At the end of every tax period it is advisable to set off the output vat amount of output vat ledgers with Input VAT amount of input VAT ledgers created.
In case where the net output is in excess, the balance amount of VAT due is transferred to VAT Payable ledger. In case of for any tax period if input tax is in excess of output VAT, need to adjust input VAT only to the extent of output VAT liability and balance of ITC can remain in the respective ledgers.
To create a journal voucher for adjusting the output VAT against input VAT,
Go to Gateway of Tally > Accounting Vouchers > F7: Journal > Select Not Applicable from the Voucher Class List.
- Select the required Output VAT ledgers to be debited from the List of Ledger Accounts and enter the corresponding ledger balance amount for the given period in the Debit field. These ledgers are to be debited for adjusting the total output vat (for each rate) against input vat ledgers.
- Credit the required Input VAT ledgers and enter the amount that has to be set-off against the output vat and purchase tax ledgers that are debited.
- In case the aggregate of input vat ledgers is less than the debit values of output VAT values debited, transfer the balance amount to VAT Payable ledger by selecting it in the credit field. VAT Payable ledger can be grouped under Current Liabilities or Duties & Taxes with Type of Duty/Tax as Others or Current Liabilities.
- In case where the input VAT value is more than the output VAT, use the excess amount to the extent required for set-off. Here the additional ledger like VAT payable need not be used.
- Accept the voucher and then make a payment entry for the payable amount if any