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08/05/2018

How to enter Ineligible Input Tax Credit Purchase / Expenses in TallyERP.9?

In GST there is some expenses/ purchases on which Input Credit is not allowed or gst on those expenses is ineligible or there is some stocks on which you cannot get Input Credit. List of Ineligible expenses are as follows:

S. No.
Nature of Expenses
Exceptions
1
Motor Vehicle Expenses
A) Dealer of Motor Vehicle
If Service provider ( S.P.) and service receiver (S.R.), both are belong to same line of business ( Dealing in motor vehicle) , in such a case S.R. can claim ITC.
B) Passenger transportation / training of driver
If this services is directly use in providing main service (output service liability), in such a case ITC can claim, in another case we cannot claim this expenses as input.
C) GTA Services
Tax Paid under RCM is allowed as input tax credit.
D) Car Hiring Charges
2
Food and beverage
If SP and SR both are belong to same line of business, in such a case S.R. can claim ITC.
3
Outdoor catering
If SP and SR both are belong to same line of business, in such a case S.R. can claim ITC.
4
Beauty Treatment Services
If SP and SR both are belong to same line of business, in such a case S.R. can claim ITC.
5
Health Services
If SP and SR both are belong to same line of business, in such a case S.R. can claim ITC.
6
Cosmetic & plastic surgery
If SP and SR both are belong to same line of business, in such a case S.R. can claim ITC.
7
Rent a cab services
1. In case of similar line of business, credit is allowed.
2. Where such service is mandatory to provide as per norms of government, credit is allowed.
8
Life Insurance Services
1. In case of similar line of business, credit is allowed.
2. Where such service is mandatory to provide as per norms of government, credit is allowed.
9
Health insurance services
1. In case of similar line of business, credit is allowed.
2. Where such service is mandatory to provide as per norms of government, credit is allowed.
10
Construction services for construction of immovable property
If SP and SR both are belong to same line of business, in such a case S.R. can claim ITC.

But the question is how to treat these expenses in Tally if supplier charge GST in his invoice but you do not eligble to take effect of Input Credit. So how to do this entry in tally. 

In this case, first you take input credit in voucher and after that you need to pass another voucher for reversal of ineligible input credit.

For Example, Tally Knowledge received invoice of Rs.  17700/- including GST @ 18%. 

For help with this tutorials please read this also: How to Setup Single Ledger for Multiple GST Tax Calculation

First you need to setup your ledger according to requirement. Alter or create a new ledger for Motor Car service or Vehicle Upkeep of Maintenance. Record a purchase voucher for automatic tax calculation for GST, or otherwise Record a journal voucher for manual calculation.


Enter amount of Taxable Value and press Enter. Following tax classification appear on your screen. Select Nature of Purchase / Expenses and Set yes to Ineligible Input Tax Credit


For this tax classification Please see follow this link: https://www.youtube.com/watch?v=uPpUF-sLgkA

Select Input GST Ledger for Credit Effect and your entry will be look like this:


Now go to GSTR 3B and Press ALT + V for detailed view:


Same can be applied for Stock Ledger.

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