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Reducing Tax Liability (VAT)

You can record a journal voucher to capture the reduction of tax liability due to prior payments.

  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 given below:
    • Type of duty/tax – VAT.
    • Nature of Adjustment – Reducing Tax Liability.
    • Additional Details – Entry Tax.

      Note: The options for Additional Details are provided as per state specific requirements of VAT/CST forms and annexures. In this example, Bihar is selected as the State.
    • Press Enter to save and return to voucher screen.
  3. Debit the VAT ledger, and enter the relevant details in the VAT Details screen.
  4. Enter the amount in the Debit column.
  5. Credit the ledger grouped under Current Assets.
    As always, press Alt+C, to create a master on the fly.Ā Alternatively, press Alt+G (Go To) > Create Master > type or select Ledger > press Enter.
  6. Set the option Provide VAT details to Yes, and enter the relevant details.
    Note: The option Provide VAT Details is provided as per state specific requirements of VAT/CST forms and annexures. In this example, Bihar is selected as the State.
  7. Enter Narration, if required. The journal voucher appears as shown below:
  8. Accept the screen. As always, you can press Ctrl+A to save.

The states with Input Tax Credit Admitted On Capital Goods available as the Nature of Adjustment are given below:

State Name

Additional Details

Voucher Entry

Bihar

Advance Tax Paid

Debit: VAT ledger or ledger grouped under Current Liabilities.

Credit: Ledger grouped under Current Assets.

Entry Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets.

Chhattisgarh

Adjusting with ITC

Debit: VAT ledger.

Credit: VAT ledger.

Adjusting with ITC of Capital Goods

Debit: VAT ledger.

Credit: VAT ledger.

Gujarat

Entry Tax

Debit: VAT ledger.

Debit: Additional tax ledger.

Credit: Ledger grouped under Current Assets.

Jharkhand

Entry Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Liabilities.

Kerala

Entry Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets.

Madhya Pradesh

Adjusting with ITC

Debit: VAT ledger.

Credit: Ledger grouped under Current Liabilities.

Maharashtra

Adjustment of Tax As Per Form 234

Debit: CST ledger.

Credit: Expense ledger.

Entry Tax

Debit: VAT ledger.

Credit: Expense ledger.

Entry Tax on Motor Vehicle

Debit: VAT ledger.

Credit: Expense ledger.

TCS Adjustment

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets.

Puducherry

Advance Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets.

Refund

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets.

Punjab

Advance Tax Deducted

Debit: VAT ledger.

Debit: Surcharge ledger.

Credit: Ledger grouped under Current Assets.

Advance Tax Paid

Debit: VAT ledger.

Debit: Surcharge ledger.

Credit: Ledger grouped under Current Assets.

Entry Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets.

Uttar Pradesh

Adjusting with ITC

Debit: VAT ledger.

Credit: Ledger grouped under Current Liabilities.

 

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