Payment of Tax

At the end of every tax period it is advisable to set off the output tax with Input tax. The excess of output tax has to be paid to the Department. For any tax period if input tax is in excess of output tax, the input tax needs to be adjusted only to the extent of output tax liability and balance of tax credit can remain in the respective ledgers.

The Input Tax can be adjusted towards output tax using:

OR

Scenario 1: Offsetting Dues in Journal & Payment of Tax

Offsetting Dues by Adjusting Input VAT Against Output Tax

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

To display the Dr and Cr instead of By and To in Journal voucher, press F12: Configure and set Use Cr/Dr instead of To/By during entry to Yes.

  1. Debit Output VAT and Output NHIL ledgers and enter the corresponding ledger balances to nullify the liability

  2. Credit the Input VAT, Input VAT on Imports and Input NHIL ledger and enter the amount of credit available for adjusting against output VAT

  3. Credit the VAT Payable ledger grouped under Current Liabilities. The balance amount will be displayed automatically in credit field

  1. Press Y or Enter to accept and save.

Payment of Tax

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

Press F12: Configure and set Use Single Entry mode for Pymt/Rcpt/Contra to Yes

In the Payment voucher screen,

  1. Click the Stat Payment button or press Alt + S to display the Statutory Payment sub-screen.

  2. In Statutory Payment sub-screen, provide the details given below:

  3. Type of Duty/Tax: Select VAT as the payment is being made towards VAT dues.

  4. Auto Fill Statutory Payment: Set it to No as the input tax is already adjusted towards output tax and the balance amount is transferred to VAT Payable ledger.

  5. In the Payment Voucher, select the Bank ledger in Account field. (use Crtl+A key combination and create a bank ledger grouped under Bank Accounts. Enter the opening balance if any).

  6. Under Particulars, select the VAT Payable ledger and enter the corresponding ledger balance.

  7. Set Provide Details to Yes to display the VAT Payment Details screen.

  1. In the VAT Payment Details screen enter the details pertaining to period of return, date on which amount is deposited, name of the bank and the cheque number.

  1. Press Enter to accept the VAT Payment Details screen.

  2. In the Bank Allocations screen, enter the Favouring Name of the person or organisations in whose favour the cheque is being issued, select the transaction type as per requirement (for e.g., Cheque), enter the instrument number with date and Cross Instrument Using details

 

  1. Accept the payment voucher.

Scenario 2: Offsetting Dues & Tax Payment in Payment Voucher

To create a VAT payment voucher,

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

Press F12: Configure button and ensure that Use Single Entry mode for Pymt/Rcpt/Contra is set to Yes

In the Payment voucher screen,

  1. Click the Stat Payment button or press Alt + S to display the Statutory Payment sub-screen.

  2. In Statutory Payment sub-screen, provide the details given below:

  3. Type of Duty/Tax: Select VAT as the payment is being made towards VAT dues.

  4. Auto Fill Statutory Payment: Set it to Yes to automate display of tax payable amount.

  5. Adjust Input VAT for Payment: This field gets displayed only when - Auto Fill Statutory Payment is enabled. On setting this field to Yes, the tax payable amount gets calculated by offsetting output tax against the available tax credit.

  6. Period From: Enter the return period in From and To fields.

The tax payable is auto-calculated and displayed in payment voucher on:

(i) Paying only the output VAT amount using Statutory Payment button by setting Auto Fill Statutory Payment to Yes and Adjust Input VAT for Payment to No

(ii) Setting options - Auto Fill Statutory Payment and Adjust Input VAT for Payment to Yes when there is balance amount remaining after offsetting tax credit.

  1. In the Payment Voucher, select the Bank ledger in Account field (use Crtl+A key combination and create a bank ledger grouped under Bank Accounts).

  2. In the Payment Voucher, the output and Input tax amount will be automatically set-off and the tax payable amount gets calculated and displayed. Select the Bank ledger in Account field.

  3. On using Stat Payment button, the Provide Details option is displayed.

  4. Set Provide Details to Yes to display the VAT Payment Details screen.

  1. In the VAT Payment Details screen, enter the payment details.

  1. Press Enter to accept the VAT Payment Details screen.

  2. In the Bank Allocations screen, enter the name in whose favour the cheque is being issued under Favouring Name. Enter the Cheque number and Cross Instrument Using details

  1. Press Y or Enter to accept the payment voucher.