Accounting Service Tax on total transaction amount including TDS

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Example: On 5-8-2012 ABC Company Purchased Auditing Services for Rs. 73,034 (inclusive of service tax) from Prakash Associates. On this payment TDS deducted to arrive at the Net amount payable.

To record the above transaction

1. Create Expense Ledger

2. Create TDS Ledger

2. Alter the Service Tax Ledger (to enable TDS)

3. Create the Service Provider Ledger

4. Record the transaction in Purchase Voucher

1. Create Expense Ledger

To create the Expense Ledger

Go to Gateway of Tally > Accounting Info. > Ledger > Create

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2. Create TDS Ledger

Go to Gateway of Tally > Accounting Info. > Ledger > Create

3. Alter the Service Tax Ledger (to enable TDS)

TDS is Deducted even on Service Tax amount charged. To calculate TDS on Service Tax amount.

To alter the Service Tax Ledger

Go to Gateway of Tally > Accounting Info. > Ledgers > Alter > select Service Tax @ 12%

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Note: Similarly alter Education Cess and Secondary Education Cess Ledgers to activate TDS option.

4. Create the Service Provider Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

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5. Record the transaction in Purchase Voucher

To record the Purchase Voucher

Go to Gateway of Tally > Accounting Vouchers > F9: Purchase

  1. Press F2 and change the date to 05-08-2012

  2. In Party's A/c Name field select Prakash Associates

  3. Under Particulars select Auditing Charges Ledger and press Enter to view Service Tax Details screen

  4. In Service Tax Details screen

  5. In Type of Ref field select New Ref

  6. In Name field select the default tax reference Purc/8-1

  7. In Type of Service field Input Credit will be defaulted

  8. In Category field the Service Category selected in the Expense Ledger will be defaulted. Tally.ERP 9 displays Taxable Service in this field

  9. Amount (Incl. of Tax): In this field specify the cumulative (collective) amount of Service amount and Tax Rs. 73, 034. After specifying the Inclusive of service tax amount, service tax of Rs. 65,000 and tax bifurcation will be displayed automatically

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  1. Press Enter to accept the Service Tax Details screen

  2. Service Amount of Rs. 65000 will be displayed in Amount field of the Voucher Creation screen

  3. Press Enter to view TDS Nature of Payment Details screen, in this screen by default the TDS Nature of payment selected in the Expense Ledger will be displayed. Accept the default screen

Note: The TDS Nature of Payment Details screen will display only when the option Allow Alteration of TDS Nature of Payment in Expenses is set to Yes in F12: Configuration.

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  1. In the Voucher Creation screen, select Service  Tax Ledger e.g. Service Tax @ 12%. Service Tax amount will be calculated and displayed automatically

  2. From Amount field press Enter to view TDS Nature of Payment Details screen, in this screen by default the TDS Nature of Payment selected in the Service Tax Ledger will be displayed. Accept the default screen

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Note: Selection of TDS Nature of Payment is must as Tax to be deducted at Source even on the Service Tax and Cess portion.

  1. Select Education Cess Ledger e.g. Education Cess @ 2%. Education Cess amount will be calculated and displayed automatically

  2. From Amount field press enter to view TDS Nature of Payment Details screen, in this screen by default the TDS Nature of Payment selected in the Expense Ledger will be displayed. Accept the default screen

  3. Select Secondary Education Cess Ledger e.g. Secondary Education Cess @ 1%. Secondary Education Cess amount will be calculated and displayed automatically

  4. From Amount field press enter to view TDS Nature of Payment Details screen, in this screen by default the TDS Nature of payment selected in the Expense ledger will be displayed. Accept the default screen

  5. Under Particulars, select TDS ledger - TDS- Professional Charges to view the TDS Details screen. TDS Details screen displays the reference, bill name, Nature of payment Assessable Value (Service Amount + Service Tax Amount) with the TDS Amount

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  1. TDS Deducted will be displayed with Negative sign.

  2. Provide the Bill Details as shown

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  1. On accepting the Bill-wise Details screen Tally.ERP 9 displays Service Tax Realisation for TDS Deducted Amount screen

  2. If you want to consider the TDS deducted amount as the Realised amount for Service Tax Bill, you can select the Tax Bill. Based on the Tax Bill selected, the Type of Service, Category and TDS portion of Rs. 7,303 which is considered as realised will be displayed

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Note: In this case ABC Company has considered TDS Deducted as the realised amount towards the Service Bill, hence they have selected the category and Service tax has calculated on the realised amount.

 

If you don't want to consider the TDS amount as realised, then in Service Tax Realisation for TDS Deducted Amount screen select Not Applicable in Category field.

The completed Purchase Voucher is displayed as shown:

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  1. Press Enter to Accept and save.

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