https://help.tallysolutions.com/docs/te9rel60/Tax_India/gst/accounting_for_inward_supply_from_unregistered_dealers_gst.htm

Accounting for Inward Supply from Unregistered Dealers in GST

Valid from Release 6 to 6.0.2

You can account for taxable purchases from unregistered dealers (URD), purchases against advance paid to unregistered dealers, cancellation of purchase after advance payment to unregistered dealers, and purchase returns under reverse charge. The purchases made under reverse charge are captured in GSTR-2 report.

To record purchases from an unregistered dealer, you need to update your party ledgers and create a ledger for unregistered purchases.

Purchases from an unregistered dealer

Inward supply > Raise tax liability or Raise tax liability and account for tax credit in the same voucher > Pay tax and file returns

Purchases from an unregistered dealer against advance payment

Same month: Advance payments > Inward supply > Raise tax liability > Pay tax and file returns

Different months: Advance payments > Raise tax liability > Pay tax and file returns > Inward supply in another month > Reverse the tax liability > File returns in the subsequent month

Cancellation of advance payment under reverse charge

Same month: Exclude the advance payment voucher from the GSTR-2

Different month: Record a journal voucher to reverse the tax liability to the extent to which the transaction is cancelled

Purchase returns under reverse charge

Same month before raising liability for complete invoice value: Purchase invoice > Cancel the invoice (press Ctrl+X to cancel) > File returns

Same month after raising liability: Purchase invoice > Raise tax liability and claim credit > Record a debit note > Reverse the tax liability and tax credit to the extent of purchase returns > File returns

Different month: Record a debit note to the extent of purchase returns > Reverse the tax liability and tax credit to the extent of purchase returns > File returns

 

Updating your party ledgers

You need to identify the party as an unregistered dealer.

To update your party ledger

1.    Go to Gateway of Tally > Accounts Info. > Ledgers > Alter > select the ledger.

2.    Set/alter GST details? - Yes.

3.    In GST Details screen, Registration Type - Unregistered.

4.    Press Ctrl+A to save.

Creating a ledger for purchases from unregistered dealer

This ledger is to account for the purchases transactions from unregistered dealers.

To create a ledger for purchases from unregistered dealer

1.    Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

2.    Under - Purchase Accounts.

3.    Is GST Applicable? - Applicable.

4.    Set/alter GST details? - Yes.

o     Nature of transaction - Purchase from Unregistered Dealer.

o     Taxability - Taxable.

o     Is reverse charge applicable? - Yes. Press F12: Configure and set Enable reverse charge calculation? to Yes.

o     Set the rate details.

5.    Press Ctrl+A to save.

In the stock item master attracting reverse charge, set the option Enable reverse charge calculation? to Yes in the Configuration screen of GST Details screen (displayed on enabling the option Set/alter GST details? in the stock item or ledger master).

 

Recording a purchase from unregistered dealer

Create a new bill reference when you are purchasing the goods from an unregistered dealer and then making a payment. If you have made an advance payment, then you can adjust it against the purchase invoice.

You can create invoices to track reverse charge transactions for unregistered dealers, by creating a new voucher type with a separate series of voucher numbers, and record the purchase invoices. In the Voucher Printing screen, you can click F12: Configure and set the options as required to print the self-invoice.  

To record a purchase entry

1.    Go to Gateway of Tally > Accounting Vouchers > Accounting Vouchers > F9: Purchase.

2.    Enter the details as required.

Link the bill reference of the payment voucher (by selecting Agst Ref in the Bill-wise Details screen) to the purchase invoice, if you have made an advance payment.

3.    Click A: Tax Analysis > F1: Detailed to view the detailed Tax Analysis report that displays the reverse charge amount.

4.    Press Escape (Esc) to go back to the purchase voucher.

5.    Press Ctrl+A to save.

 

Recording a journal voucher to raise tax liability only

To record a journal voucher to raise only the liability

1.    Go to Gateway of Tally > Accounting Vouchers > F7: Journal.

2.    Click J: Stat Adjustment.

3.    Select the options as shown below.

4.    Click F2: Date and change the voucher date as required.

5.    Debit the expense ledger or ledger grouped under Current Assets and credit the GST ledgers.

6.    Press Enter to save.

Recording a journal voucher to raise tax liability and claim tax credit

To record a journal voucher to raise liability and claim tax credit

1.    Go to Gateway of Tally > Accounting Vouchers > F7: Journal.

2.    Click J: Stat Adjustment.

3.    Select the options as shown below.

4.    Click F2: Date and change the voucher date as required.

5.    Debit and credit the GST ledgers with the same values.

6.    Press Enter to save.

GST payment voucher for paying liability under reverse charge

To record a tax payment voucher

1.    Go to Gateway of Tally > Accounting Vouchers > F5: Payment.

2.    Click S: Stat Payment and enter the required details.

Payment Type: Set the type of payment as Recipient Liability.

3.    Account: Select the bank from which the payment will be made.

4.    Select the central and state tax ledgers.

5.    Provide GST details: Enable this option 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.

 

Recording an advance payment to unregistered dealer

When you make an advance payment to an unregistered dealer for goods due to be received on a future date, you can record an advance payment voucher.

To record an advance payment

1.    Go to Gateway of Tally > Accounting Vouchers > F5: Payment.

2.    Click V: Reverse Chrg. Adv. to mark the voucher for advance payment. The values entered in this voucher are captured in GSTR-2 report.

Note: Payment vouchers recorded without clicking V: Reverse Chrg. Adv. will not have GST implications, and will form part of the Summary of Excluded Vouchers.

3.    In Account, select the bank from which the payment will be made.

4.    Select the party ledger predefined as unregistered dealer, and enter the details in the Advance Payment Details screen.

If the stock item being purchased from unregistered dealer does not attract reverse charge, do not configure the stock item for reverse charge. Select the ledger configured for reverse charge in the Advance Payment Details screen.

Note: To categorise and display the stock item or ledgers attracting reverse charge in the Advance Payment Details screen, set the option Enable reverse charge calculation? to Yes in the Configuration screen of GST Details screen (displayed on enabling the option Set/alter GST details? in the stock item or ledger master).

The tax type appears as integrated tax or central tax and state tax, based on the state selected for the party ledger.

5.    Press Ctrl+A to save the Advance Payment Details screen.

6.    Select the type of reference as Advance and enter the reference details in the Bill-wise Details screen.

7.    Enter the details in the Bank Allocations screen.

8.    Press Enter to save.

Recording a journal voucher to raise liability for reverse charge on advance payments

When an advance payment is made to a unregistered dealer, the liability due under reverse charge gets captured in the GSTR-2 report.

To view the reverse charge amount in GSTR-2

     Go to Gateway of Tally > Display > Statutory Reports > GST > GSTR-2.

To record a journal voucher to raise liability on advance payment from GSTR-2

1.    Click J: Stat Adjustment in GSTR-2 report.

2.    Select the options as shown below.

3.    Click F2: Date and change the voucher date as required. You can record a journal voucher to raise the liability for each advance payment, or at the end of the month, record a voucher to raise liability for all the advance payments made, against a particular party.

4.    Debit the expense ledger or ledger grouped under Current Assets and credit the GST ledgers.

5.    Press Enter to save.

Recording a journal voucher to reverse the tax liability raised for purchases from an unregistered dealer to claim tax credit

When you have made the advance payment in previous period and created the purchase invoice in the current period, you can view the transaction details in GSTR-2 report.

You can claim the tax paid on purchases from unregistered dealer as tax credit by recording a journal voucher, and can view the tax credit claimed in GSTR-2.

To view the tax liability under reverse charge in GSTR-2

1.    Go to Gateway of Tally > Display > Statutory Reports > GST > GSTR-2.

The purchase invoice values with the tax liability details

2.    Click V: Default View and F1: Detailed to view the purchase invoice recorded in the current period adjusted against the advance payment of the previous period.

Claim tax credit when the advance amount paid matches with the purchase value

To claim tax credit on the purchases from unregistered dealer

1.    Go to Gateway of Tally > Accounting Vouchers > F7: Journal.

2.    Click J: Stat Adjustment.

3.    Select the options as shown below.

4.    Debit the GST ledgers and enter the amount claimed as credit on purchase invoices recorded against unregistered dealers.

5.    Credit the expense ledger or ledger grouped under Current Assets.

Claim tax credit on the purchases from unregistered dealer when the purchase value exceeds the advance amount paid

Example: Consider the transactions recorded in the following sequence.

     On 5th July, an advance payment of 1,00,000 is made to an unregistered dealer.

     To account for the GST liability, a journal voucher is recorded by crediting the GST ledgers, and debiting the tax on advance (Current Liabilities) ledger for 18,000.

     On 2nd August, a purchase invoice is recorded for 2,90,000 (attracting GST of 52,200) by adjusting the advance amount of 1,00,000. The tax liability on the balance amount of 1,90,000 (purchase value 2,90,000 - advance amount 1,00,000) is 34,200.

     Now to raise the tax liability of 34,200 and claim tax credit for 52,200 record a journal voucher.

To record a journal voucher to raise a liability and account for tax credit in the same voucher

1.    Go to Gateway of Tally > Accounting Vouchers > F7: Journal.

2.    Click J: Stat Adjustment.

3.    Select the options as shown below.

4.    Debit the GST ledgers and enter the total tax credit available on the purchase invoice.

5.    Credit the GST ledgers and enter the amount of tax liability to be raised on the purchase value after deducting the advance payment.

6.    Credit the expense ledger or ledger grouped under Current Assets.

To view the tax credit claimed on reverse charge liability in GSTR-2

1.    Go to Gateway of Tally > Display > Statutory Reports > GST > GSTR-2.

2.    Click V: Default View and F1: Detailed to view the journal voucher recorded to reverse the tax liability raised on advance payments.

Accounting for cancellation of purchases after advance payments under reverse charge

If you cancel a purchase order after advance payment to an unregistered dealer, you can reverse the liability on cancellation of purchase.

If the order cancellation is done in the same month, you need to exclude the advance payment voucher from GSTR-2. Otherwise, reverse the liability on cancellation.

To exclude an advance payment voucher from GSTR-2

1.    Go to Gateway of Tally > Display > Statutory Reports > GST > GSTR-2.

2.    Select Included in returns and press Enter.

3.    Select Advance Payment and press Enter.

4.    Select the receipt voucher and click X: Exclude Vouchers.

5.    Click Yes for the message Do you want to exclude this voucher?.

To reverse the liability on cancellation of purchase

1.    Click J: Stat Adjustment in GSTR-2 report or from the Accounting Vouchers > F7: Journal.

2.    Select the options as shown below.

3.    Debit the GST ledgers and credit the expense ledger or ledger grouped under Current Assets.

 

Purchase Returns under reverse charge

Consider a purchase invoice recorded for purchase from unregistered dealer as shown below:

The tax liability gets calculated and displayed in the Tax Analysis screen (click A: Tax Analysis in the above purchase invoice) as shown below:

Record a journal voucher, to raise the liability and claim credit on the tax calculated in the Tax Analysis screen of the above purchase invoice, as shown below:

When the purchase returns happens either partially or fully after filing returns, record a debit note to reverse the transaction to the extent of goods returned.

To record a debit note

Go to Gateway of Tally > Accounting Vouchers > Ctrl+F9. If the purchase returns happens partially, record the debit note to the extent it is reversed as shown below:

The tax liability gets calculated and displayed in the Tax Analysis screen (click A: Tax Analysis in the above debit note) as shown below:

Record a journal voucher to reverse the liability and tax credit claimed in the previous month to the extent it is returned.

To record a journal voucher to reverse the tax liability and input tax credit

1.    Click J: Stat Adjustment in GSTR-2 report or from the Accounting Vouchers > F7: Journal.

2.    Select the options as shown below.

3.    Debit and credit the GST ledgers with the same tax values as shown below: