Lesson 52 – Reverse Charge with Service Tax Percentage in Tally.ERP9

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Reverse Charge with Taxable Percentage 

Through This tutorial you can learn about Reverse Charge entry in Tally.ERP9 and enable to compute tax liability on reverse charge service tax.

Example: On 23-11-2012 ABC Company availed building
renovation services worth Rs.5,00,000 from R.B.Co. Taxable Percentage of the
service is 60% and tax liability of the service provider is 50%.

To record the above transaction,

1. Create the Service
Provider Ledger

2. Create the Service
Ledger

3. Record the
Transaction in Purchase Voucher

4. Record the Payment
Voucher (to account the payment)

5. Record a Journal
Voucher (to create Service Tax liability)
 

1. Create Service Provider Ledger

Go to Gateway
of Tally – Accounts Info. – Ledgers – Create

In the Ledger Creation screen:

·       Enter the Name of
the Party Ledger e.g. R.B. Co.

·       Select Sundry
Creditors
 from the List of Groups displayed in the Under field.

·       Set Maintain balances
bill-by-bill
 to Yes.

·       Enter the Default
Credit Period
, if required.

·       Set Is
Service Provider/Receiver
 to Yes.

·       Set the option Set/Alter
Service Tax Details
 to Yes and press enter to view
    Service Tax Details screen

·        
In Service
Tax Details
 screen enter

o   
Registration
Number
 and Date
of Registration
 (This is  not mandatory).

o   
Type
of Classification
: In this field
select the classification that is applicable for the service provider. For R.B.
Co., Not Applicable is selected from the list of
Classifications. 

 

·        
Enter the Mailing Details and Tax Information

·        
Press Enter to
accept and save. 

2. Create Service Ledger

Go to Gateway
of Tally – Accounts Info. – Ledgers – Create

·        
Enter the Name of
the service expense Ledger you wish to create, for e.g., Building Renovation
Services

·        
Select Indirect
Expenses
 as the group name in the Under field.

·        
Set Inventory
values are affected
 to No.

·        
Set Is
Service Tax Applicable
 to Yes.

·        
In Default
Service Category
 field select Works Contract Service from
the List of Service Categories.

·        
Press Enter to
save. 

3. Record purchase of Services

To record the
purchase of services,

Go to Gateway
of Tally – Accounting Vouchers – F9: Purchase

1.       Press F2 and
change the date to 23-11-2012

2.       In Party A/c Name field
select R.B. Co.

3.       Under Particulars,
select Service Ledger – Building Renovation Services and press Enter to
view Service Tax Details screen.

4.       In Service Tax Details screen

·        
In Type of
Ref
 field select New Ref from the Method of
Adjustment.

·        
In Name field
accept the default reference Number displayed Purc/14-1 which
can be changed by the user.

·        
In Type of
Service 
field service type  – Input Credit will
be displayed by default, as the classification chosen in for R.B. Co. is Not
Applicable
. Press Backspace and select Reverse
Charge
.

·        
In Category/Service field
the service category selected in the Service Ledger will be defaulted. Press Enter to
view the Taxable Percentage screen

·        
In Taxable Percentage field,
enter 60%

·        
Service
Amount
: In this field enter
the Service Amount of Rs. 5,00,000

·        
Amount
(Incl. of Tax)
: The amount
specified in the Service Amount field plus Service Tax payable on the amount,
will be displayed in this field.

 5.             
Accept Service Tax Details screen

In the Voucher Creation screen, 

6.               In Amount field Service
Amount
 of Rs. 5,00,000 will be displayed 

7.               Select
Service Tax Ledger e.g. Service Tax @ 12%. Service Tax amount
will be calculated and displayed automatically. 

8.             Select Education Cess
Ledger e.g. Education Cess @ 2%. Education Cess amount will be
calculated and displayed automatically. 

9.            Select Secondary and
Higher Education Cess Ledger e.g. Secondary Education Cess
@ 1%
. Secondary and Higher Education Cess amount will be calculated and
displayed automatically.

10.          In Bill-wise
Details
 screen

·        
In Type of
Ref
 select New Ref

·        
In Name field
enter the bill number – Bill-0579

·        
Amount will be defaulted
automatically

 

11.               
Accept the Bill-wise
Details screen.

 

                    The completed Purchase Voucher
is displayed as shown: 

12.               
Press Enter to
Accept the Voucher Creation

4.
Record the payment voucher (to account the payment

On reverse charge
transactions Service Tax liability on the  service receiver arises only on
making the payment to the service provider.

Go to Gateway
of Tally – Accounting Vouchers – F5: Payment

1.       Press F2 and
change the date to 24-11-2012

2.       In Debit field
select R.B. Co. Ledger and press Enter to
view Service Tax Details screen

3.       In Service Tax Details screen

·        
In Type of
Ref
 field select Agst Ref

·        
In Name field
select Purc/14-1 dated 23-11-2012 to adjust the Pending Tax
Bills

·        
Based on the tax bill
selected Type of Ref, Category, Amount (Incl. of Tax) and Service
Amount
 will be defaulted.

4.      
IBill-wise Details screen

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·        
In Type of
Ref
 field select Agst Ref


·        
In Name field
select Bill-0579 to adjust the pending bill against the
payment

 

                In the Voucher Creation screen,

5.      
Rs.
5,18,540
 will be
defaulted in Amount field for R.B. Co.

6.      
In Credit field
select Canara Bank. Rs. 5,18,540 will be defaulted in Amount field

7.       Press Enter to
view the Bank Allocations screen. Fill in the
required details and press Enter to save the Bank details. The
completed Payment Voucher is displayed as shown:

 

8.      Press Enter to
save and accept. 

5. Record a Journal Voucher (to Create Service Tax Liability)

To create Service Tax
liability on work contract services, create the Voucher Class in
Journal Voucher.

To record the
transaction,

Go to Gateway
of Tally -Accounting Vouchers – F7: Journal

1.      In Change
Voucher Type
 screen, in Class field select Service
Tax Adjustments
 from                Voucher
Class list

2.      
Press F2 and
change the date to 24-11-2011

3.      
In Used for field
select Tax on Reverse Charge from the list of Service
Tax     Adjustments

 

4.      
Press Enter to
view Tax on Reverse Charge screen to calculate Service Tax
liability

5.      In Service
Tax Liability
 screen

·      In Till Date select
the Voucher date to account all services purchased till the date of accounting
the Service Tax liability. By default Voucher Date 24-11-2012 will
be displayed.

·      In Service
Category
 field select the service received – Works Contract
Service
 from the List of Service Categories.

·      Avail
Input Credit:
 Set this option
to Yes to consider the Service Tax amount paid towards the
works contract services.

·     In Party
Ledger
 field select the party from whom services are received 
R.B. Co.
 from the List of Ledger Accounts

·    
In Output
Ledgers
 section select

o   
Service
Tax @ 12%
 to account
Service Tax

o   
Education
Cess @ 2%
 to account
Education Cess

o   
Secondary
Education Cess @ 1%
 to account
Secondary and Higher Education Cess

·     In Input
/Expense Ledgers
 section select

o   
Service
Tax @ 12%
 to account
Service Tax

o   
Education
Cess @ 2%
 to account
Education Cess

o   
Secondary
Education Cess @ 1%
 to account Secondary
and Higher Education Cess

 

 7.      Press Enter to
save and accept.

On payment of Service
Tax to the Government, the tax paid towards works contract services will be
displayed in Input Credit Summary Report. 

To view the Input
Credit Summary
 report, Go to Gateway of Tally – Display
– Statutory Reports – Service Tax Reports – Input Credit Summary

 

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