16/08/2017

How to Create Reverse Charge Tax Liability in TallyERP.9?

In our previous posts, we know about to generate Reverse Charge Tax liability on Cash or credit expenses or purchases from any unregistered dealer. In this post we know about how to generate tax liability of such expenses / purchases?


For Example: Sumit Kumar purchase goods from open market worth Rupees 5000 from an unregistered dealer, (Goods are taxable @ 18% in GST Regime). The condition is Sumit Kumar purchase goods from a unregistered dealer, then tax liability will be raised on Sumit himself. So the liability is Rs. 4500 as CGST (9%) and Rs. 4500 as SGST (9%) is payable on Sumit Kumar. First, he needs to pass a purchase entry to calculate Reverse Charge on his purchase:

How to Create Reverse Charge Tax Liability in TallyERP.9?

In above Image, you can see there is no tax ledger selected in voucher entry, Instead of this you can press Alt + A to show tax analysis on Reverse Charge purchase or Expenses. Taxes paid on Reverse charge is fully recoverable and you can get credit or refund of GST of Reverse charge in next month.

When you generate the liability of Reverse Charge, you need to show outstanding GST in your loans and advances against Reverse Charge payment which will be adjust when you take credit or refund of Reverse Charge Tax.

Create Tax on Reverse Charge Ledger under the group of Current Assets, Create IGST, CGST and SGST under duties and taxes - GST. Go to Gateway of Tally - Journal - Press Alt - J for Stat Adjustment:

How to Create Reverse Charge Tax Liability in TallyERP.9?

Select type of duty/ tax - GST, Nature of Adjustment - Increase of Tax Liability, Additional details - Purchase from unregistered dealer, Press enter to accept stat adjustment details and make journal entry as follows:

How to Create Reverse Charge Tax Liability in TallyERP.9?

Press Enter to save the entry and its all done. 

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