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VAT Accounting

VAT Accounting. Challenges & Solutions. Speaker Designation Tally Solutions (India) Pvt. Ltd. Objective. To highlight The challenges in accounting posed by changes in the taxation framework The solutions offered by Tally. The VAT Impact.

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VAT Accounting

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  1. VAT Accounting Challenges & Solutions Speaker Designation Tally Solutions (India) Pvt. Ltd.

  2. Objective • To highlight • The challenges in accounting posed by changes in the taxation framework • The solutions offered by Tally

  3. The VAT Impact Introduction of VAT offers enormous challenges to four stakeholders Businessman Government Accountant Software Provider

  4. VAT - Implementation Challenge The Challenge The Implication VAT legislation across all states is not uniform The system needs to be configured to handle the differences in legislation Continuation of CST alongside with VAT at least up to 2009. CST compliance is mandatory and also returns have to be filed There are good reasons for CST to continue though

  5. VAT - Accounting Challenge Different states implement VAT differently • Threshold for very small dealers – Rs. 5 to 10 Lacs not compulsory for every state. • Composition scheme which is not uniform • Stage at which credit can be taken • Capital goods credit • Tax implications on opening stock • Tax accounting of Closing stock and WIP • Tax accounting for goods destroyed, rejects, samples

  6. VAT – Implementation Challenge

  7. A typical transaction cycle under Sales Tax Company P Surat Q Jaipur R Jaipur S Jaipur Sale @100 CST 4% 2nd local Sale @ 137.68 TOT 1.5% 1st local Sale @ 114 LST 12% Sale to local Consumer @ 149.74 TOT 1.5% A margin of Rs.10.00 is retained by each dealer

  8. A typical VAT transaction cycle Company P Surat Q Jaipur R Jaipur S Jaipur Sale @100 CST 4% 2nd local Sale @ 124 VAT 12.5% 1st local Sale @ 114 VAT 12.5% Sale to local Consumer @ 134 VAT 12.5% Retaining the same margin through the sales cycle

  9. A typical Sales Tax transaction cycle

  10. A typical VAT transaction cycle

  11. VATDocuments Tax Invoice Debit/Credit Note At the minimum • Tax Invoice for taxable goods • Bill of Sale in certain casesE.g. for only non-taxable goods • In duplicate, Original-to be delivered to thebuyer • Credit and Debit Notes

  12. Net Difference Between Sales Tax and VAT

  13. VAT Records • Stock Records • Details of Sales and purchases of each Stock Item • Manufacturing Account • VAT Account in specified format Records must contain stipulated information

  14. Advantage Tally Tally has VAT experience! It already serves the VAT needs of its UK customers as well as customer of 25 states in India Printing Invoice according to thedifferent saterequirements Handling MRP based tax accounting and Discounts of different types

  15. Example: VAT configuration

  16. Example: Creating Purchase Ledger

  17. Example: Creating Sales Ledger

  18. Example: Customer Ledger Creation

  19. Supplier Ledger Creation

  20. Input VAT Ledger Creation

  21. Output VAT Ledger Creation

  22. CST on Purchase Ledger Creation

  23. CST on Sales Ledger Creation

  24. Creating Stock Item

  25. Purchase Voucher Creation

  26. Capital Goods Purchased

  27. Creation of Purchase-Exempt Voucher

  28. Creation of Inter-State Purchase Voucher

  29. Creation of Sales Voucher

  30. Creation of Consignment/Branch Transfer Voucher

  31. Creation of Inter-State Sales Voucher

  32. Creating Voucher class for VAT adjustment

  33. Creating VAT adjustment entries

  34. Adjustment Towards CST

  35. TDS adjustment

  36. Adjustment for Advance Tax Paid

  37. Adjustment for Purchase Tax

  38. VAT computation and Return

  39. VAT Computation Report

  40. VAT Return

  41. Forms and Reports • All statutory VAT reports will be directly generated from Tally • All returns will be generated for printing and/or electronic filing Tally 7.2 The Value Added TALLY for VALUE ADDED TAX

  42. Tally is committed To ease the pain of complexity of compliance With Power of Simplicity THANK YOU!

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