Tax adjustemnts
This query is : Resolved
19 July 2013
Hi,
May i know the payment entries of TDS payable, Service tax payable and VAT payable, when there is a input Tax (TDS,Service TAX and VAT) and output Tax(TDS,Service TAX and VAT) in a company.
And how i can set off the payments payable tax with input tax.
Am getting trouble when am giving the entries in Tally for the payment of tax.
Thanks in Advance.
May i know the payment entries of TDS payable, Service tax payable and VAT payable, when there is a input Tax (TDS,Service TAX and VAT) and output Tax(TDS,Service TAX and VAT) in a company.
And how i can set off the payments payable tax with input tax.
Am getting trouble when am giving the entries in Tally for the payment of tax.
Thanks in Advance.
19 July 2013
first is input TDS cant be adjust against output TDS.
only indirect taxes service tax, VAT can be adjusted.
entry will be :-
for VAT
say you made sale:-
then output VAT
you made purchase:-
then input VAT
balance is VAT payable pass journal.
and payment:-
VAT payable to bank.
only indirect taxes service tax, VAT can be adjusted.
entry will be :-
for VAT
say you made sale:-
then output VAT
you made purchase:-
then input VAT
balance is VAT payable pass journal.
and payment:-
VAT payable to bank.
19 July 2013
Thanks Ayush,
Can you pl tell about Service Tax Input And output,payment of Service tax. What is CENVAT Credit Input.
How we can set off the input service tax with output St.
Can you pl tell about Service Tax Input And output,payment of Service tax. What is CENVAT Credit Input.
How we can set off the input service tax with output St.
19 July 2013
by simply passing a journal entry.
19 July 2013
What Is the JV and Could you pl tell about CENTVAT Credit INPUT?
26 July 2025
Sure! Let me explain how you handle **TDS, Service Tax, and VAT** payments and adjustments, including the role of **CENVAT Credit** for Service Tax, and how to pass journal entries (JV) in accounting software like Tally.
---
### 1. **TDS Payable vs TDS Receivable**
* **TDS (Tax Deducted at Source)** is a direct tax.
* **Input TDS** means the tax deducted on your payments, which you can claim as a credit while filing your return.
* **Output TDS** means tax you have deducted from others and deposited with the government.
**Important: You cannot adjust Input TDS against Output TDS** — they are tracked separately.
**Entries:**
* When you deduct TDS and pay to government:
```
TDS Payable A/c Dr.
To Bank/Cash A/c
```
* When you receive TDS deducted by others (TDS receivable):
```
TDS Receivable A/c Dr.
To Expense / Purchase A/c
```
* You claim TDS credit while filing tax returns; no ledger adjustment needed for set-off.
---
### 2. **Service Tax & CENVAT Credit**
* **Service Tax** is an indirect tax paid on taxable services.
* **CENVAT Credit** is the input credit of service tax paid on input services or goods used in your business.
* You can **adjust CENVAT Credit (input service tax)** against **Output Service Tax liability**.
---
### 3. **VAT Input and Output**
* VAT is also an indirect tax on sales/purchases.
* You can set off **Input VAT** paid on purchases against **Output VAT** collected on sales.
---
### 4. **How to pass journal entries for VAT and Service Tax payment**
#### a) For VAT
* On sale with VAT:
```
Debtors/Customer A/c Dr.
To Sales A/c
To Output VAT Payable A/c
```
* On purchase with VAT:
```
Purchase A/c Dr.
Input VAT Credit A/c Dr.
To Creditors/Supplier A/c
```
* At month end, to pay VAT:
Calculate VAT payable = Output VAT - Input VAT
* If Output VAT > Input VAT (VAT payable):
```
Output VAT Payable A/c Dr.
To Bank/Cash A/c
```
* If Input VAT > Output VAT (VAT refundable):
```
Bank/Cash A/c Dr.
To Input VAT Credit A/c
```
---
#### b) For Service Tax and CENVAT Credit
* On receipt of taxable services:
```
Service Expense A/c Dr.
CENVAT Credit (Input Service Tax) A/c Dr.
To Supplier/Creditor A/c
```
* On providing taxable services:
```
Debtors/Customer A/c Dr.
To Service Revenue A/c
To Output Service Tax Payable A/c
```
* Payment of service tax liability (Output Service Tax - CENVAT Credit):
```
Output Service Tax Payable A/c Dr.
To CENVAT Credit A/c (input service tax)
To Bank/Cash A/c (balance payment)
```
---
### 5. **Journal Voucher (JV)**
* A **JV** is an accounting entry to record transactions not involving cash/bank directly.
* For example, adjusting input tax credit against output tax payable is done via JV.
---
### Summary:
| Tax Type | Input Tax Credit Allowed? | Can Adjust Input Against Output? | Payment Entry Example |
| ----------- | ------------------------- | -------------------------------- | --------------------------------------------- |
| TDS | No | No | TDS Payable Dr. To Bank (when paying TDS) |
| Service Tax | Yes (CENVAT Credit) | Yes | Output ST Payable Dr. To CENVAT Credit & Bank |
| VAT | Yes | Yes | Output VAT Payable Dr. To Bank |
---
If you want, I can help prepare specific Tally journal voucher entries based on your transactions. Just let me know!
---
### 1. **TDS Payable vs TDS Receivable**
* **TDS (Tax Deducted at Source)** is a direct tax.
* **Input TDS** means the tax deducted on your payments, which you can claim as a credit while filing your return.
* **Output TDS** means tax you have deducted from others and deposited with the government.
**Important: You cannot adjust Input TDS against Output TDS** — they are tracked separately.
**Entries:**
* When you deduct TDS and pay to government:
```
TDS Payable A/c Dr.
To Bank/Cash A/c
```
* When you receive TDS deducted by others (TDS receivable):
```
TDS Receivable A/c Dr.
To Expense / Purchase A/c
```
* You claim TDS credit while filing tax returns; no ledger adjustment needed for set-off.
---
### 2. **Service Tax & CENVAT Credit**
* **Service Tax** is an indirect tax paid on taxable services.
* **CENVAT Credit** is the input credit of service tax paid on input services or goods used in your business.
* You can **adjust CENVAT Credit (input service tax)** against **Output Service Tax liability**.
---
### 3. **VAT Input and Output**
* VAT is also an indirect tax on sales/purchases.
* You can set off **Input VAT** paid on purchases against **Output VAT** collected on sales.
---
### 4. **How to pass journal entries for VAT and Service Tax payment**
#### a) For VAT
* On sale with VAT:
```
Debtors/Customer A/c Dr.
To Sales A/c
To Output VAT Payable A/c
```
* On purchase with VAT:
```
Purchase A/c Dr.
Input VAT Credit A/c Dr.
To Creditors/Supplier A/c
```
* At month end, to pay VAT:
Calculate VAT payable = Output VAT - Input VAT
* If Output VAT > Input VAT (VAT payable):
```
Output VAT Payable A/c Dr.
To Bank/Cash A/c
```
* If Input VAT > Output VAT (VAT refundable):
```
Bank/Cash A/c Dr.
To Input VAT Credit A/c
```
---
#### b) For Service Tax and CENVAT Credit
* On receipt of taxable services:
```
Service Expense A/c Dr.
CENVAT Credit (Input Service Tax) A/c Dr.
To Supplier/Creditor A/c
```
* On providing taxable services:
```
Debtors/Customer A/c Dr.
To Service Revenue A/c
To Output Service Tax Payable A/c
```
* Payment of service tax liability (Output Service Tax - CENVAT Credit):
```
Output Service Tax Payable A/c Dr.
To CENVAT Credit A/c (input service tax)
To Bank/Cash A/c (balance payment)
```
---
### 5. **Journal Voucher (JV)**
* A **JV** is an accounting entry to record transactions not involving cash/bank directly.
* For example, adjusting input tax credit against output tax payable is done via JV.
---
### Summary:
| Tax Type | Input Tax Credit Allowed? | Can Adjust Input Against Output? | Payment Entry Example |
| ----------- | ------------------------- | -------------------------------- | --------------------------------------------- |
| TDS | No | No | TDS Payable Dr. To Bank (when paying TDS) |
| Service Tax | Yes (CENVAT Credit) | Yes | Output ST Payable Dr. To CENVAT Credit & Bank |
| VAT | Yes | Yes | Output VAT Payable Dr. To Bank |
---
If you want, I can help prepare specific Tally journal voucher entries based on your transactions. Just let me know!
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