Accounting Service Tax on Expenses (Journal Voucher) [Service Tax] in Tally.ERP 9

In case of Non-Service Organisations services purchased are considered as expenses. In Tally.ERP 9, Service Expenses can be recorded in Journal Voucher

Example: On 11-7-2012 ABC Company purchased Air ticket booking services from AK Tours for Rs.65,000 on which Service Taxis charged @ 12.36% (vide no. AT/654/12-13) when their Managing Director went on a Foreign Tour.

To account the above transaction

1. Create Expense Ledger

2. Create Service Provider (Supplier) Ledger

3. Record the transaction in Journal Voucher

1. Create Expense Ledger

To create the Service Expense 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., Foreign Tour Expenses.

  • 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 Air Travel Agency from the List of Service Categories.

Note: All expenses subject to Service Tax have to be associated with relevant predefined Service Category.


The option Any can be selected from the List of Service Categories, where the user doesn't want to define the Service Category during Ledger Creation. This allows the user to use an Expense/Purchase Ledger (as a common Ledger) to account multiple Service Categories.


 From Rel 4.8 an option to provide Bank Details is provided in the Ledger Master.


  1. Press Enter to save.

2. Create Service Provider (supplier) Ledger  

To create the Service Provider-  AK Tours Ledger refer the topic - Service Provider (Supplier) Ledger

3. Record the Transaction in Journal Voucher

To record the Journal Voucher

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

  1. Press F2 and change the date to 11-07-2012

  2. In Debit field select Foreign Tour Expenses ledger and press enter to view Service Tax Details screen

  3. In Service Tax Details screen

  4. Type of Ref: Select New Ref from the Method of Adjustment. New Ref is selected for new financial  transactions.

  5. Name:  Tally.ERP 9 displays the reference number, which is a combination of abbreviation of Journal and Voucher Number and Line Number(example: Jrnl /4-1) which can be changed by the user. Input service credit are tracked with these Reference Numbers.

  6. Type of Service: Based on the Type of Classification selected in the Service Provider, Type of Service will be defaulted (displayed). By default Input Credit is displayed and Tally.ERP 9 skips the field.

  7. Category/Service: Based on the service Category selected in the Expense Ledger, category will be defaulted (displayed). By default Taxable Service is displayed and Tally.ERP 9 skips the field.

  8. Service Amount: In this field enter the Service Amount, where in you can ascertain Service Amount in the invoice issued by the service provider. On providing the service amount Service tax gets calculated. Enter Rs. 65,000

  9. Amount (Incl. of Tax): In this field the cumulative (collective) amount of Service amount and Tax will be displayed in this field

Note: In cases where the invoice received from the service provider is inclusive of tax, you can enter the invoice amount in theAmount (Incl. of Tax) field. Tally.ERP 9 back calculates the amount to arrive at the Service amount and Tax portion. The service amount will be displayed in Service Amount field and Tax details against the Tax Head.


  1. In Amount field the Service Amount of Rs. 65,000 will be defaulted automatically

  2. In Debit field select Service Tax Ledger e.g. Service Tax @ 12%. Service Tax amount will be calculated and displayed automatically.

  3. In Debit field select Education Cess Ledger e.g. Education Cess @ 2%. Education Cess amount will be calculated and displayed automatically.

  4. In Debit field select Secondary Education Cess Ledger e.g. Secondary Education Cess @ 1%. secondary Education Cess amount will be calculated and displayed automatically.

  5. In Credit field select the Party Ledger - AK Tours. Total amount  (Rs. 73,034) of Service Cost plus the Service Tax will be displayed in theAmount field.

  6. In Bill-wise Details screen

  7. In Type of Ref select New Ref

  8. In Name field enter the bill number - AT/654/12-13

  9. Amount will be defaulted automatically:


The completed Journal Voucher is displayed as shown:


  1. Press Enter to save and Accept





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