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Accounting Adjustments under Rule 6(3) [Service Tax] in Tally.ERP 9

The amount refunded for not providing of the service for which service tax was paid on receipt of such money can be adjusted against the liability of the subsequent period under rule 6(3). This adjustment entry can be recorded in Journal using the Voucher Class by selecting Tax Paid but service not rendered Rule 6(3) Adjustment.

Example:On 27-9-2012 ABC company received Advance of Rs. 50,000 from CreativeIn Ad Agency towards the Event Management Services to be provided.

 

On 28-9-2012 Paid the Service Tax on the advance received to the Government.

 

On 29-9-2012 CreativeIn Ad agency cancelled the Services and ABC company paid the Advance received Rs. 50000 (including the Service Tax paid to the Government)

 

On 30-9-2012 ABC Company adjusted the service tax paid (ST - Rs. 4533, Education Cess Rs. 91, SHE cess Rs. 45) on the services cancelled towards the tax Liability.

To account the above transaction

1. Record the Receipt Voucher (to account advance received)

2. Record the Payment Voucher (to account tax payment to government)

3. Record the Journal Voucher (To account Service tax portion paid to the government)

4. Record Payment Voucher (To pay the balance to the party)

5. Record the Journal Voucher (To account adjust the tax paid on the cancelled services towards the tax liability)

1. Record the Receipt Voucher (to account advance received)

Go to Gateway of Tally > Accounting Vouchers > F6: Receipt

  1. In Account field select Canara Bank

  2. Select CreativeIn Ad Agency under Particulars

  3. In Service Tax Details screen select Type of Ref as Advance, Name and Type of Service will be defaulted. In Category field select Event Management Services and in Service Amount specify Rs. 50000. Tax will be calculated and displayed.


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  1. In Bill-wise Details select the Type of Ref as Advance and specify the bill Name as ADV -002

  2. Select Service tax and Cess Ledgers.


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  1. Press Enter to Accept

2. Record the Payment Voucher (to account tax payment to government)

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

  1. In Account field select Canara Bank

  2. Under Particulars select service Tax ledger -Service Tax @ 12%

  3.  In Service Tax Details screen, select Agst Ref in Type of Ref field. In Name field select Rcpt/5-1 dated 27-9-2012. based on the bill selectedCategory and Amount will be defaulted.


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  1. Under Particulars select Education Cess Ledger - Education Cess @ 2%

  2.  In Service Tax Details screen, select Agst Ref in Type of Ref field. In Name field select Rcpt/5-1 dated 27-9-2012. based on the bill selectedCategory and Amount will be defaulted.

  3. Similarly select Secondary education Cess ledger and select the tax bill Rcpt/5-1 dated 27-9-2012

  4. In Service Tax Payment Details screen provide the service tax payments details.


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  1. Press Enter to Accept

3. Record the Journal Voucher (To account Service tax portion paid to the government)

Service Tax portion on the advance received is paid to government. On cancellation of service contract, service tax amount already paid to the government is also returned to the party. To account such portion of tax paid to the government and adjust towards the mount payable to the party record a adjustment entry in Journal Voucher

To account the account the tax already paid a control account is created under Suspense A/c.


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

  1. In Debit field select the control account created to account the tax already paid - Service Tax Paid to Government and mention Rs. 5,500.18 inAmount field.

  2. In Credit field select the party ledger - CreativeIn Ad Agency. Amount will be defaulted to Rs. 5,500.18

  3. In Bill-wise Details screen, select the Type of Ref as New Ref and reference Name as ADJ 01


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  1. Press Enter to Accept

4. Record Payment Voucher (To pay back the advance received to the party)

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

  1. In Account field select Canara Bank

  2. Under Particulars select CreativeIn Ad Agency. In Service Tax Details screen in Type of Ref field select Agst Ref and select the bills ADV-002and ADJ 01

  3. In Amount field will automatically display Rs. 50,000


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  1. Press Enter to Accept

5. Record the Journal Voucher (To account adjust the tax paid on the cancelled services towards the tax liability)

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

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

  2. In Used for field select Tax Paid But Service Not Rendered Rule 6(3) Adjustment from Service Tax Adjustments list


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  1. In Debit field select service tax ledger - Service Tax @ 12%

  2. In Service Tax Details screen

  3. In Type of Ref select Agst Ref

  4. In Name field select the tax bill Sale/13-1. Category and amount will be defaulted based on the bill selected

  5. In Amount field Rs. 5399.98 is defaulted


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Note: In this case,  the tax paid on services sold (Sale/13-1) is equal to tax paid on services not rendered.

  1. In Debit field select Education Cess @ 2% and in Service Tax Details screen select the tax bill Sale/13-1, the Amount Rs. 106.80 is defaulted

  2. In Debit field select Secondary Education Cess @ 1% and in Service Tax Details screen select the tax bill Sale/13-1, the Amount Rs. 53.40 is defaulted

  3. In Credit field select the control ledger used to adjust service tax paid - Service Tax Paid to Government. Amount Rs. 5500.18 will be displayed automatically.

  4. Enable the option Provide Details to Yes to enter the Service Tax Payment Details


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  1. Press Enter to Accept

Note: The values of Tax adjusted under Rule 6(3) will be captured in section (4A) (I) (a) (iii)

 
 
 
 
Tally.ERP 9 Reference Manual LIBRARY
1.
Installation of Tally.ERP9
2.
Site Licensing of Tally.ERP9
3.
Shortcut Keys in Tally.ERP9
4.
Maintaining Company Data
5.
Creating Masters
5a. Accounts Information [Creating Masters]
5b. Inventory Information [Creating Masters]
6.
Voucher Entry
7.
Reports in Tally.ERP9
8.
Excise for Dealer
9.
Excise for Manufacturer
10.
Reports [ Excise for Manufacturer]
11.
Excise for Importer
12.
Service Tax in Tally.ERP9
13.
Tax Collected at Source (TCS) in Tally.ERP9
14.
Tax Deducted at Source (TDS) in Tally.ERP9
15.
Value Added Tax (VAT) in Tally.ERP9
16.
Central Sales Tax (CST) in Tally.ERP9
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
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