VAT Accounting

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!