DVAT

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Creating a Company and Enabling VAT in Tally.ERP 9

(DELHI)

Regular VAT

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Create Company as Illustrate Below

1. Explain business analysis and its relation to financial statement analysis

2. Identify and discuss different types of business analysis

3. Describe the component analysis

4. Learn the sources of financial information

5. Accounting system features

6. Company reporting strategy

Data Storage Location

If “ Use Security Control” :- No The Tally.Net

Features

Not Available

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Go to Gateway of Tally > F11: Features > F3:

Statutory & Taxation.

yes

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yes

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Creating Master Required for VAT

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Creating a Purchase/Sales Ledger Creating an Input/ Output VAT Ledger Creating a Supplier/Customer Ledger Creating a CST on Purchase/ Sales Ledger Creating a Stock Item Creating a VAT Adjustment Class for

Journal

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Select Appropriate VAT/TAX Class, Try to Create Purchase Ledger as VAT/TAX Class

wise

The field - Use for Assessable Value Calculation will be displayed for ledgers grouped under Direct Expenses/Incomes, Indirect Expense/Incomes, Purchase Accounts and Sales

Accounts. In case of ledgers which add to the cost of purchase or sale value, this field needs to be enabled to select the Duty/Tax Type as VAT with the required Method of Apportion. The

option Excise & VAT will not be displayed even on enabling Excise module for ledgers grouped under Purchase and Sales Accounts. Care should be taken to disable the option Used for Assessable Value Calculation in case of regular Purchase and Sales ledgers for both VAT

and VAT & Excise enabled companies.

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

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You May Select ‘Not Applicable’ Here, You may choose VAT/ Tax Class at the

time of Voucher Entry

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List of VAT/TAX

Class Used In DVAT

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List of VAT/TAX

Class Used In DVAT

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You Select Not Applicable Here, You may choose VAT/

Tax Class at the time of Voucher Entry

Previous Year Closing Figure

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This is for Overdue Receivable/ Payable

Report

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Press Ctrl + Enter

Press

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Ensure that in F12: Configure the field Allow ADVANCED entries in Masters is set to Yes.

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Same as Purchase Ledger

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Same as Input VAT

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Create Anything Anywhere in tally (Here Units)>Alt+C

Go to Gateway of Tally > Inventory Info. > Stock Items > Create

Create Anything Anywhere in tally (Here Units)>Alt+C

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Enter the Name of Class, for e.g., VAT

Class.

Creating a VAT Adjustment Class for Journal

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

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Recording of Transaction

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Purchase of Taxable Goods Purchase of Capital Goods Inter-State Purchase of Goods Consignment Branch Transfer Inwards Purchases Made against Form H Receipt of Debit Notes from Creditor

(Seller) Receipt of Credit Note from Creditor

(Seller) Issue Debit Note for Goods Purchased

Returned

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

Purchase of Taxable Goods

Item Invoice

Press

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YES/NO

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The field - Use for Assessable Value Calculation will be displayed for ledgers grouped under Direct Expenses/Incomes, Indirect Expense/Incomes, Purchase Accounts and Sales Accounts. In case of ledgers which add to the cost of purchase or sale value, this field needs to be enabled to select the Duty/Tax Type as

VAT with the required Method of Apportion. The option Excise & VAT will not be displayed even on enabling Excise module for ledgers grouped under Purchase and Sales Accounts. Care should be taken to

disable the option Used for Assessable Value Calculation in case of regular Purchase and Sales ledgers for both VAT and VAT & Excise enabled companies.

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Purchase of Capital Goods

Press

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Yes

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Inter-State Purchase of Goods

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The Form H is issued by an exporter for purchase of goods. In order to issue Form H, the purchase of goods must be for an export order or in pursuance of an export order. The seller of goods will be eligible to get the export benefits on the

basis of Form H issued by the purchaser. So Form H has to be issued and the same is selected in the purchase invoice in order to bifurcate the inter-state

purchases made, exclusively for exporting goods from local purchases

Purchases Made against Form H

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Gateway of Tally > F11>Accounting Feature

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Gateway of Tally > Accounting Vouchers > Ctrl+F8: Credit Note

Creditor

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Gateway of Tally > Accounting Vouchers > Ctrl+F9: Debit Note

Creditor

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Sale of Taxable Goods

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Sales – Exempted

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Export Sale

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Gateway of Tally> Display>List of accounts>Currencies> Alt+C

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Press F12

Sales Against Form E1/E2

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Yes

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E-1, E-2 Transaction According to Section 6(2) of CST Act, the first inter-state sale is taxable

and subsequent sale during movement of goods by transfer of documents of title to goods is exempt from tax, if the subsequent sale is made to a registered dealer.

Example: Assume National Traders from Karnataka despatches goods to Yukta Traders of Tamil Nadu and raises an invoice on Prerana Traders in Maharashtra. National Traders charges 2% CST and remits the same in Karnataka. During movement of goods, Prerana Traders sells the goods to Yukta Traders in Tamil Nadu. Yukta Traders takes possession of goods and the 'movement of goods’ comes to an end.

The sale from Prerana Traders to Yukta Traders is by way of transfer of documents of title to goods. In the above case, National Traders will receive declaration in ‘C’ Form from Prerana Traders and will issue declaration in ‘E1’ form to Prerana Traders. Subsequently, Prerana Traders will receive declaration in ‘C’ Form from Yukta Traders and issue declaration in ‘E2’ form which completes the cycle. It is important to note that, if this chain is broken CST will be payable.

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Consignment Branch Transfer Outward of Goods

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Inter-State Sale of Goods

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Sales against Form H – Deemed Exports

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Credit Note for Sales Cancelled

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Debit/Credit Note for Change in Nature of Sale

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Credit Note for Change in Sales Consideration

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Credit Note for Goods Sold Returned

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Journal Entries

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Gateway of Tally> accounting voucher> F7

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Bad Debts Written–off

A dealer may write-off the whole or partial value of sales to a particular customer as bad debt. The amount of bad debts must be nullified and the purchase values needs to be transferred to expense account. The amount of tax included in such sale value can be claimed as a deduction by the dealer.

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Bad Debts Recovered

The amount of output VAT included in the instance of bad debts incurred is nullified and the balance in the party account is transferred to an expense ledger. Sometimes, the dealer may recover the amount written-off as bad debts from the customer. Such bad debts recovered will be considered as income and is chargeable to output VAT.

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Tax Payable on Goods Held on the Date of Cancellation of Registration

The input VAT paid on closing stock of goods held cannot be claimed as tax credit when the registration is cancelled. In such cases, these goods have to be considered as chargeable to output VAT and valued based on the fair market value. The difference between the input tax credit and the output VAT payable needs to be adjusted using a journal voucher. Also, if the tax credit is already availed, then the same will be chargeable to output VAT.

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Change in use of Goods for Purposes Other than for which Credit Allowed

In case, a dealer purchases goods for a particular purpose for which tax credit is allowed and subsequently uses the goods for any other purpose on which tax credit is not allowed, then the input tax claimed on such purchase has to be reversed. The reversal entry must be made in a journal.

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Change in use of Goods for Purposes for which Credit is Allowed

A dealer may purchase goods on which tax credit is not allowed and subsequently use it for a purpose for which tax credit is allowed. In such a case, the input VAT needs to be accounted for by the dealer

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Tax Credit Disallowed for Stock Transferred out of Delhi The tax credit claimed at the time of

purchase by the dealer has to be reversed if the goods are subsequently transferred out of Delhi. This adjustment entry has to be recorded in a journal voucher.

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Tax Credit for Transitional Stock held on 1st April The input VAT paid on goods purchased

from registered dealers can be claimed as tax credit on transitional stock held by the dealer, on producing the supporting invoices, evidencing the payment of input VAT. This adjustment entry has to be made in a journal voucher.

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Tax Credit for Purchase of Second – hand Goods On purchase of second-hand goods, tax

credit can be claimed only if the supporting document is an original tax invoice. The entry for claiming tax credit on purchase of second-hand goods must be recorded in a journal.

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Tax Credit on Goods Held on Date of Withdrawal from Composition Scheme

The dealer opting to withdraw from composition scheme would be eligible to claim tax credit on input tax paid under the Regulation on the trading stock, raw material and packaging material held on the date from which withdrawal is sought. The credit would be available on the basis of original tax invoice showing the tax component separately.

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Tax Credit for Trading Stock and Raw Materials Held at the Time of Registration

A dealer may have purchased goods from a registered dealer before falling under the purview of VAT Act. Such input tax paid can be claimed as a tax credit by the dealer at the time of registration under the Act. The tax credit can be claimed on trading stock or raw materials only if, there is a supporting tax invoice issued by a registered dealer for the amount of input tax paid on such goods.

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Tax Credit Disallowed for Goods Lost or Destroyed The input tax credit claimed on purchase of

goods has to be reversed if such goods are lost or destroyed.

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Balance Tax Credit on Capital Goods The tax credit on purchase of capital goods

can be claimed in 3 equal installments. The adjustment entry to avail the tax credit can be accounted for in journal voucher using voucher class.

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Adjustment Towards Interest Payable The amount of interest to be paid due to a

delay in payment or any departmental adjustments on account of audits or orders etc. has to be accounted for to adjust the interest liability.

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Adjustment towards CST Due

The excess of input VAT credit available after adjusting the output VAT liability can be used to pay the amount of CST due.

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VAT Adjustment – Difference CST Payable On the basis of the Forms, a dealer may claim

exemption/reduction on CST payable. In case where the dealer fails to submit the forms to the department within the stipulated time, the difference between the actual CST liability and the CST already collected has to be paid. For entering this difference amount, a Journal Voucher using Difference CST Payable as VAT Adjustment needs to be passed. The tax amounts entered will capture the values in respective columns of Forms based on the selection made in Forms to Receive or Forms to Issue fields (these fields will pop up on selecting the VAT Adjustment for journal voucher with class).

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VAT Adjustment – Interest Payable on CST The dealer will be required to pay interest on account of

non-payment of CST liability within the prescribed time limits. Such interest will be calculated, Form-wise, in VAT Form 51 if the respective Forms are not submitted to department within time limits. For entering this interest amount, a Journal entry using Interest payable on CST as VAT Adjustment needs to be made. The values will be captured in respective Columns of Form based on the selection of Forms made in Forms to Receive or Forms to Issue fields (these fields will pop up when this VAT Adjustment is selected for journal voucher with class).

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VAT Adjustment against Tax Payable 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. The excess of input VAT over output VAT, if any, during a particular tax period needs to be adjusted only to the extent of output VAT liability and balance of ITC can remain in the respective ledgers.

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Payment of VAT Liability

From Release 2.0 onwards, S: Stat Payment option needs to be selected to make all Statutory Payments including VAT/CST. The Payment Details should now be provided in the Provide Details sub screen.

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Reports

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VAT Computation Report

Gateway of Tally > Display > Statutory Reports > VAT Reports > VAT Computation

Press F12Change Period from Alt

+ F2

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Drag it

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Gateway of Tally > Display > Statutory Reports > VAT Reports >VAT Commodity>Purchase

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Gateway of Tally > Display > Statutory Reports > VAT Reports >VAT Commodity>Sale

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Gateway of Tally > Display > Statutory Reports > CST Reports> Form Receivable>Group>Sundry Debtors

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Reminder Letters for Form Collection Gateway of Tally > Display > Statutory Reports > CST Reports > Form Receivable > Print> no>

Print reminder Letter> Yes

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Gateway of Tally > Display > Statutory Reports > CST Reports> Form Issuable>Group>Sundry Creditors

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VAT Return (DVAT-16)

Gateway of Tally > Display > Statutory Reports > VAT Reports > VAT Forms > VAT Return

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Form 1- CST Return

Gateway of Tally > Display > Statutory Reports > CST Reports > CST Return Forms > CST Return Form

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Form VAT 4

Gateway of Tally > Display > Statutory Reports > CST Reports > CST Return Forms > CST Annexures

Every Registered Dealer is required to maintain Form 4- Register of Inter-state Sales to record the inter-state sales transactions.

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VAT Annexure: DVAT-30 Gateway of Tally > Display > Statutory Reports > VAT

Reports > VAT Forms > VAT Annexures > DVAT-30 Form DVAT 30 displays a list of all the purchases

made during a particular return period. The detail of purchases made using all the purchase

classifications is captured in Form DVAT 30. The party-wise details of transactions made using VATable, non-VATable, exempt and inter-state purchases are displayed in the respective fields of Form DVAT 30. Original tax invoice for taxable purchases and invoices for purchases made without payment of tax has to be preserved date-wise and in numerical order.

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Reports > VAT Forms > VAT Annexures > DVAT-31 Form DVAT 31 displays a list of all the sales made

during a particular return period. The detail of sales made using all the sales

classifications is captured in Form DVAT 31. The party-wise details of transactions made using VATable, non-VATable, exempt, zero-rated, tax free and inter-state sales are displayed in the respective fields of Form DVAT 31. Original tax invoice for taxable sales and invoices for sales made without charging output tax has to be preserved date-wise and in numerical order.

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Reports > VAT Forms > VAT Annexures > DVAT-51 The Form VAT 51 is a reconciliation return with

information relating to various forms that are used by the trader during the course of interstate sales or transfers. This provides information relating to the Forms to be submitted to the department for the sales on which lower rates of CST is charged or not charged.

This form is to be submitted within three months from the end of relevant quarter for which the information is provided.

DVAT

Documents

Transcript of DVAT