Service Tax in Tally
Service tax is one of the common taxes in India. Some of the service categories in India are
§ Advertising Agency
§ Beauty parlors
§ Consulting Engineer
§ Transport of Goods by air/road/rail
Now Let us take an example of a case where I am the business owner of a car motor servicing company. I offer services and at times I also take consultancy from a giant management consultancy provider named Delloitte
Now let us see how this can accounted for using Tally.
1) Open TallyERP.9 and then select your company, if you haven’t created it yet, then you may create a company in 4 minutes
Also select the respective state you are in. Once that is done enable the service tax, by pressing F11 and then F3.
Fill in the details of service tax registration etc.
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 Crores
2) Go to Quick Set up by pressing “K” and then go to Service tax by pressing “S”.
Press Service Ledgers and then create the ledgers as follows:-
Now go back ( by pressing Esc.) and then go to Tax Ledgers as shown :-
Then press Enter:-
Now press Esc. And go to the party ledgers and create the party ledgers as:-
Then go back and go to the Service tax Adjustments ledger:-
Then enable Yes:-
Personally Using Quick set up is one of the easiest methods to set up your ledgers especially when starting work on tally.
3) Now that we have our party ledgers and service ledgers ready, I am going to suggest a method where we can use classes( Named as Cess) so that the user does not have to enter the three tax ledgers every time
· Service Tax @10%
· Education Cess
· Sec Education Cess
So first we will create a purchase ledger with a class named Cess (to include the three different duties in the voucher).
Inside the class Cess:-
We can also create the sales voucher for our default sales as :-
Here also we give the name “Cess”( this can be any name as per your wish). Now press enter and :-
4) Now go to vouchers and go to purchase (F9):-
Select this consulting service purchase voucher and the class as Cess.
The screen view initially is
Now select party’s A/c Name as Delloitte consulting and then create an Item( Alt-C) named Consulting services Delloitte.
The Item master is shown as :-
Concept For advanced users only (Beginners may get confused):-
You might be wondering why I have taken up an item when this is a service, the simple reason is that using this as an item –we can use the class Cess and enable the automatic calculation of the 3 types of taxes. You can also view it in the service mode( by pressing the “As voucher mode”-(Ctrl-V).
But to cut efforts I would suggest the item mode. This mode automatically takes the default purchase ledger as we had specified the purchase ledger at the time of Class creation (Cess).
We see that the taxes are calculated automatically. Keep pressing enter and come back to the voucher as :-
5) Now to check the balance of input credit, you can go to Display Statutory Reports Service Tax reports Computation and :-
6) Now let us make a sales using the voucher we have created
Here we see the ledger as Service receiver ledger.
And we create an item named motor service, the item master looks like:-
And in the amount tab we give the amount that is being charged from the debtor, let us say the amount is Rs. 15000 . Now press enter and a new page is opened up as :-
Press enter and return back to the sales voucher.
Now save the voucher by pressing (Ctrl-A) or press enter repeatedly.
Now if you check the Service tax – credit details tax payables is not displayed because we haven’t received any payment from the ledger named service receiver ledger.
Now let us assume that we receive an amount of Rs. 10000 only where as the actual payment receivable is Rs. 16545.
So for that, go to Display Statements of Accounts Outstanding Receivables and then it displays Service Receiver Ledger as Rs. 16545.
Now go back and select the ledger “Service Receiver” and then press space bar to select the bill. Then press Alt-B for bill wise settlement.
Press 10,000 and then give the total amount as Rs. 10,000 and pass the voucher.
Then the voucher payments are shown as :-
Since the payment made is only 10,000 and the remaining amount of 6545 stands as receivable.
Pass this entry.
Now the outstanding shown is :-
However, Now let us also make the payment to Delloitte for its management consultancy services.
Go to Display Statements of Accounts Outstanding Ledger ->Delloitte Consulting
Press space bar and select the bill then press Alt-B for bill wise settlement
Now press enter and select against reference automatically and let us assume that we are making a payment of only Rs. 5000 now. So type(overwrite) the amount as 5000. The screen while selecting pending tax bills shows:-
And then :-
Then make the adjustment as :-
The above voucher also shows that an amount of 6030 stays as the credit amount that is payable by us.
Press enter and make the payment.
Now the pending amount shown from gate way of Tally is 6030.
Now let us make a service input credit adjustment.
Go to accounting vouchers(F7)
Input credit adjustment as shown.
The input credit is more than the service tax payable till date as the amount received is low.
Please analyse service tax computation carefully in this case to understand the service calculations.
Here we see that a balance of 96 is still available as the input credit.(1030-934).
Now to check the input credit details, go to service tax reports Input credit Summary
Now we see that our service tax payable is ZERO
And we see that it’s blank, the reason being that the payment has not been received completely from the debtor.
Let us receive the complete payment and see how much tax is to be paid.
Go to gateway of Tally and then type short codes ( D S O Ledger)
Select the service receiver ledger by pressing the space bar and then press Alt-B to make the receipt
And then press enter and automatically :-
Press enter and save the entry.
Now we see that we have a tax payable of 611 as computed above. But recall that we have an input credit of 96 and this can be adjusted against this 611(611-96=515)
Let us go to the journal voucher for this credit adjustment
Since the input credit is 96 and the tax payable in service [email protected]% ledger alone is 593, therefore we subtract 96 and make the credit adjustments as shown above.
Now we check the service tax payables:-
The total tax payable on 15000 was 1545 and input credit of 1030 was adjusted against it.
So now let us pay the remaining service tax(Rs.511) to the government.
Go to the payment voucher then press (Alt-S) for Stat_payment
Once the payment is made, you have to print the GAR 7 so press Alt-P before saving the voucher and then press back space to go to Print GAR -7 Challan and press YES.
The GAR 7 print out is ready for submission, as shown below:-
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There is a lot of changes in Services tax in Tally, so upgrade your software to release 3.3. of Tally.erp 9. you may upgrade your software by activating your Tally.net license online
To make best use of your software always buy original Tally only and be safe and secure.
* YOU WILL NEVER KNOW WHAT YOU ARE LOSING OUT IF YOU USE A PIRATED VERSION*