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Claiming ITC on Capital Goods @ Tally.ERP9

Under VAT laws, the Input Tax Credit is allowed on capital goods from the date of its commercial production. The extent of credit is at the discretion of the Assessing Officer and is deferred over 12 months.

Consider the following transaction:

 

On 1-6-2016, TallyERP9Book.Com purchased a 'Laser Line Printer' at Rs. 15,00,000 + VAT @ 4% from NeXT Engineering. On 2-6-2016 the Tax authorities allowed a tax credit of Rs. 30000 to be set-off in 12 monthly installments.

Setup :

 

In the F11: Features (Accounting Features) set:

 

        Maintain Bill-wise Details to Yes.

        for Non-trading A/cs also (under Maintain Bill-wise Details.) to Yes.

 

 

Create the following ledgers:

 

i. Fixed Asset Ledger

 

Name

Under

Maintain balances bill-by-bill

Inventory Values are affected

Used in VAT Returns

Laser Line Printer

Fixed Assets

No

No

No

 

 

ii. Current Assets Ledger

 

Name

Under

Maintain balances bill-by-bill

Inventory Values are affected

Tax Paid on Capital Goods

Sundry Debtor

Yes

No

 

iii. Tax Ledger

Name

Under

Type of

Duty/Tax

VAT/Tax Class

Maintain balances bill-by-bill

Inventory Values are affected

Input VAT on

Capital Goods

Duties & Taxes

VAT

Purchases - Capi- tal Goods @ 4%

No

No

 


[Fig-40]

iv. Party Ledger

 

Name

Under

Maintain balances bill-by-bill

Inventory Values are affected

Sweta Engineering

Sundry Creditors

Yes

No

 

Step1: Create Purchase Voucher

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

 

1. Press Ctrl+V if the screen appears in the Invoice mode.

2. Date: 1-6-2016.

3. Credit Sweta Engineering: Rs. 15,60,000.

   4. Debit Laser Line Printer : Rs. 15,60,000

(If you don't find this ledger account in the drop down list, press F12: Configure and set the feature Allow Expenses/Fixed Assets in Purchase Vouchers to Yes).

[Fig-39]

The completed Purchase Voucher appears as shown below :


[Fig-41]
5. Press Y or Enter to accept the screen
 

Step 2: Create Journal Voucher
(to record the installment amount to be claimed as input credit)

 

1. Go to Journal voucher.

2. Date: 2-6-2016.

3. Debit Tax paid on Capital Goods: Rs. 30,000 (amount allowed as credit by the tax authorities).

4. In the Bill-wise Details screen,

        Select New Ref under Type of Ref,

        Installment Number under Name

        Enter Rs. 2,500 (i.e. 30,000/12) under Amount.

    5. Similarly, create 12 new references for the monthly installments.

    6. Credit Laser Marking M/c: Rs. 30000

The completed Journal Voucher appears as shown below:


[Fig-42]
7. Press Y or Enter to accept the screen.

Step 3: Journal entry
(for claiming the installment of credit)

 

Setup :

 

Create the Voucher class for the journal entry.

 

Go to Gateway of Tally > Accounts Info. > Voucher type > Alter > Select Journal.

 

        Most of the fields are already completed as the voucher type is in the alteration mode.  Hence tab down to the field Name of Class.

 

  ‡                    Enter VAT Adjustment Class under the Name of Class field and press Enter. In the voucher type class screen, set Use Class for VAT Adjustments to Yes.

[Fig-43]

        As mentioned before, you will need to do this if the Journal entry is to be considered in VAT Computation.

 

                    Press Enter and return to the Voucher class screen and save it.
 

Create Journal Voucher

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

 

1. Select VAT Adjustment class.

2. Press F2 and change the date to 30-6-09.

3. Debit Input VAT on Capital Goods.

4. Enter Purchases-Capital Goods @ 4% and 1560000 respectively, in the screen prompting for the VAT/ Tax Class and Assessable value.

5. Return to the voucher screen and enter 2500 in the Amount column.

6. Credit Tax Paid on Capital Goods: Rs. 2500.

7. In the Bill-wise details, select Agst-Ref in Type of Ref and 1 as Name of Reference. The amount will appear automatically. (Ensure that Show Table of Bill Details for Selection is set to Yes in the F12: Voucher Configuration).

[Fig-44]
8. Type the narration and press Y or Enter to accept the screen
 
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1- Enabling Value Added Tax (VAT)

 

2- Creating MASTERS affected by VAT

The ledgers that are affected by VAT are:

‡       Purchase Ledger
‡       Sales Ledger
‡       Input VAT Ledger & Output VAT Ledger
‡       Party Ledger
‡       Stock Items      

 

3- Creating Purchase Voucher without Inventory

On 1-6-2015, TallyERP9Book.Com purchased from Fasion Zone, Bangalore, Philips Lamps 20 nos at Rs. 300 each & Philips lamps 30 nos at Rs. 500 each. (Input VAT - 840.)

 

4- Creating Purchase Invoice with default VAT Class

On 2-6-2015, TallyERP9Book.Com purchased from Fashion Zone Bangalore, Philips Lamps 30 Nos. at Rs. 300 each. VAT @ 4% was charged additionally.

 

5- Creating Purchase Invoice with Selection of VAT Class during Entry

On 2-6-2015, TallyERP9Book.Com purchased from Fashion Zone Bangalore, Philips lamps 10 Nos. at Rs. 300 each. VAT @ 4% was charged additionally.

 

6- Creating Purchase Invoice with Multiple VAT Rates

On 2-6-2015, TallyERP9Book.Com purchased the following lamps from Fashion Zone

 

Item

Quantity

Rate

VAT %

Handing Lamps

15 Nos

100

12.5

Bajaj Lamp

5 Nos

150

4

 

 

7- Creating Sales Voucher without Inventory

On 2-6-2015, TallyERP9Book.Com sold to Emami Papers Ltd., Bangalore, Philips Lamps 10 Nos. at Rs.350 each. VAT @ 4% was charged additionally.

 

8- Creating Sales Invoice with default VAT Class

On 2-6-2015, TallyERP9Book.Com sold to Hari Plast P Ltd., Bangalore, Philips Lamps 8 Nos. at Rs. 350 each and Philips lamps 5 Nos. at Rs. 550 each. VAT @ 4% was charged additionally

 

9- Printing Sales Invoice

 

10- Creating Sales Invoice with Selection of VAT Class during Entry

On 1-1-2016, TallyERP9Book.Com sold to Emami Papers Ltd., Bangalore, Philips lamps 3 Nos. at Rs. 550 each. VAT @ 4% was charged additionally.

 

11- Creating Sales Invoice with Multiple VAT Rates

TallyERP9Book.Com sells the following lamps to Hari Plast P Ltd. on 1-1-2016.

 

Sales Item

Quantity

Rate

VAT %

Hanging Lamp

10 Nos

150

12.5

Wiprow Lamp

5 Nos

150

4

You can use multiple ledgers pre-defined with a different VAT rate, or choose to select each rate at the time of voucher entry.

 

12- Creating Sales Invoice using Voucher Class

On 1-1-2016, TallyERP9Book.Com sold 1 Wiprow Lamp at Rs. 350 to Emami Papers Ltd.. The goods are taxable @ 4% VAT.

 

13- Sales Returns

On 2-1-2016, Hari Plast P Ltd. returned 1 No. Wiprow Lamp to TallyERP9Book.Com.

 

14- Purchase Returns

TallyERP9Book.Com returns 1 No. Philips Lamps to Fashion Zone from the earlier purchases made from them.

 

15- Display VAT Computation Report

 

16- Rate Differences in Purchases

On 1-1-2016, Fashion Zone allowed a rate difference on lamps purchased by TallyERP9Book.Com for the stock available at Rs. 50. VAT @ 4% was charged additionally.

 

17- Rate Differences in Sales

TallyERP9Book.Com allowed a discount to Hari Plast P Ltd. on 2-1-2016 for 8 nos. of Wiprow Lamps at Rs.50. VAT @ 4% was charged additionally.

 

18- Inter-state Purchases

Inter-state Purchases attract Central Sales Tax (CST), which is not set-off against Output VAT on sales within the state or Output CST in inter-state sales. The CST paid is treated as a part of pro- curement cost.

 

Create the following purchase voucher for the Inter-state Purchase transaction

 

Date

Party

Item

Quantity

Rate

Tax

2-1-2016

Swayam  Enterprises

(Delhi)

Philips Lamps

50 Nos

200

CST 4%

 

19- Inter-state Sales

In the case of Inter-state Sales, Input VAT can be adjusted against Output CST. Place the Output CST Ledger under the group – Duties & Taxes and classify as CST for auto computation.

 

Create the following Sales voucher for the Inter-state Sales transaction

 

Date

Party

Item

Quantity

Rate

Tax

2-1-2016

Next Computer

Philips Lamps

25 Nos

350

CST 4%

 

 

20- Exempted Purchases

Consider the following transaction of TallyERP9Book.Com:

 

Date

Party

Books

Quantity

Rate

2-1-2016

Swayam  Book Depot

Tally ERP 9 Accounting Book

Income Tax Management Book

8 Nos

25 Nos

450

50

 

 

21- Exempted Sales

Consider the following sales transaction of TallyERP9Book.Com.

 

Date

Party

Books

Quantity

Rate

2-1-2016

Gayatri Associates

Basumati Rice-5Kg. Bag

5 Nos

500

 

22- Purchases from Unregistered Dealers

Consider the following transaction:

 

On 01-5-2016:  TallyERP9Book.Com purchased Philips Lamps, 10 nos. at Rs.150 each from an unregistered dealer Swayam Travels
 

22- Purchases from Unregistered Dealers

Consider the following transaction:

 

On 01-5-2016:  TallyERP9Book.Com purchased Philips Lamps, 10 nos. at Rs.150 each from an unregistered dealer Swayam Travels
 

23- Claiming ITC on Capital Goods

Consider the following transaction:

 

On 1-6-2016, TallyERP9Book.Com purchased aLaser Line Printer” at Rs. 15,00,000 + VAT @ 4% from NeXT Engineering. On 2-6-2016 the Tax authorities allowed a tax credit of Rs. 30000 to be set-off in 12 monthly installments.
 

24- Inter-State Branch Transfers

Inter-state Branch transfers do not attract any tax. The Input Credit on stocks transferred outside the state is allowed only to the manufacturers. However, to put stock transfers and inter-state trade broadly on the same competitive level, 4% of the Input Credit on stock transfer is disallowed.

Branch Transfer transactions can be both (i) Transfer Inwards and (ii) Transfer Outwards. Tally.ERP 9 provides specific VAT classes for these transactions.
Branch Transfer Outwards : On 1-6-2010 a local purchase was made – 10 Wiprow Lamps were purchased at Rs. 150 each from Fashion Zone and Input VAT of 12.5% was paid on the items. These goods were transferred to a branch outside the state i.e. to the Mumbai Branch
Adjustment of ITC on Branch Transfers : Input Credit on stocks transferred outside the state is allowed for manufacturers, except for 4% credit, which is disallowed. The disallowed amount has to be transferred to either the Purchase Accounts or into a separate ledger under Direct Expenses.
Branch Transfer Inwards : On 2-7-2016 consider the transfer of 5 Philips Lamps @ Rs. 300 per No. from TallyERP9Book.Com - Hyderabad
 
 
Company Information @ Tally.ERP9
Group & Ledger

Introduction
1. THE GROUP
2. THE LEDGER
3. VOUCHERS TYPES

Advanced Inventory / Stock
Meaning
Order Processing
Re-Order Levels
Tracking Numbers
Batch-wise Details
Additional Cost Details
Bill of Materials (BOM)
Price Lists and Price Levels
Stock Valuation
Zero Valued Entries
Inventory Ageing Report
Actual and Billed Quantities
Advanced Usage of Vouchers
Maintain Bill-wise Details
Cost Center and Cost Category
Interest Calculation
Reversing Journals
Post-Dated Voucher
Memo (Memorandum) Voucher
Optional Voucher
Using Tracking Number
 
Statutory & Taxation
Utilities & Others @ Tally.ERP9
Credit Limits
Knowledge Base @ Tally.ERP9
Stock Items
Stock Groups
Inventory Masters
Inventory Vouchers
Inventory Report Statements
Balance Sheet
Accounting Reports
Accounting Vouchers
Interest Calculation
VAT-Value Added Tax
Service Tax
TDS (Tax Deducted at Source)
Disclaimer

The names of Companies and persons used in this Website have been used for illustrative purposes only.
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