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How to Adjust Service Input Credit towards Excise Duty?  (Knowledgebase) @ Tally.ERP9

Query

How to adjust service input credit towards excise Duty?

 

Example: ABC Company has Excise Duty liability of Rs. 10,300 on the sale of 25000 Liters of Aqua Pure – 1 ltr @ Rs.20

  •  Basic Excise Duty of Rs. 50,000
  •  Education Cess of Rs. 1,000
  • Secondary Education Cess of Rs. 500

Service Input credit of Rs. 41,200 on the purchase of Advertising services for Rs. 4,00,000

  • Service Tax of Rs. 40,000
  • Education Cess of Rs. 800
  •  Secondary Education cess of Rs. 400

Wants to adjust the Service input credit towards the excise duty to arrive at the Net duty payable to the government.

 

To adjust the Service Input Credit towards the excise duties follow the given procedure

 

Step 1: Create Masters

 

1. Service Tax Party Ledger

Ledger

Under

Is Service Provider/Receiver

Set/Alter Service tax Details

Creative Ad Agency

Sundry Creditor

Yes

Yes

Provide Service tax Registration Number and Date of Registration

In Type of Classification select Not Applicable

 

2. Excise Party Ledger

Ledger

Under

Set/Alter Excise Details

Mega Dealers

Sundry Debtors

Yes

 

 3. Excise Duty ledgers

Ledger

Under

Type of Duty/Tax

Duty Head

Percentage of Calculation

Basic Excise Duty @ 10%

Duties & Taxes

Excise

Basic Excise Duty

10%

Education Cess @ 2%

Duties & Taxes

Excise

Education Cess

2%

Secondary Education Cess @ 1%

Duties & Taxes

Excise

Secondary Education Cess

1%

 

4. Service Tax Ledgers

Ledger

Under

Type of Duty/Tax

Tax Head

Service Tax

Duties & Taxes

Service Tax

Service Tax

Education Cess

Duties & Taxes

Service Tax

Education Cess

Secondary Education Cess

Duties & Taxes

Service Tax

Secondary Education Cess

 

5. Service Purchase Ledger

Ledger

Under

Is Service Tax Applicable

Default Service Category

Purchase-Advertisement Service  

Purchase Accounts

Yes

Advertising Agency

 

6. Goods Sales Ledger

Ledger

Under

Inventory values are affected

Used in VAT Returns

VAT/Tax Class

Sales @ 5%

Sales Accounts

Yes

Yes

Sales @ 5%

 

7. VAT Ledger

Ledger

Under

Type of Duty/Tax

VAT/Tax Class

Input VAT @ 5%

Duties & Taxes

VAT

Input VAT @ 5%

 

8. Tariff Classification

Tariff Classification

Used for

HSN Code

Water

Excise

22011010

 

9. Excise Stock Item

Ledger

Under

Is Service Tax Applicable

AquaPure-1 Ltr

Primary

Kgs

Note: Enable  Excise Details and provide duty details BED-10%, EC- 2% and SEC -1%

 

Step 2: Record an Excise Sales Voucher

To record Excise Sales, Go to Gateway of Tally > Accounting Vouchers > F8: Sales (select Excise-Sales)

Record the Excise Sales voucher as shown below

Record an Excise Sales Voucher in Tally.ERP9

Step 3: Record a Service Purchase Voucher

To record the service purchase voucher

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

1.      In Party A/c Name field select Creative Ad Agency

2.      Under Particulars select Purchase- Advertisement Service ledger and press enter to view Service Tax Details Screen

3.      In Service Tax Details screen

 
  • In Type of Ref field select New Ref
  • In Name field retain the default tax bill references – Purc/1-1
  • Type of Service  Input Credit will be defaulted based on the Type of Classification specified in the service provider ledger. 
  • Category  Advertising Agency will be defaulted based on the service category selected in the service purchase ledger.
  • Enter Rs. 4,00,000 in Service Amount field. Based on the amount specified in service amount field service tax and cess amount gets calculated and the Amount (Incl. of tax) will be displayed automatically.
Service Tax Details for Service Purchase Voucher in Tally.ERP9

 4.      In Amount filed the Service Amount of Rs. 4,00,000 will be defaulted automatically.

5.      Under Particulars select service tax ledger e.g. Service Tax. Service Tax amount will be displayed automatically.

6.      Under Particulars select education cess ledger e.g. Education Cess. Education Cess amount will be displayed automatically.

7.      Under Particulars select secondary education cess ledger e.g. Secondary Education Cess. Secondary Education Cess amount will be displayed automatically.

8.      Enter the Bill Details

Completed Service Purchase Voucher is displayed as shown

Record a Service Purchase Voucher in Tally.ERP9

Step 4: Create voucher Class in Journal Voucher

To create voucher class

Go to Gateway of Tally > Accounts Info. > Voucher Types > Alter > select Journal

1. Tab Down to Name of Class field and enter the class name as CENVAT Credit Adjustment

2. In Voucher Type Class screen

  • Set the option Use Class for Excise/CENVAT Adjustments to Yes
Create voucher Class in Journal Voucher in Tally.ERP9

3. Save Voucher Type Class and Voucher Type Alteration screen.

Step 5: Record Payment Voucher

Note: Service Input Credit will be available for credit adjustment only when the payment is made to the service provider

learning tally erp 9

Step 6: Record Journal Voucher (to adjust Service Input Credit towards Duty liability)

To record Journal Voucher

 

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

  1. In Change Voucher Type screen select CENVAT Credit Adjustment in Class field
Record Journal Voucher (to adjust Service Input Credit towards Duty liability) in Tally.ERP9
  1. In Used for Field select CENVAT Adjustment
  2. Select the Excise Unit, for which the excise Duty to be adjusted against service Input credit. E.g. ABC Company
  3. In Debit field select Basic Excise Duty @ 10% ledger and press enter to view Excise Duty Allocation screen
  4. In Excise Duty Allocation screen
  • In Type of Ref select Agst Ref and in Name field select the Tax bill towards which the Service Credit to be adjusted. Select ABC/1/09-10ABC/2/09-10 dated 12-4-2010
  • In Amount field the total duty amount will be displayed (i.e. 50,000). Enter 40,000 in amount field as ABC Company has service tax credit of Rs. 40000 which is adjusted towards the Excise duty.
Record Journal Voucher (to adjust Service Input Credit towards Duty liability) in Tally.ERP9
  1. In Debit field select Education Cess @ 2% ledger and press enter to view Excise Duty Allocation screen
  2. In Excise Duty Allocation screen
  •  In Type of Ref select Agst Ref and in Name field select the Tax bill towards which the Service Credit to be adjusted. Select ABC/1/09-10ABC/2/09-10 dated 12-4-2010
  • In Amount field the total duty amount will be displayed (i.e. 1,000). Enter 800 in amount field as ABC Company has education cess credit of Rs. 800 which is adjusted towards the education cess liability on the sale of goods.
  1. In Debit field select Secondary Education Cess @ 1% ledger and press enter to view Excise Duty Allocation screen
  2. In Excise Duty Allocation screen
  •  In Type of Ref select Agst Ref and in Name field select the Tax bill towards which the Service Credit to be adjusted. Select ABC/1/09-10ABC/2/09-10 dated 12-4-2010 
  • In Amount field the total duty amount will be displayed (i.e. 500). Enter 400 in amount field as ABC Company has secondary education cess credit of Rs. 400 which is adjusted towards the secondary education cess liability on the sale of goods.
  1. In Credit field select Service Tax ledger and press enter to view Service Tax Details screen
  2. In Service Tax Details screen
  •  In Type of Ref select Agst Ref and in Name field select the Tax bill which is adjusted towards the duty liability. Select Purc/1-1 dated 15-4-2010
  • Category and Amount details will be displayed automatically. As we are adjusting the entire credit available i.e. Rs. 40,000 towards duty liability accept the default amount displayed.
Record Journal Voucher (to adjust Service Input Credit towards Duty liability) in Tally.ERP9
  1. In Credit field select Education Cess ledger and press enter to view Service Tax Details screen
  2. In Service Tax Details screen
  •  In Type of Ref select Agst Ref and in Name field select the Tax bill which is adjusted towards the duty liability. Select Purc/1-1 dated 15-4-2010
  • Category and Amount details will be displayed automatically. As we are adjusting the entire credit available i.e. Rs. 800 towards cess liability accept the default amount displayed.
  1. In Credit field select Secondary Education Cess ledger and press enter to view Service Tax Details screen
  2. In Service Tax Details screen
  • In Type of Ref select Agst Ref and in Name field select the Tax bill which is adjusted towards the duty liability. Select Purc/1-1 dated 15-4-2010 
  • Category and Amount details will be displayed automatically. As we are adjusting the entire credit available i.e. Rs. 400 towards duty liability accept the default amount displayed.
  1. Set the option Provide Details to YES to provide the Adjustment details. In Adjustment Details screen specify the period for which the adjustment has been made.
Record Journal Voucher (to adjust Service Input Credit towards Duty liability) in Tally.ERP9
The Completed CENVAT Adjustment Journal Voucher is displayed as shown
CENVAT Adjustment Journal Voucher  in Tally.ERP9
Note: On adjusting the Service Input Credit towards the excise duty liability the service tax ledger balance is displayed as ZERO
 
 
 
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