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FAQ-2 ( Service Tax):

How to Calculate Service Tax for GTA (Goods Transport Operators) transaction in Tally.ERP 9 ?

Query

How to Calculate Service Tax for GTA (Goods Transport Operators) transaction in Tally.ERP 9?

Solution :

When a Goods Transport Agency (GTA) is hired by you for transporting raw material or finished goods or any other purpose relevant to business, liability to pay the service tax on the transport service received will be on the service receiver.

Service Input Credit on Services Purchased

  • If the Service Receiver pays the Service tax on the gross amount of GTA services received. He will be eligible to avail the input credit of the tax paid on the services purchased.
  • If the Service provider opts for 75% abatement and pays the service tax on 25% of the Gross Amount GTA services received, then No Credit will be available.


In Tally.ERP 9 GTA Transaction can be recorded as shown

Example: On 15-4-2010 ABC Company purchased transportation services from Sai Goods Transporter for Rs. 50,000 and made the payment on the same day and raised the tax liability. On 5-5-2010 paid the tax on transportation services received to the government.

Step 1: Ledger Creation

1. Create Freight Charges under Indirect Expenses > Set the option Is Service Tax Applicable to Yes > In Default Service Category field select Transport of Goods by Road

2. Sai Goods Transporter under Sundry Creditors > set the option Is Service Provider / Receiver to Yes > Enable Set/Alter Service Tax Details to Yes. In Service Tax Details screen select Type of Classification as Tax On Service Received. Enter the notification Number if any.

 

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Note: Registration number and date details are not required for the operator who is providing the transportation services

3. Service Tax - 10% under Duties and Taxes, select Type Duty/Tax as Service Tax and Service Tax as Tax Head

4. Education Cess - 2% under Duties and Taxes, select Type Duty/Tax as Service Tax and Education Cess as Tax Head

5. Secondary Education Cess - 1% under Duties and Taxes, select Type Duty/Tax as Service Tax and Secondary Education Cess as Tax Head

Step 2:  Record a Purchase voucher (to account purchase of service)

Record the transaction in account invoice mode

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

1. In Party Account Name field select Sai Goods Transporter

2. Under Particulars select Freight Charges 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 by default the tax bill reference number will be displayed which can be changed
  • In Type of Service field Tax on Service Received will be defaulted based on the Type of Classification selected in the party ledger
  • For Type of Service - Tax on Service Received, Transport of Goods by Road will be defaulted.

Tally.ERP 9 allows altering the Abatement percentage and notification Number. To alter abatement rate during entry press F12 from Service Tax Details screen. In Service Tax Configuration screen set the option Allow Alteration of Abatement Rate during entry to Yes

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Note: Tally.ERP 9 allows to enable the option Allow alteration of Abatement Rate during Entry only when the option Allow to Override Service Category during entry is set to Yesas the abatement is allowed for the service categories and Abatement Details screen will be displayed only when the cursor moves to Category field.

ABC Company is paying service tax on gross amount of GTA services received (not taking 75% abatement) as it wants to avail full credit on the tax paid on the services received. To alter the abatement rate press back space from Service Amount field, cursor will move to category field and press enter to view Abatement Details screen, by default 75% will be displayed in Abatement Rate field set it to "Zero". Abatement rate can also be altered from the

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Note: If you are not availing credit and paying service tax on 25% of the gross amount of GTA services received then can accept the default percentage.

  • In Service Amount field enter the service bill amount Rs. 50,000
  • In Amount (Incl. of Tax) field amount specified in the service Amount field will be taken as Amount inclusive of tax, as on transport services the service tax liability is on the service receiver and not on the provider. So service Tax will not get calculated.

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4. Enter the Bill-wise Details as shown

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Completed Purchase Voucher is shown as below

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Press Enter to save.

Step 3: Record a Payment Voucher (to account payment to the service provider)

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

1. In Account field select the Bank/Cash ledger through which the payment is made

2. In Particulars select party ledger -Sai Goods Transporter. In the Service Tax Details screen select the Tax Bill of the purchase where the Transport purchases are accounted

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