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Record Journal Vouchers for Adjustments Against Input Tax Credit (ITC) under GST

Record Journal Vouchers for Adjustments Against Input Tax Credit (ITC) under GST

The tax credits of central tax, integrated tax and state tax can be used to set-off the liability of central tax, state tax/UT tax and integrated tax in the order specified under GST.

The order in which tax credit can be offset is given below:

Input Tax Credit

Set-off against the Liability

Central tax

Central tax (set-off complete liability) and then integrated tax (in that order).

Integrated tax

Integrated tax (set-off complete liability).

Remaining credit, if any, to be utilised to pay central, or state tax/UT tax, in any order and any proportion.

State tax/UT tax

State tax/UT tax (set-off complete liability) and then integrated tax (in that order).

 

  1. Gateway of Tally > Vouchers > press F7 (Journal).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F7 (Journal).
  2. Press Alt+J (Stat Adjustment) , select the options as shown below:
    • Type of duty/tax – GST.
    • Nature of Adjustment – Decrease of Tax Liability.
    • Additional Details – Adjustment Against Credit.
  3. Press Enter to save and return to the journal voucher.
  4. In the journal voucher, debit and credit the ledgers as per the scenarios mentioned below:

Scenario

Debit Ledger

Credit Ledger

Paying central tax liability, when only central tax credit is available.
  • Debit the central tax ledger
  • Enter the amount to the extent of credit available.

Credit the central tax ledger to set-off the payable amount to the extent of credit available.

Paying central tax liability, when central tax and integrated tax credits are available.
  • Debit the central tax ledger.
  • Enter the amount to the extent of credit available.
  • Credit the central tax ledger, and enter the amount to the extent of credit available.
  • If complete central tax liability is not set-off, credit the integrated tax ledger, and enter the amount to the extent of credit available. This is only when the integrated tax credit is not already utilised to pay state tax liability.

Paying state tax liability, when only state tax credit is available.
  • Debit the state tax ledger.
  • Enter the amount to the extent of credit available.

Credit the state tax ledger to set-off the payable amount to the extent of credit available.

Paying state tax liability, when state tax and integrated tax credits are available.
  • Debit the state tax ledger.
  • Enter the amount to the extent of credit available.
  • Credit the state tax ledger, and enter the amount to the extent of credit available.
  • If complete state tax liability is not set-off, credit the integrated tax ledger and enter the amount to the extent of credit available. This is only when the integrated tax credit is not already utilised to pay central tax liability.

Paying integrated tax liability, when only integrated tax credit is available.
  • Debit the integrated tax ledger.
  • Enter the amount to the extent of credit available.

Credit the integrated tax ledger to set-off the payable amount to the extent of credit available.

Paying integrated tax liability, when integrated tax, central tax and state tax/UT tax credits are available.
  • Debit the integrated tax ledger.
  • Enter the amount to the extent of credit available.
  • Credit the integrated tax ledger, and enter the amount to the extent of credit available.
  • If complete integrated tax liability is not set-off, credit the central tax ledger and enter the amount to the extent of credit available.
  • If complete integrated tax liability is not set-off even after utilising central tax credit, credit the state/UT tax ledger and enter the amount to the extent of credit available.

Paying cess liability, when only cess credit is available.
  • Debit the cess ledger.
  • Enter the amount to the extent of credit available.

Credit the cess ledger to set-off the payable amount to the extent of credit available.

       5. Accept the screen. As always, you can press Ctrl+A to save.

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