RK Solutions

For few businesses like Software Companies, Works Contract, etc., both VAT & Service Tax is applicable. If we take the example of a works contract, VAT needs to be calculated on Goods and Service tax on Labour Charges. In some cases, Service Tax will form part of VAT calculation. There are also scenarios, wherein a single invoice different tax applicable Items, like only Service Tax, only VAT, or both Service Tax and VAT are sold. Whatever may be the business scenario or practice, Service Tax & VAT need to be calculated as per the statutory requirements and the same has to be captured in the respective reports. Presently, accounting of different tax applicable items (only Service Tax \ only VAT \ both Service Tax and VAT) in a single invoice is not supported.

ALTERNATE SOLUTION/WORKAROUND

Sale of different tax applicable items (only Service Tax /only VAT/ both Service Tax and VAT) can be accounted, by using any one of the following methods:

• Passing separate sales invoices by selecting the items based on the tax applicability
• A single invoice for items on which only Service Tax and only VAT is applicable
• A single invoice for items on which both Service Tax and VAT are applicable.

For Works Contract Services on which both Service Tax and VAT is charged can be accounted in a Sales Invoice by entering the total transaction Value (E.g. Rs. 10,000/-) in Accounting Allocation screen. Service Tax being calculated on service tax applicable assessable Value (Rs. 2500/-) and VAT calculated only on VAT Assessable Value (Rs. 7500/-) or Assessable Value + Service Tax. For detailed procedure on recording such Sales on which both Service Tax and VAT is charged, refer to the topic – Accounting VAT and Service Tax on Works Contract Services

RESOLUTION TIMELINES

Resolution for the above-stated problem will be provided in Tally.ERP 9 Series B JAS (July, August, September) Release.