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Refund of Service Tax Input Credit @ Tally.ERP9

Query

Is it possible to account the Refunds of Service Tax Input Credit claimed on the services purchased which are used for providing services exported?

Example: On 20-11-2010 ABC Company purchased Fashion Designer Services from Raman Creations for Rs. 4,00,000 by paying Service Tax @ 10.3%. Fashion Designer Services purchased towards the manufacture of garments which were exported to United States.

On 24-11-2010, ABC Company made payment of Rs. 4,41,200 to Raman Creations towards the service purchases

On 29-11-2010 after export of goods, ABC Company claimed the refund of service tax Rs. 41,200 paid on the input services purchased as on 15-11-2010 from Raman Creations, which are used for providing services exported.

Solution

Service Tax refund of service tax paid on input services can be claimed .

  • When the services received by an exporter and used for the services exported (in terms of Export of Service Rules 2005)
  • When the services received by an exporter and used for manufacture of goods exported.

Conditions for claiming the Refund of service tax paid on input services are

  • The refund shall be claimed by the exporter of the goods/services for the input services received and used by the exporter for export of goods/services
  • Claim can only in the form of refund of service tax paid on the specified services used for goods/services
  • To claim the refund the exporter should have actually paid the service tax on the input services

Now in Tally.ERP 9, you can record the Refund of Service Tax paid (Service Input Credit) on the services purchased which are used towards the Goods exported. To account refund of service Input Credit in Journal Voucher a new flag - Refund of Service Tax Input Credit has been provided.

To claim the refund of Service Tax Input Credit follow the given steps.

Step1: Record Service Purchase Transaction

Before accounting the purchase transaction, ensure party ledger, service purchase and tax ledgers are created.

To record Service Purchase Ledger

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

Record Service Purchase Transaction in tally erp 9

Step 2: Payment to Service Provider

To record payment to service provider

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

record payment to service provider in tally erp 9

Step 3: Create Current Asset Ledger

To create Current Asset ledger

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

  • In Name field enter ledger name - Refund of Input Credit
  • Group the ledger Under - Current Assets
  • In Type of Duty/Tax field select Not Applicable
  • Set Inventory values are affected to No
  • Press Enter to save the ledger creation.

Step 4: Record a Journal Voucher (to account refund of Service tax input credit)

To account the refund of service input credit

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

1. In Change Voucher Type screen in Class field select Service Tax Adjustments from Voucher Class List

2. Press F2 and change the date to 29-11-2010

3. In Used for field select the flag Refund of Service Tax Input Credit

Refund of Service Tax Input Credit in Tally.ERP 9

4. In Debit filed select the ledger created under Current Assets - Refund of Input Credit

5. In Debit Amount field specify the amount claimed as refund Rs. 41,200

Note: ABC Company is claiming refund of input credit of Rs. 41,200 on the services purchased from Aman Creations.

6. In Credit field select Service Tax ledger - Service Tax @ 10% and press enter to view Service Tax Details screen

7. In Service Tax Details screen

  • In Type of Ref field select Agst Ref as the Method of Adjustment
  • In Name field select the service tax bill - Purc/2-1 against which the service input credit refund is claimed

Note: The Tax bill references will be displayed in Pending Tax Bills only when the payment is made to the Service Provider.

  • On selection of service tax bill Category and Amount will be defaulted automatically. Accept the default details.
Service Tax Details in Tally.ERP 9

Note: If you are claiming refund of Partial service input credit then in Amount field specify the amount which is claimed as refund.

8. In Credit field select Education Cess ledger - Education Cess @ 2% and in Service Tax Details screen select the tax bill Purc/2-1 and accept the default details displayed.

9. In Credit field select Education Cess ledger - Secondary Education Cess @ 1% and in Service Tax Details screen select the tax bill Purc/2-1 and accept the default details displayed.

The completed journal voucher is displayed as shown

Journal Voucher of Service Tax Adjustment in Tally.ERP 9

10. Press Enter to save.
 
 
 
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