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24.     Quick Setup for Service Tax in Tally.ERP 9

Did you know that in Tally.ERP 9, you can implement all statutory modules and Tally.NET service from just a single screen?

Implementing company statutory modules in Tally.ERP 9 involves setting up of statutory masters by entering the required details, creation of needed voucher types and going through advance setup if required. Similarly, setting up Tally.NET also requires creation of users with different security levels and defining various authorization rights based on business requirements. Let us take an example. The standard steps required to implement statutory module for ‘Service Tax’ are shown in the image below:

Quick Setup for Service Tax in Tally.ERP 9

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Remembering the sequence of creation of all these ledgers, voucher types and various settings is not a simple task. But, Quick Setup provides a one stop solution that allows users to complete all these requirements in a sequential manner from a single screen. It helps users save time, prevent errors and makes implementing statutory modules in Tally.ERP 9 a stress-free experience.

Currently, Quick Setup feature in Tally.ERP 9 is available for 7 different modules and in this article let’s implement ‘Quick Setup for Service Tax’. To do this:

Quick Setup for Service Tax in Tally.ERP 9 helps you to configure statutory setup required to maintain the financial records of Service Tax.

To configure statutory setup for Service Tax

Go to Gateway of Tally > Quick Setup > Service Tax. Quick Setup screen for Service Tax will be displayed as shown:

Quick Setup for Service Tax in Tally.ERP 9
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From this screen you can make required basic configurations like, enter company Service Tax Details and create  masters to account statutory transactions. It also allows makingadvance configurations wherever applicable.

Configuration details will be displayed below the setup options once the configuration is done other wise application will display the status as Not Configured for Company Setup and 0 of 0 Configured for other setups (Masters/Voucher Type/Advanced Setup).

Procedure to Quick Setup for Service Tax

1. Company Setup

Company Setup guides you to update relevant Service Tax details . To know how to update Service Tax details click on the link, C: Company Service Tax Details

C : Company Service Tax Details

To update Company Service Tax Details press Alt+C or select the option C: Company Service Tax Details and press Enter to view Entering Company Service Tax Details screen.

In Company Service Tax Details screen

1.    Service Tax Registration No. – Enter the registration number allotted to you by the Service Tax Department (before the circular No. 35/3/2001-ST dated 27-08-2001).

2.    Date of Registration – Enter the date of registration of Service Tax for your service.

3.    Type of Organization – In this field select the type of your organization from the List of Organisations menu.

4.    Enable Service Tax Round Off: By default this option will be set to Yes. If this option is Yes, service tax will get Rounded off to nearest Rupee and round off will happen for each tax head. If You don't want line round Off then set this option to NO

      In this case ABC company does not want line round off hence this option is set to No.

Note:  If the option Enable Service Tax Round Off is set to Yes, for a service bill the tax is calculated as shown below then each Tax head gets rounded off.

          *Service tax of 1012.85 to 1013

*Education Cess of 20.53 to 21

*Secondary Education Cess of 10.12 to 10

5.            Assessee Code – Enter the Service Tax Assessee Code of the company.

Note:   Service Tax Assessee Code is a PAN based 15 digit alpha numeric number e.g. ASDCE1588ST001. Servcie Tax Assessee Code is also Known as Service Tax Registration Number and Service Tax Code (STC)

          The first part denotes (10 characters – alpha numeric) Permanent Account Number issued by Income tax authorities to the concerned person to whom the Service Tax Registration Number is to be allotted. Second part comprises of a fixed 2 character alpha code – ST (Service Tax). This is followed by 3-Character numeric code representing the registered Premises or Office of the service provider.

          The Service Tax Registration Number has to be quoted on GAR–7 Challans covering deposit of Service Tax, Cess and other dues to the Government.

6.            Premises Code – Enter the Premises code/Location code. It is the identification number provided to the service tax payers.

Note:  Premises code is the identification number provided to the premises of the service tax payers. Premises code is issued to an assessee under Sl.No. 5 of the certificate for Registration (ST-2)

7.       Is Large Tax Payers – This field is set to Yes/No base on the amount of tax paid by the assessee. this field is set to No as ABC company is not a large Tax Payer.

Note: Large Tax Payers are those assessees who pay large amount of Tax. They are the eligible taxpayer for the purposes of being served by the LTU. For e.g.: Rs.5 Crore

8.        Large Tax payer Unit – Enter the name of the unit where the large tax payers pay tax. Tally.ERP 9 skips Large Tax Payer Unit when the option Is Large Tax Payer is set to No.

Note:  Large Tax Unit is self-contained tax office under the Department of Revenue acting as a single window clearance point for all matters relating to Central Excise, Income Tax/ Corporate Tax and Service Tax. Eligible Tax Payers who opt for assessment in LTU shall be able to file their excise return, direct taxes returns and service tax return at such LTUs and for all practical purposes will be assessed to all these taxes there under. These units are being equipped with modern facilities and trained manpower to assist the tax payers in all matters relating direct and indirect tax/ duty payments, filing of documents and returns, claim of rebates/ refunds, settlement of disputes etc.

          Large Tax Unit location Code for Bangalore is L-10000

          More information on LTU is available on - http://www.cbec.gov.in/cae1-english.htm

9.       Range

·         Code- Enter the code of the range of your company.

·         Name- Enter the name of the range under which your company falls.

10.        Division

·         Code- Enter the code of the division in which your company falls.

·         Name - Enter name of the division under which your company falls.

11.        Commissionerate

·         Code- This is the code of the Commissionerate of Service Tax under which the address of your registered premise is located.

·         Name- This is the name of the Commissionerate of Service Tax under whose range the address of your registered premise falls.

Completed Company Service Tax Details screen appears as shown

Quick Setup for Service Tax in Tally.ERP 9
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12.         Press Enter to save.

Note: You can also update company Service Tax Details from F11: Features screen. To enable Service Tax go to Gateway of Tally > F11: Features > Statutory & Taxation

          To know more on updating Company Service Tax Details from F11: Features refer the topic - Enabling Service Tax in Tally.ERP9

Note: In Tally.ERP 9, to move from one setup to another setup use Arrow (up and down) Keys.

2. Master Setup

Master Setup guides you to create masters like Service Ledger,Tax ledgers and Party Ledger by enabling relevant Service Tax options in the masters. For more details on master creation Click on the below links.

S : Service Ledger

To create service ledger press Alt+S or select the option S: Service Ledger press Enter to view Service Ledger Setup screen.

In Service Ledgers Setup screen

1.    Enter the name of the Service Ledger e.g. Sales - Advertisement Services in Name of Ledger field.

2.    Select the Group Name e.g. Sales Accounts in the Under field.

3.    By default Is Service Tax Applicable is set to Yes and the cursor skips the filed

4.    In Category field select Advertising Agency from List of Service Categories.

Quick Setup for Service Tax in Tally.ERP 9
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Similarly, You can create the Service Ledgers under Direct Expenses, Direct Incomes, Indirect Expenses, Indirect Incomes, Fixed Assets, Purchase Accounts and  Misc. Expenses (ASSET) groups from this screen.

Quick Setup for Service Tax in Tally.ERP 9
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5.            Press Enter to save.

Note: You can also create Service Ledgers from Gateway of Tally > Accounts Info. > Ledgers

          To know more on creating Service Ledgers refer the below topics -

Service Purchase Ledger

Service Sales Ledger

T : Tax Ledger

To create Service Tax ledger press Alt+T or select T: Tax Ledgers and press Enter to view Tax Ledgers Setup sub-form.

In Tax Ledgers Setup screen

1.    Enter the name of the Tax Ledger e.g. Service Tax @ 10% in Name of Ledger field.

2.    Select the Group Name e.g. Duties & Taxes in Under field.

3.    In Tax Head field select Service Tax from list of Tax Head.

Note: The option Service Tax allows to use the tax ledger to account only Service Tax on taxable Services.

4.    Similarly select Education Cess and Secondary Education Cess ledger

Quick Setup for Service Tax in Tally.ERP 9
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5.            Press Enter to save

Note: The option Any allows to use a service tax ledger as a common tax ledger to account tax of all the tax heads.

          You can also create Service Tax ledgers from Gateway of Tally > Accounts Info. > Ledgers

          To know more on creating service tax ledger refer the below topics

Common Service Tax Ledger

Service Tax Ledger

Education Cess Ledger

Secondary Education Cess Ledger

L : Party Ledger

To create Service Receiver or Service Provider ledger press Alt+L or select L: Party Ledgers and press Enter to view Party Ledger Setup screen

In Party Ledger Setup screen

1.    In Name of Ledger field, enter the name of the Service Receiver e.g. Krypton Agency

2.    In the Under field, select Sundry Debtors option from the List of Groups.

3.    By default the option Is Service Provider/Receiver will be set to Yes and application skips the field.

Note: In day-to-day business scenario a party can provide services as well as receive services. In such cases, same party ledger can used to account both the sale and purchase of services.

4.    Set the option Set/Alter Service Tax Details to Yes to view Service Tax Details screen

Quick Setup for Service Tax in Tally.ERP 9
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5.           In Service Tax Details screen

·         In Registration No. field enter the service tax registration number - AESRF4581EST001

·         In Date of Registration field enter the date of registration

·         In Type of Classification select  the classification , if applicable. For Krypton Agency Not Applicable is selected.

Quick Setup for Service Tax in Tally.ERP 9
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Note:

1. Exempt: Select this option when the Service Provider/Receiver is exempt from Service Tax.

2.        Export:        Select this option when the services are Exported

3.       Import:        Select this option when the services are Imported

4.       Pure Agent: Select this option when the Service provider/Receiver acts as a pure agent

5.        Not Applicable: Select this option when the service purchased/sold is a taxable service and eligible to avail input credit

6.       Tax on Service Received: Select this option when the transport services are purchased and the service receiver is liable to pay the tax.

          The Type of Classification selected in the Service Provider/Receiver will determine the Type of Service which can be overridden in the voucher entry.

5.    Similarly, create Service Provider ledger

Quick Setup for Service Tax in Tally.ERP 9
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6.            Press Enter to save.

Note: You can also create service provider and receiver ledgers from Gateway of Tally > Accounts Info. > Ledgers

          To know more on creating party ledger refer the below topics

*Service Provider Ledger

*Service Receiver Ledger

3. Voucher Type Setup

Voucher Type Setup guides to create voucher class in Journal voucher to record service tax related adjustment entries. For more details on voucher Class creation Click on the below link

F7: Service Tax Adjustments

Under Service Tax, Service Tax Liability can be adjusted towards service input credit  or CENVAT Credit.  

Accounting opening balance of Service Tax liability and Input Credit. Service Tax adjustment under Rule 6(4A) Rule 6(3) etc.

All the Service tax adjustment entries in Tally.ERP 9 can be recorded in journal voucher using the service tax adjustment class.

To create voucher class press F7 or select F7: Service Tax Adjustments and press Enter to view Voucher Type Setup screen

In Voucher Type Setup screen Application displays default Journal Voucher

1.    Select Journal Voucher Type. Retain the default settings in Name of Voucher Type,  Voucher Type and Method of Voucher Numbering

2.    In Name of Class field mention the class name as - Service Tax Adjustment and press Enter to view Voucher Type Class screen

Quick Setup for Service Tax in Tally.ERP 9
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3.            In Voucher Type Class screen

o    Set the option Use Class for Service Tax Adjustments to Yes

Quick Setup for Service Tax in Tally.ERP 9
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4.            Press Enter to save Voucher Type Class screen

The completed Voucher Type Setup screen appears as shown

Quick Setup for Service Tax in Tally.ERP 9
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5.            Press Enter to save.

Note: Voucher Class in Journal Voucher can be created from Gateway of Tally > Accounts Info./Inventory Info. > Voucher Types > Alter > Journal

 4. Advanced Setup

Advance Setup is an optional (not a must) setup. Advance set up is required, only when you want to configure abatement and Tax Rate details in service ledgers.

Advanced Setup guides you to configure for  abatement and Tax Rate details. For more details on Advanced Setup Click on the below link.

Note: To view the advance setup options press Enter from Advanced Setup or press F5 key or click on F5: Show Adv config button in the buttons bar.

A : Configure Abatement

Abatement is a deduction allowed (by the Government) on the value to be considered for service tax . Abatement is also known as Specific Exemption

To configure for Lower/No Collection for party press Alt+A or select A: Configure Abatement  and press Enter to view Abatement Details Setup screen.

Example: Current percentage Abatement on outdoor catering is 50%. Government has changed the abatement percentage from 50 % to 60%.

In Abatement Details Setup screen

1.    Retain the default details in Name of Ledger, Under and Category Details field.

2.    Set the option Set/Alter Abatement Details to Yes only to those ledger (s) to alter the abatement details.

Quick Setup for Service Tax in Tally.ERP 9
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3.            In Abatement Details screen

·         In Category field select the Service Category for which the abatement percentage to be altered

·         In Applicable From Date field enter the date as 1-4-2010

·         In Notification Number field enter the Notification through which the percentage change has been made.

·         In Abatement field enter the changed percentage - 60%

Quick Setup for Service Tax in Tally.ERP 9
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·         Press Enter to save Abatement Details

The completed Abatement Details Setup screen appears as shown

Quick Setup for Service Tax in Tally.ERP 9
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4.            Press Enter to save.

B : Configure Tax Rate

In some cases, there may be provision under law to charge service tax at a rate lesser than the actual percentage. Example: Works Contract services - Tax is charged @ 4%.

In this scenario the service provider/receiver has to change the rate of tax applicable on the service provided/received while accounting the transaction. Altering the Rate of Service Tax during entry for each & every transaction of this nature will be time consuming & some times may forget to alter the rate which leads to wrong calculation of Service Tax.

To assist the users to account the services on which service tax charged is lesser than the actual rate a provision has been provided to alter the Service Tax rate in the service Ledger.

To configure for Lower/higher rate od Tax for a service ledger press Alt+B or select B: Configure Tax Rate and press Enter to view Tax Rate Details Setup screen.

In Tax Rate Details Setup screen

1.    Retain the default details in Name of Ledger, Under and Category Details field.

2.    Set the option Set/Alter Tax Rate Details to Yes only to those ledger (s) to alter the tax rate details.

Quick Setup for Service Tax in Tally.ERP 9
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3.            In Set/Alter Tax Rate Details screen

·         In Category field select the Service Category for which the service tax rate to be altered

·         In Applicable From Date field enter the date as 1-4-2010

·         In Service Tax %  field enter tax rate applicable.

·         In Education Cess % and Secondary Education Cess % field specify the Cess Rate.

Quick Setup for Service Tax in Tally.ERP 9
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·         Press Enter to save Set/Alter Tax Rate Details

The completed Tax Rate Details Setup screen appears as shown

Quick Setup for Service Tax in Tally.ERP 9
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5. Q : Quit

To quit from Quick Setup- Service Tax screen press Alt+Q or select Q: Quit and press enter.

 
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