VAT Form and VAT Return

VAT Form
To view the periodical VAT return go to
Gateway of tally -> Display -> Statutory Report -> VAT reports -> VAT Forms. The form for VAT differs according to the state you have selected in the company creation screen.

VAT Return
An assessee falling under the purview of VAT is supposed to file return through Form No. 100. As Tally is VAT complaint it generates the Return based on the transactions entered into. For VAT return form go to
Gateway of tally -> Display -> Statutory Report -> VAT reports -> VAT Forms.

VAT Payable/Carried Forward

The report displays the VAT amount for each type of transactions together with total Output and Input Tax. It shows the VAT payable/Refundable amount, which is the difference between the Total Output Tax and Total Input Tax.

When Output Tax is greater than Input Tax, VAT Payable is Output Tax - Input Tax.
(Output Tax > Input Tax, VAT Payable= Output Tax - Input Tax)

When Output Tax is less than Input Tax, VAT Refundable is Input Tax - Output Tax. Balance Amount is carried forward to next period.
(Output Tax < Input Tax, VAT Refundable= Input Tax - Output Tax)

VAT Report

To see VAT Reports go to Display from Gateway of Tally and then from there go to Statutory Reports, then from there go to VAT Reports.
(Gateway of Tally -> Display -> Statutory Reports -> VAT Reports)

Branch Transfer when VAT is applicable

For goods transfer from the various branches of the company, no VAT is attracted, but for maintaining proper accounts. Tally provides different VAT classes for inter-branch transfer transaction.
For example if goods are to be transfered from Kolkata branch to Mumbai branch. In this case of branch transfer outward for kolkata branch create ledger named Delhi branch under Branch/Division group.
Transfer out a/c under sales group and set 'Yes' at the option 'use in VAT'. Select Consignment/Branch transfer outwards and set 'yes' at Inventory values are effected.
In the sales invoice , select the delhi branch a/c in the Party's A/c Name field and at sales ledger select Transfer Out Ledger.
In case of transfer inward, create the ledger as Transfer in a/c under purchase group and voucher class is Consignment/Branch transfer inward.

Rate Difference in VAT

Sometimes it might happen that subsequent to a sale or purchase, the rate per unit of item is revised. In this case, rate difference allowed on purchase or sales are also entered through Debit Note and Credit Note, thus, reducing the purchase and sales value, respectively.

Debit note to supplier

For example your supplier reduces price due to competition and allowed a rate reduction of Rs. 100/each on 5 units of a good supplied to you and issued a credit note for Rs. 520(Rs.100 x 5 + 4% of Rs. 500). Then you pass an entry in Debit note by selecting the name of items and entering the rate difference (Rs.500 in this case) in the amount column and after entering item details, in the next row, press enter and select Input VAT @ 4%.

In the same way you can pass entry in Credit note in case you

VAT in Purchase Return and Sales Return(Debit Note/Credit Note

For passing Purchase return in Tally, Debit note is used and for Sales return, credit note is used. Rate difference allowed by vendor is entered in debit note and when granted to buyer is entered in credit note. Net sales or purchases are taken into consideration for VAT computation.

Sales Return
For example Mr. Rajiv Ghosh returned two monitors worth Rs. 10000/- due to some defects on which VAT @ 4% is charged. Therefore the total value comes to Rs 10400/-( Rs. 10000 + 4% of Rs. 10000)
In this case, select sales @ 4% ledger in the Sales Ledger field in the credit note voucher type. In the item field, give details of item returned worth Rs. 10000. After the items enter, press enter to move the additional aentry area, where you have to select Output VAT@4%, Press Ctrl + A to save the entry.

Purchase Return
For example some goods are returned to supplier due to defects, that are subject to 4% VAT.
In this case, at Debit note field , at purchase ledger field, select Purchase 4% ledger and at item field, enter the details of items, which is to be returned. In the next row press enter to move to the additional accounting entries where you have to select Input VAT @4% from the list of ledger to automatically compute the amount of VAT. Then Press Ctrl + A to save entry.

More than one VAT Rate Invoice entry

Different goods have different VAT rates(say 4% & 12.5%), and its quiet possible that a trader deals in more than one type of good. In this case the purchase invoice entry can be passed in the following way:

• Create Purchase @ 4% Account, Purchase @ 12.5% Account. It should be under Purchase account with VAT rate applicable like Purchase @ 4%, Purchase @ 12.5%.
• Create Input VAT @ 4% Account and Input VAT @ 12.5% Account under Duties and Taxes and select VAT under Type of Duties/taxes and Input VAT @ 4% and Input VAT @ 12.5% under default Tax and VAT class.
• Create suppliers account under sundry creditors if not created.
• Press F12 -> Invoice configuration -> set no at Use common ledger account and no at Allow selection of VAT/Tax class during voucher entry.
• Give item details at the entry at accounting allocation, select purchase-exempted ledger. Then enter item details for each item, select respective Purchase ledger and select the VAT class for each item.
• After completing the item details, select the input VAT A/c for each rate one by one, to get VAT computed on VAT-able items.
  

Sales entry with single VAT rate.

Press F12 -> select Invoice/orders entry configuration -> press enter -> set yes at the option 'Use common ledger for item allocation?' -> press enter.
At Sales @ 4% A/c, select the sales ledger with VAT rate applicable like sales @4%.
Go to Accounting Vouchers from Gateway of Tally and press F8 for sales. There select Sales @ 4% under sales ledger and select sales @ 4% under VAT/TAX class. Enter the item details there. Then after that press enter and select VAT ledger, for example output VAT @ 12%, from the list and provide the rate to be charged. Press Ctrl + A to save the enty.

Ledgers to be created for VAT

Create another Sales, Purchase and VAT ledger and enable 'use as VAT return' as yes.
Purchase and Sales Ledger
Then create purchase and sales ledger for each VAT rates, for example Sales @ 4%, purchase @ 4%, sales @ 12%, purchase @ 12%,etc. You can provide any other suitable name too but do set 'yes' at 'Used in VAT return?' to link the ledger to VAT computation and VAT return.
At VAT/Tax class field, select the applicable VAT classification, which would be selected as default on entry of the sales/purchase ledger.VAT Ledger
In the same way create input and output VAT ledger, for example Output VAT @ 4%, Input VAT @ 4%,Output VAT @ 12%, Input VAT @ 12% etc.

Activation of VAT

For Activating VAT(Value Added Tax) :
Press F11 -> Press F3 -> Set 'enable value added tax(VAT)' as 'yes' -> Enable 'Set/alter VAT details' option as 'yes' -> Enter VAT TIN number and PAN number there -> press enter and save it.













Then come back to Gateway of Tally and press F12 then select Invoice/Orders Entry and press enter. Set 'Allow selection of VAT/Tax class during entry' and 'Warn on Mismatch in VAT Rates' as 'yes'. Then save it.

Value Added Tax(VAT) in Tally

Value Added Tax(VAT) is levy imposed on purchase or sale of goods. It cam into effect from 1st April, 2005 in place of State Sales Tax. As a result, the different states of India will have their own state level structure for VAT. The principle rules and regulations governing VAT in various states will remain same, since, they will be based on the 'White paper on State -Level Value Added Tax' released by the Empowered Committee of State Finance Ministers constituted by the Ministry of Finance, Government of India.

Types of Dealers.
A trader having turnover less than specified limit must not register under VAT Act but if they want to avail the facility of Input Tax Credit, they can register themselves. But traders who have exceeded the limit have to register themselves.

Unregistered Dealer.
Dealers having turnover less than the limit are not registered under the VAT act. They can maintain normal accounts in tally.

Registered Dealer.
Under the VAT Act, registered dealers may have either of the following status:

• Composite Dealer : Dealer having turn over less than the limit determined for composition, and have opte for composition scheme. They need not maintain VAT accounts but are required to maintain proper accounts to get the turnover figure for computation of composite tax.
• Registered Dealer : Dealers exceeding the specified limit must register under VAT Act. They can claim input tax credit and maintain accounts properly as per VAT rules.