > and press Enter.
    Alternatively, press Alt+G (Go To) > Alter Master > type or select Stock Item > and press Enter.
  2. Select the required stock item.
  3. Specify GST applicability.
    • Set the option GST Applicable to Applicable.
    • Enable the option Set/Alter GST Details.
  4. Provide GST details.
    • Press F12 (Configure) > set the option Enable Reverse Charge calculation to Yes > and save the configuration screen.
    • In the GST Details screen, set the Taxability to Taxable.
    • Set Is reverse charge applicable to Yes.
    • Enter the GST rates.
  5. Accept the GST Details screen and the stock item.

 

Configure Purchase Ledgers – Services

  1. Gateway of Tally > Alter > type or select Ledger > and press Enter.
    Alternatively, press Alt+G (Go To) > Alter Master > type or select Ledger > and press Enter.
  2. Select the required purchase ledger.
  3. Specify GST applicability.
    • Set the option Is GST Applicable to Applicable.
    • Enable the option Set/Alter GST Details.
  4. Provide GST details.
    • Press F12 (Configure) > set the option Enable Reverse Charge calculation to Yes > and save the configuration screen.
    • In the GST Details screen, set the Taxability to Taxable.
    • Set Is reverse charge applicable to Yes.
    • Enter the GST rates.
  5. Accept the GST Details screen and the purchase ledger.

 

Record Inward Supply Under Reverse Charge

You can record inward supply of:

 

Record inward supply of goods

  1. Gateway of Tally > Vouchers > press F9 (Purchase).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F9 (Purchase).
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Item Invoice, in this case).
  3. Press Ctrl+O (Related Reports) > type or select GST – Tax Analysis to view the tax details. Press Alt+F5 (Detailed) to view the reverse charge amount.

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    Press Ctrl+I (More Details) > type or select GST – Tax Analysis to view the tax details. Press Alt+F5 (Detailed) to view the reverse charge amount.


  4. Press Esc to return to the purchase invoice. The purchase invoice appears as shown:
  5. Press Enter to save.

 

Record inward supply under reverse charge for services

You can create invoices to track the purchase of services attracting reverse charge.

  1. Gateway of Tally > Vouchers > press F9 (Purchase).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F9 (Purchase).
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case).
  3. Press Ctrl+O (Related Reports) > type or select GST – Tax Analysis to view the tax details. Press Alt+F5 (Detailed) to view the reverse charge amount.

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    Press Ctrl+I (More Details) > type or select GST – Tax Analysis to view the tax details. Press Alt+F5 (Detailed) to view the reverse charge amount.


  4. Press Esc to return to the purchase invoice. The purchase invoice appears as shown:
  5. Press Enter to save.

 

Raise the Tax Liability and Claim Tax Credit

  1. Gateway of Tally > Display More Reports > GST Reports > GSTR-3B.
    Alternatively, press Alt+G (Go To) > type or select GSTR-3B > and press Enter.
  2. Press Enter on Reverse Charge Inward Supplies. You can raise the tax liability for the amount shown in this report.
  3. Press F12 (Configure) and set Show eligible Input Tax Credit to Yes.
  4. Press Alt+J (Stat Adjustment) to record a journal voucher for increase in tax liability and tax credit.
  5. Debit and credit the tax ledgers. Enter the respective GST Rate and Taxable Value for each tax ledger.
  6. Press Enter to save.

Note: While recording a separate journal voucher for Increase of Input Tax Credit on Purchases under Reverse Charge, enable the option Provide GST Details and enter the period for which the tax credit is being claimed.

 

Record Payment of Tax

  1. Gateway of Tally > Vouchers > press F5 (Payment).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F5 (Payment).
  2. Press Ctrl+F (Autofill) > select Stat Payment > select Payment Type as Recipient Liability.
  3. Select the bank from which the payment will be made.
  4. Select the central and state tax ledgers.
  5. Enable the option Provide GST details to enter the bank details. 
    If the bank details are not available, you can enter them later in the Challan Reconciliation report.
  6. In the Bank Allocations screen, select the ledgers, enter the amount and provide the payment details.
  7. Press Enter to save.

 

Manage Purchase Returns Under Reverse Charge

When purchase returns happens either partially or fully:

 

Record debit notes

  1. Gateway of Tally > Vouchers > press F10 (Other Vouchers) type or select Debit Note > and press Enter.
    Alternatively, press Alt+G (Go To) > Create Voucher > press F10 (Other Vouchers) > type or select Debit Note > and press Enter.
  2. In Party A/c name, select the party from whom the original purchase was made. Enter the Original Invoice No. and Date of the purchase transaction against which you are recording the current purchase return.
  3. If the purchase returns happens partially, record the debit note to the extent it is reversed.
  4. Select the Nature of Return, and the Supplier’s Debit/Credit Note No. and Date in the Statutory Details screen.
  5. The tax liability gets calculated and displayed in the GST – Tax Analysis screen (press Ctrl+O (Related Reports) > type or select GST – Tax Analysis) as shown below:

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    The tax liability gets calculated and displayed in the GST – Tax Analysis screen (press Ctrl+I (More Details) > type or select GST – Tax Analysis) as shown below:


  6. Press Esc to return to the debit note.
  7. Press Enter to accept.

 

Reverse the tax liability to the extent of purchase returns

  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:
    • Nature of Adjustment – Reversal of Tax Liability.
    • Additional Details – Purchase under reverse charge.
  3. Debit the tax ledgers and credit the expenses/current assets ledger.
  4. Press Enter to save.

 

Reverse the tax credit to the extent of purchase returns

  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:
    • Nature of Adjustment – Reversal of Input Tax Credit.
    • Additional Details – Purchase under reverse charge.
  3. Debit the tax ledgers and credit the expenses/current assets ledger.
  4. Press Enter to save.

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