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Sale and Purchase Service Tax Entry in Tally Prime

Sale and Purchase Service Tax Entry

Sale of Service in TallyPrime (Service Tax)

Sale and Purchase Service Tax – It’s very simple to record sale of service in TallyPrime. You can record sales of one service, multiple services, services inclusive of tax and exempt services.

Sale of one Service

AtoZ Company is an advertising agency. They render advertising services to their clients. Since they render only one service, they can define the service tax details at the company level.

On 16-11-2015, AtoZ Company provided advertising services to Ombré Pvt. Ltd. for ₹ 2,50,000 on which service tax is charged at @ 14% and Swachh Bharat Cess (SBC) charged at 0.50%.

To record the transaction

  1. Gateway of Tally > Vouchers > press F8 (Sales).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case).
  3. Select Ombré Pvt. Ltd. in the field Party’s A/c Name.
  4. Select the sales ledger under Particulars.
  5. Enter 250000 in the field Amount.
  6. Select Duties & Taxes ledger. The service tax rate and SBC rate will get calculated automatically using the details defined at the company level.
  7. Enter the Bill-wise Details, as required.
  8. Enter Narration, if required.

The sales invoice appears as shown below:

Sale of one Service in TallyPrime

9. Press Enter to save.

Sale of more than One Service

Straight Scenes Designs is an architectural firm. They render architects services and interior design services to their clients.

On 16-11-2015, Straight Scenes Designs provided architect services to Prerana worth ₹ 1,50,000. They also provided interior design service to Prerana worth ₹ 50,000. Both the services are subject to service tax and SBC.

To record both the services in the same transaction

  1. Gateway of Tally > Vouchers > press F8 (Sales).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case).
  3. Select Prerana in the field Party’s A/c Name.
  4. Select the sales ledger for architect services under Particulars.
  5. Enter 150000 in the field Amount.
  6. Select the sales ledger for interior design services under Particulars.
  7. Enter 50000 in the field Amount.
  8. Select Duties & Taxes ledger. The service tax rate and the SBC rate will get calculated automatically using the details defined at the company level.
  9. To display the Tax Analysis screen

    If you need to use this option only for the current invoice, press Ctrl+O (Related Reports) > type or select Service Tax – Tax Analysis > and press Enter.

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    If you need to use this option only for the current invoice, press Ctrl+I (More Details) > type or select Service Tax – Tax Analysis > and press Enter.

  10. Press Alt+F5 (Detailed) to view in detailed mode. The Tax Analysis screen appears as shown below:
  11. Enter Narration, if required.

The sales invoice appears as shown below:

Sale of more than One Service in TallyPrime

12. Press Enter to save.

Sale of Service in TallyPrime – Inclusive of Tax

On 16-11-2015, AtoZ Company rendered advertising services to Sathya Enterprises  worth ₹ 3,00,000, inclusive of service tax. Let us see how to record a sales transaction for this scenario.

Sale and Purchase Service Tax

To record the transaction

  1. Gateway of Tally > Vouchers > press F8 (Sales).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case).
  3. Click F12 (Configure). The Voucher Configuration
     screen appears.
  4. Set the option Allow entry of amount inclusive of tax for service tax ledger? to Yes.
  5. Press Ctrl+A to accept changes.
  6. Enter the reference number in the field Ref.
  7. Select the party ledger in the field Party’s A/c Name and enter party details.
  8. Select the sales ledger under Particulars. The Inclusive of Service Tax screen appears as shown below:
    Inclusive of Service Tax Amount in TallyPrime
  9. Enter amount in the field Enter Amount.
  10. Select Duties & Taxes ledger. The service tax and SBC rate will get calculated automatically using the details defined at the ledger level.
  11. To display the Tax Analysis screenIf you need to use this option only for the current invoice, press Ctrl+O (Related Reports) > type or select Service Tax – Tax Analysis > and press Enter.

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    If you need to use this option only for the current invoice, press Ctrl+I (More Details) > type or select Service Tax – Tax Analysis > and press Enter.

  12. Press Alt+F5 (Detailed) to view in detailed mode. The Tax Analysis screen appears as shown below:
  13. 10.  Enter Narration, if required.
  14. The sales invoice appears as shown below:

    Sale of Service Inclusive of Tax in TallyPrime

  15. Press Enter to save.

Sale and Purchase Service Tax

Sale of Exempt Services

On 27-4-2015, AtoZ Company rendered advertising services to UNDP  (India)  worth ₹ 1,00,000. Being an agency of the UN, the sales rendered to UNDP (India) is exempt of service tax. Let us see how to record a sales transaction in this scenario.

Sale and Purchase Service Tax

To create the party master

  1. Create a party master under Sundry Debtors, as shown below:Sundry Debtors in TallyPrime
  2. Enter details in the Service Tax Details screen as shown below:Service Tax Details in TallyPrime
  3. Press Enter to save.

Sale and Purchase Service Tax

To record exempt sales

  1. Gateway of Tally > Vouchers > press F8 (Sales).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case).
  3. Enter the reference number in the field Ref.
  4. Select UNDP (India) in the field Party’s A/c Name.
  5. Select the sales ledger under Particulars.
  6. Enter 100000 in the field Enter Amount.
  7. Press Enter to save.
  8. The sales invoice appears as shown below:

    Sale of Exempt Services in TallyPrime

  9. Press Enter to save.

Sale of More than One Service in TallyPrime (Service Tax)

Sale and Purchase Service Tax

You can record a sales invoice with multiple services rendered.

Straight Scenes Designs is an architectural firm. They render architects services and interior design services to their clients.

On 16-11-2015, Straight Scenes Designs provided architect services to Prerana worth ₹ 1,50,000. They also provided interior design service to Prerana worth ₹ 50,000. Both the services are subject to service tax and SBC.

  1. Gateway of Tally > Vouchers > press F8 (Sales).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case)Go to Gateway of Tally >
  3. Select Prerana in the field Party’s A/c Name .
  4. Select the sales ledger for architect services under Particulars.
  5. Enter 150000 in the field Amount.
  6. Select the sales ledger for interior design services under Particulars.
  7. Enter 50000 in the field Amount.
  8. Select Duties & Taxes ledger. The service tax, SBC and KKC will get calculated automatically using the details defined at the company level.
  9. To display the Tax Analysis screen.
    If you need to use this option only for the current invoice, press Ctrl+O (Related Reports) > type or select Service Tax – Tax Analysis > and press Enter.

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    If you need to use this option only for the current invoice, press Ctrl+I (More Details) > type or select Service Tax – Tax Analysis > and press Enter.

    •  Press Alt+F5 (Detailed) to view in detailed mode.
  10. Enter Narration, if required.
    The sales invoice appears as shown below:
    Sale of More than One Service in TallyPrime
  11. Press Enter to save.

Purchase of Service (Service Tax)

Sale and Purchase Service Tax

You can record a purchase of services using the Purchase invoice. You can also record a purchase invoice for service inclusive of tax.

Single Service Received

D-Day Events is an event management company. They render event management services to their clients. They receive advertising service from AtoZ company.

On 01-06-2016, D-Day Events received advertising services worth ₹ 2,00,000 from AtoZ Company on which service tax is charged at 14.0%, and Swachh Bharat Cess (SBC) and Krishi Kalyan cess are charged at 0.50% each. The invoice number of the bill issued by AtoZ is AZ/04/025 dated 01-06-2016.

To record the transaction

  • 1. Gateway of Tally > Vouchers > press F9 (Purchase).Alternatively, press Alt+G (Go To) > Create Voucher > press F9 (Purchase).

     

  • Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case)
  • 2.Enter AZ/04/025 in the field Supplier Invoice No.
  • 3.Enter 01-06-2016 in the field Date.
  • 4.Select AtoZ Company in the field Party’s A/c Name.
  • 5.Select the purchase ledger under Particulars.
  • 6.Enter 2,00,000 in the field Amount.
  • 7.Select service tax, SBC and Krishi Kalyan cess ledgers. The values are calculated automatically using the details defined at the ledger level.
  • 8.To display the Tax Analysis screenIf you need to use this option only for the current invoice, press Ctrl+O (Related Reports) > type or select Service Tax – Tax Analysis > and press Enter.

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    If you need to use this option only for the current invoice, press Ctrl+I (More Details) > type or select Service Tax – Tax Analysis > and press Enter.

    •  Press Alt+F5 (Detailed) to view in detailed mode. The Tax Analysis screen appears as shown below:

  • Press Esc to return to sales invoice.

The Purchase invoice appears as shown below:

  • 8.Press Enter to accept.

Purchase of Service Inclusive of Tax

On 01-06-2016, AtoZ Company received advertising services from CreativeIn Ad Firm worth ₹ 3,00,000, inclusive of service tax. Let us see how to record a purchase transaction for this scenario.

Sale and Purchase Service Tax

To record the transaction

  • 1. Gateway of Tally > Vouchers > press F9 (Purchase).

    Alternatively, press Alt+G (Go To) > Create Voucher > press F9 (Purchase).

  • Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case)
  • 2.Press F12 (Configure).
  • Set the option Allow Inclusive Tax during entry for Service Tax? to Yes.
  • Press Ctrl+A to accept.
  • 3.Enter the Supplier Invoice No.
  • 4.Enter the Date (supplier invoice date).
  • 5.Select CreativeIn Ad Firm in the Party’s A/c Name field.
  • 6.Select the purchase ledger under Particulars.
  • 7.Enter 2,50,000 in the Enter Amount field as shown below:

  • 8.Select duties and taxes ledger. The service tax, Swachh Bharat cess and Krishi Kalyan cess values will get calculated automatically using the details defined at the ledger level.
  • 9.To display the Tax Analysis screenIf you need to use this option only for the current invoice, press Ctrl+O (Related Reports) > type or select Service Tax – Tax Analysis > and press Enter.

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    If you need to use this option only for the current invoice, press Ctrl+I (More Details) > type or select Service Tax – Tax Analysis > and press Enter.

    •  Press Alt+F5 (Detailed) to view in detailed mode. The Tax Analysis screen appears as shown below:

  • Press Esc to return to sales invoice.

The purchase invoice appears as shown below:

  • 10.  Press Enter to accept.

Exports (Service Tax)

All services that are exported, are exempt from service tax. This is to make the export of services competitive in the international market.

For example, on 27-4-2015, D-Day Events rendered event management services worth ₹ 2,00,000 to Cosmic Rays Inc. located in Thailand.

  1. Gateway of Tally > Vouchers > press F8 (Sales).Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case)
  3. Select Cosmic Rays Inc. in the field Party’s A/c Name.
  4. Select the sales ledger under Particulars.
  5. Enter 2,00,000 in the field Amount.
  6. Press Enter to save.
  7. Enter Narration, if required. The sales invoice appears as shown below:

  8. Press Enter to accept.

Pure Agent Services (Service Tax)

A pure agent is a service provider who is a liaison between another service provider and a client. An expense incurred by the pure agent is exempt from service tax.

TallyPrime provides the facility to exclude the costs and expenses incurred by a service provider acting as a pure agent from total service charges to get taxable amount.

For example, on 01-06-2016, D-Day Events acted as a pure agent in getting event management services to Expecto Magic. The service cost amounted to ₹ 1,50,000, including the pure agent expenses of ₹ 25,000. The service tax is charged at 14.0%, and Swachh Bharat Cess (SBC) and Krishi Kalyan cess are charged at 0.50% each.

To record the transaction

  • 1. Gateway of Tally > Vouchers > press F8 (Sales).Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  • Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case)
  • 2.Select in the field Party’s A/c Name.Ensure that the Type of service for this party is Pure Agent.

    To enable Type of service as Pure Agent

  • 1.Enable Set/alter service tax details?, in the party creation screen.
  • 2.Select Pure Agent as the Type of service.
  • 3.Press Ctrl + A to accept.
  • [/expand]
  • 3.Select the sales ledger under Particulars.
  • 4.Enter the pure agent expenses 25,000, in the field Allowable Expenses.
  • The Service Tax Details screen appears as shown below:

  • 5.Enter 1,50,000 in the field Amount.
  • 6.Select service tax, SBC and Krishi Kalyan cess ledgers. The values are calculated automatically on the difference amount.
  • To display the Tax Analysis screen

    If you need to use this option only for the current invoice, press Ctrl+O (Related Reports) > type or select Service Tax – Tax Analysis > and press Enter.

    Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    If you need to use this option only for the current invoice, press Ctrl+I (More Details) > type or select Service Tax – Tax Analysis > and press Enter.

    •  Press Alt+F5 (Detailed) to view in detailed mode.
  • Press Esc to return to sales invoice.
  • The sales invoice appears as shown below:

  • 7.Enter the Narration, if required.
  • 8.Press O to override the transaction details and save.

Sale of Service by Professionals (Service Tax)

In practice, professionals issue receipts for services rendered. You can record services rendered by professionals directly in a receipt invoice.

For example, Serendipitous Clicks render photography services to customers. For the services provided, they issue receipts on the payments received from their customers.

Serendipitous Clicks rendered their photography services to Jass Jewels worth ₹ 2,00,000 on which a service charge of 14.0%, and Swachh Bharat Cess (SBC) and Krishi Kalyan cess of 0.50% each is charged. On 04-06-2016, they received the payment and issued a receipt.

To record the transaction

  • 1.Gateway of Tally > Vouchers > press F6 (Receipt).Alternatively, press Alt+G (Go To) > Create Voucher > press F6 (Receipt).
  • 2.Select Cash in the field Account.
  • 3.Select the income ledger under Particulars.
  • 4.Enter 2,00,000 in the field Amount.
  • 5.Select service tax, SBC and Krishi Kalyan cess ledgers. The values are calculated automatically.
  • 6.Enter Narration, if required.

The completed receipt voucher appears as shown below:

  • 7.Press Enter to accept.

Advance Receipt (Service Tax)

When advance payment is received for a taxable service, and service tax is calculated in the receipt transaction, then while recording sales invoice, the service tax component is calculated after considering the tax value in the receipt transaction.

TallyPrime displays a prompt message about tax applicable in a sales transaction when advance payment is received from a party for a service.

To record advance receipt for any services in Release 5.0 and above, enable the option Define service category and tax details as masters?

in Service Tax Details screen.

 

Advance Receipt with Service Tax (partial advance)

To record receipt voucher for advance received

  • 1.Gateway of Tally > Vouchers > press F6 (Receipt).
  • Alternatively, press Alt+G (Go To) > Create Voucher > press F6 (Receipt).
  • 2.Select cash or bank ledger in Account field.
  • 3.Select the party ledger from whom advance is received under Particulars.
  • 4.Enter the value in Amount field and press Enter to display Bill-wise Details screen.
  • Select Advance from Method of Adj. list in Type of Ref field.
  • Enter a Name for the advance.
  • Press Enter to save the amount and return to voucher screen.
  • 5.Select service tax ledger and press Enter to display Service Tax Allocation screen.
  • Select the Category.

  • Press Enter to accept. Service Tax gets calculated as per the rate defined in the category master.
  • 6.Select the swacch bharath cess ledger, and press Enter to accept the amount displayed.
  • 7.Select the krishi kalyan cess ledger, and press Enter to accept the amount displayed.

The receipt voucher appears as shown below:

  • 8.Press Enter to save.

 

To record a sales invoice for the advance received

  • 1. Gateway of Tally > Vouchers > press F8 (Sales).Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  •  

    Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case)

  • 2.Press F12 (Configure).
  • Set the option Use defaults for bill allocations? to No.
  • Press Ctrl+A to accept.
  • 3.Select the party from whom advance was received in the Party’s A/c Name field.
  • 4.Select the ledger of the service being provided under Particulars.
  • 5.Enter the sales value in the Amount column.
  • 6.Select service tax ledger and press Enter to accept the amount that appears.
  • 7.Select Swacch Bharath cess ledger and press Enter to accept the amount that appears.
  • 8.Select Krishi Kalyan cess ledger and press Enter to accept the amount that appears.
  • 9.Press Enter to display the Bill-wise Details screen.
  • Select Agst Ref from Method of Adj. list in Type of Ref field.
  • Select the advance receipt bill from Pending Bills list in Name field.
  • Select New Ref from Method of Adj. list in Type of Ref field.
  • Enter the Name for the new ref.

  • Press Enter to accept value in the Amount field.

A message appears to inform about the tax computed in advance receipt as shown below:

  • Press Enter to revert to voucher screen.

Note: To avoid this warning message, do not accept the tax amount computed in the voucher but calculate tax value by considering the tax applied in advance voucher and enter manually.

  • 10.  Modify the tax amount as per the value displayed in the message.
  • 11.  Press Enter to display the Bill-wise Details screen.
  • Select Agst Ref from Method of Adj. list in Type of Ref field.
  • Select the advance receipt bill from Pending Bills list in Name field.
  • Select New Ref from Method of Adj. list in Type of Ref field.
  • Enter the Name for the new ref.
  • Press Enter to accept value in the Amount field.

The sales invoice appears as shown below:

  • 12.  Press Enter to save.
  • 13.  Press Page Up to open the invoice in alteration mode.
  • 14.  Press Ctrl+P (Print).
  • 15.  Press Enter in the Voucher Printing screen to print.

The print with service tax computed less tax amount in advance receipt appears as shown:

 

Advance Receipt with Service Tax (full advance)

To record receipt voucher for advance received

  • 1. Gateway of Tally > Vouchers > press F6 (Receipt).Alternatively, press Alt+G (Go To) > Create Voucher > press F6 (Receipt).
  • 2.Select cash or bank ledger in Account field
  • 3.Select the party ledger from whom full advance is received under Particulars.
  • 4.Enter the value in Amount field and press Enter to display Bill-wise Details screen.
  • Select Advance from Method of Adj. list in Type of Ref field.
  • Enter a Name for the advance.
  • Press Enter to accept the amount and return to voucher screen.
  • 5.Select service tax ledger and press Enter to display Service Tax Allocation screen.
  • Select the Category.
  • Press Enter to accept. Service Tax will be calculated as per the rate defined in the category master and displayed in the voucher screen against service tax ledger.
  • 6.Select the Swacch Bharath cess ledger and press Enter to accept the amount calculated. Swacch bharat cess is calculated as per the rate defined in the category master.
  • 7.Select the Krishi Kalyan cess ledger and press Enter to accept the amount calculated. Krishi Kalyan cess is calculated as per the rate defined in the category master.

The receipt voucher appears as shown below:

  • 8.Press Enter to save.

To record a sales invoice for the full advance received

  • 1. Gateway of Tally > Vouchers > press F8 (Sales).

    Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).

  • Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case)
  • 2.Select the party from whom advance was received in the Party’s A/c Name field.
  • 3.Select the ledger of the service being provided under Particulars.
  • 4.Enter the sales value in the Amount column.
  • 5.Press Enter to display the Bill-wise Details screen.
  • Select Agst Ref from Method of Adj. list in Type of Ref field.
  • Select the advance receipt bill from Pending Bills list in Name field.

  • Press Enter to accept value in the Amount field and revert to voucher screen.

Note: Service tax is fully applied in advance receipt, in this case tax ledgers are not selected in the sales invoice.

The sales invoice appears as shown below:

  • 6.Press Enter to save.
  • 7.Press Page Up to open the invoice in alteration mode.
  • 8.Press Ctrl+P (Print).
  • 9.Press Enter in the Voucher Printing screen to print.

The print with service tax computed in advance receipt appears as shown:

Sale of Service with Tax Abatement (Service Tax)

Service tax, Swachh Bharat cess and Krishi Kalyan cess can be calculated on the sales or purchase amount after abatement.

You can define the abatement percentage on the sales or purchase amount at the service category, ledger or group level.

To define abatement of sales amount in the service category level

Sale and Purchase Service Tax

  • 1.Gateway of Tally > Create > type or select Service Category > and press Enter.Alternatively, press Alt+G (Go To) > Create Master > Service Category > and press Enter.
  • 2.Click F12 (Configure). The Service Category Configuration
     screen appears.
  • Enable the option Enable abatement details?.
  • Press Ctrl+A to save and return.
  • 3.Enter the Name of the service category.
  • 4.Enter the rate of Service tax.
  • 5.Enter the rate of Swachh Bharat cess.
  • 6.Enter the rate of Krishi Kalyan cess.
  • 7.Enter the Abatement rate.
  • 8.Enter the Notification number and Notification sl. no.
  • 9.Press Enter to save.
  •  

    Recording a transaction with service tax abatement

  • 1.Gateway of Tally > Vouchers > press F8 (Sales).Alternatively, press Alt+G (Go To) > Create Voucher > press F8 (Sales).
  • 2.Enter Ref. number.
  • 3.Select party ledger in the field Party’s A/c Name.
  • 4.Select sales ledger with the abatement percentage defined.
  • 5.Enter 10,000 as the Amount.
  • 6.Select service tax ledger and enter the amount.
  • 7.Select swachh bharat cess ledger, and press Enter to accept the amount.
  • 8.Select krishi kalyan cess ledger, and press Enter to accept the amount.
  • The completed sales invoice appears as shown below:

  • 9.Press Enter to save.

Read Also Service Tax in Tally Prime 

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