How to set up Service tax duty ledger in Tally.erp 9

As we have seen that service tax module in tally.erp 9 release 1.8  has been completely re written and it is giving a perfect solutions to service tax requirement of any enterprise.

However, one need to renew tally.net license to download the latest release 1.8 of tally.erp 9 as the new service tax module is available only with release 1.8 and above.

Company Creation

Go to Gateway of Tally > Alt + F3 > Create Company

  • Enter Company details such as Mailing details.
  • Select the Country from the List of Countries under the field, Statutory Compliance for.

Enabling Service Tax 1

Enabling Service Tax in F11 Features

Go to Gateway of Tally > F11: Features > Statutory & Taxation

  1. Set Enable Service Tax to Yes
  2. Enable Set/Alter Service Tax Details to Yes to view Company Service tax Details screen

Enabling Service Tax 2

  1. In Company Service Tax Details Screen
  2. In Service Tax Registration No. field enter the service tax registration no of the company allotted by the Service Tax department
  3. In Date of Registration field enter the Service Tax Registration date
  4. Enter the Service Tax File No. (The File No. is the Ledger Folio number)
  5. Select the Method of adjustment of Expenses from the List of Adjustment Methods
  6. First Receipt: The expenses are first adjusted from the amount received and then the rest of the amount is adjusted against Service fee and Tax account.
  7. Last Receipt: The expenses are adjusted from the last receipt of the bill amount
  8. Proportionate: The payment received from the customer is proportionately adjusted against fee, tax and disbursement

Enabling Service Tax 3

Accept the screen to save.

To create a Customer ledger

Go to Gateway of Tally > Accounts Info > Ledgers > Create

  1. In the Name field enter the name of the company to which the services are provided e.g. Icons Computers
  2. In Under field select Sundry Debtors from the List of Groups
  3. Set Maintain balances bill-by-bill to Yes.
  4. Enter details in the Default Credit Period if applicable
  5. Set Is Service Tax Applicable to Yes to view the Exemption Details screen to display

Creating a Customer Ledger 1

  1. In the Exemption Details screen
  2. In Type of Classification select Not Applicable. The option Exempt will be selected when the tax is not payable

Creating a Customer Ledger 2

  1. Enter the Mailing details and Tax information

Creating a Customer Ledger 3

  1. Accept the screen to save

Similarly, you can create Supplier ledgers.

To create Service Tax ledger

Go to Gateway of Tally > Accounts Info > Ledgers > Create

  1. In the Name field enter the Name of the Ledger
  2. Select the Group Duties & Taxes in the Under field
  3. In Type of Duty field select Service Tax from the list of Types of Duty/Tax
  4. In Category Name files select Accounting Services (619) from the List of Service Categories

Creating a Tax Ledger 1

  1. Set Inventory Values are affected to No, which can be set to Yes if applicable
  2. Accept the screen to save.

To create Sales ledgers for Services

Go to Gateway of Tally > Accounts Info > Ledgers > Create

  1. In the Name field enter the name of the Ledger. e.g. Sales – Accounting Services
  2. Select the Group Sales Accounts from the List of Groups in the Under field
  3. Set Inventory Values are affected to No
  4. Set Is Service Tax Applicable to Yes to view Category Name screen
  5. In Category Name field select Accounting Services (619) from the List of Service Categories

Creating Sales Ledgers for Services 1

  1. Set Used in Sales Tax to No
  2. Accept the screen to save

Similarly, you can create ledgers for various services.

Creating Ledgers for Indirect Expenses

An Expenses ledger has to be created to claim the expenses.

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

  1. In the Name field enter the expense ledger name e.g. General Expenses
  2. Select the Group Indirect Expenses from the List of Groups in the Under field
  3. Set Inventory Values are affected to No
  4. Set Is Service Tax Applicable to Yes to view Category Name screen
  5. In the Category Name screen select Accounting Services (619) from the List of Service Categories

Creating Ledgers for Indirect Expenses 1

  1. Accept the screen to save
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