All the services purchased can be recorded in Purchase Voucher (Account Invoice Mode). In case of Non-Service Organisations where the services purchased are considered as expenses the same can be recorded in Journal Voucher.
As per Amendment in the CENVAT Credit (Third Amendment) Rules, 2011 Service Tax Input Credit against the Purchase Bills can be availed even if the payment is not made to the Service provider w.e.f 1-4-2011 (applicable only for the service bills raised after 1-4-2011). However if the payment is not made to the service provider within 3 months then, the Service tax credit utilised has to be reversed.
In Tally.ERP 9 the functionality of service purchases has been enhanced to adhere to the requirements.
Example: On 4-7-2012, ABC company purchased Advertising Services from Krypton Agency for Rs. 1,00,000 on which Service Tax is charged @ 12.36%.
Let us understand how to record purchase of services in Tally.ERP 9.
Set up
Ensure in F12: Purchase Invoice Configuration the following options are set to No
Use Common Ledger A/c for Item Allocation
Use Defaults for Bill Allocations
To create Purchase Voucher
Go to Gateway of Tally > Accounting Vouchers > F9: Purchase
In Accounting Voucher Creation screen, press Alt+I or click on I :Account Invoice if the Voucher is in Item invoice mode
Press F2 and change the date to 01-08-2012
In Party’s A/c Name field select the service provider e.g. Ram Agency
Under Particulars select the Service (purchases) Ledger e.g. Purchase- Advertising Services and press Enter to view Service Tax Details screen
In Service Tax Details screen
Type of Ref.: Select New Ref from the method of Adjustment. New Ref is selected for new Financial Transactions. Where as, Agst Ref is selected to set off the advance payments made.
Name: This field displays the Reference Number for the Service Tax calculation. The default Reference Number displayed, is a combination of abbreviation of Purchase, Voucher Number and Line Number. Example: Purc/1-1 which can be changed by the user. Service Input credits are tracked with these Reference Numbers.
Note: If the invoice no is mentioned in the Supplier Invoice No. field, then Tally.ERP 9 captures invoice number instead of voucher number in Reference Number displayed in Name field.
Type of Service: Based on the Type of Classification selected in the Service Provider, Type of Service will be defaulted (displayed). By default Input Credit is displayed and Tally.ERP 9 skips the field.
Note: In Type of Service field
1.Exempt is defaulted for the Type of Classification Exempt
2.Import is defaulted for the Type of Classification Import
3.Pure Agent is defaulted for the Type of Classification Pure Agent
4.Input Credit is defaulted for the Type of Classification set to Not Applicable
5.Tax on Service Received is to record the transportation services purchased from the Goods transport Operators (GTOs) and to calculate tax on Service Tax. The liability of tax on services purchased from the GTO is on the service receiver
The default Type of service can be overridden. Press Backspace to move to Type of Service field and select the applicable Type of service. The type of service selected in the voucher entry will determine the Type of service.
Category: Based on the service Category selected in the Purchase Ledger, category will be defaulted (displayed). By default Advertising Agency is displayed and Tally.ERP 9 skips the field.
Note: To override the default service category press F12: Configure and set the option Allow to override Service Category during entry to Yes.
Service Amount: In this field enter the Service Amount, where in you can ascertain Service Amount in the invoice issued by the service provider. On providing the service amount Service tax gets calculated. Enter Rs. 60,000
Amount (Incl. of Tax): In this field the cumulative (collective) amount of Service amount and Tax will be displayed in this field
Note: In cases where the invoice received from the service provider is inclusive of tax, you can enter the invoice amount in the Amount (Incl. of Tax) field. Tally.ERP 9 back calculates the amount to arrive at the Service amount and Tax portion. The service amount will be displayed in Service Amount field and Tax details against the Tax Head.
Tally.ERP 9 allows to alter the Tax Rate during entry. To alter the Tax Rate enable the option Allow Alteration of Tax Rate to Yes
In Service Amount field the Service Amount of Rs. 60,000 will be defaulted automatically.
Under Particulars select service tax ledger e.g. Service Tax @ 12%. Service Tax amount will be calculated and displayed automatically.
Under Particulars select education cess ledger e.g. Education Cess @ 2%. Education Cess amount will be calculated and displayed automatically.
Under Particulars select secondary education cess ledger e.g. Secondary Education Cess @ 1%. secondary Education Cess amount will be calculated and displayed automatically.
Enter the Bill-wise Details as shown below:
The completed service purchase voucher is displayed as shown:
Press Enter to Accept the Voucher.
Note: the above transaction can also be recorded in Journal Voucher.
As per the Amendment in the CENVAT Credit (Third Amendment) Rules, 2011 changes input credit can be availed against the Purchase Bill received from the Service Provider. On recording the Service purchase on or after 1-4-2011 the input credit details will be displayed in the input Credit summary report which can be utilised towards the Service tax payable.
To view the credit available on the service purchased on 1-8-2012
Go to Gateway of Tally > Display > Statutory Reports > Service Tax Reports > Input Credit > Summary
The Input Credit Summary report appears as shown
Report displays the invoice details, Party Name, Service Category, Bill Amount, Total Tax, Total Input Credit and Balance Input Credit.
Note: If the payment towards the purchase is not paid with in 3 months to the service provider, the Service input tax credit utilised has to be revered.
In Tally.ERP 9 to reverse the input credit utilised, record a Journal Voucher. In Journal Voucher a new flag - Reversal of Utilised Input Credit has been provided.