Tally Entry GST ITC Payment done under appeal done

This query is : Resolved

Elbin (Querist)
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02 September 2024 What will be the tally entry for GST ITC Payment done under appeal ? & Under Which Head Duties & Taxes or Indirect Expense >

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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12 August 2025 Got it! You want to record the **GST ITC payment made under appeal** in Tally and know where to classify it.

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### Scenario:

* You have made a **GST payment (including interest, penalty or tax demand) under appeal** where ITC was not initially claimed or disallowed.
* Now you are paying that amount.

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### 1. **Tally Entry for GST ITC Payment under Appeal**

* Typically, payment made under appeal is considered a **direct payment of tax liability**, **not an expense**.
* So, the payment should be booked as a **liability reduction** (GST Input Credit account or GST Payable account), depending on your books.
* If you **are paying GST demand** (tax + interest) and the payment is under appeal, it is not an expense but adjustment of tax liability.

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### 2. **Suggested Tally Entry:**

| Particulars | Debit (Dr) | Credit (Cr) |
| --------------------------- | ---------- | ----------- |
| GST Liability / GST Payable | Rs. XXX | |
| To Bank / Cash Account | | Rs. XXX |

* This reduces your **GST liability** by the payment amount.

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### 3. **Which Head to Use?**

* The amount paid **should be shown under “Duties & Taxes” (Current Liabilities)** and not under **Indirect Expenses**.
* Payment of GST (tax/interest) is a **liability settlement**, not an expense.
* If any **penalty or interest** is paid that is not allowed as ITC, then those amounts can be recorded under **Indirect Expenses → Interest or Penalty**.

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### 4. **If ITC was initially reversed and now paid:**

* When you pay under appeal, the **ITC reversal will be adjusted**, and liability settled.
* You can credit the **GST Input Credit** ledger if that is maintained separately.

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### Summary:

| Action | Tally Ledger Head |
| ------------------------- | --------------------------------------------------------- |
| GST tax paid under appeal | GST Liability (Duties & Taxes) |
| Interest or penalty paid | Indirect Expenses → Interest / Penalty (if not claimable) |

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If you want, I can help you with exact ledger names or detailed steps in Tally. Would that help?

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