Applying VAT on Fixed Assets in Tally.ERP 9 – Step-by-Step Tutorial with Examples

In Tally.ERP 9, applying VAT (Value Added Tax) on fixed assets involves a few steps. Here’s a comprehensive guide on how to apply VAT on fixed assets in Tally.ERP 9:

Step 1: Creating Fixed Assets Ledger:

1. Go to Gateway of Tally > Accounts Info > Ledger > Create.
2. Create a ledger named “Fixed Assets” under the group “Fixed Assets”.

Step 2: Enabling VAT in Tally.ERP 9:

1. Go to Gateway of Tally > F11: Features > F3: Statutory & Taxation.
2. Enable VAT by selecting “Yes” in the option “Enable Value Added Tax (VAT)?”

Step 3: Creating VAT Ledger:

1. Go to Gateway of Tally > Accounts Info > Ledger > Create.
2. Create a ledger named “VAT @ X%” (replace X with your applicable VAT rate) under the group “Duties & Taxes”.

Step 4: Recording Purchase of Fixed Asset with VAT:

1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase.
2. Enter the date of purchase, supplier invoice number, and other details.
3. Debit the “Fixed Assets” ledger with the total amount (excluding VAT).
4. Debit the “VAT @ X%” ledger with the VAT amount.
5. Credit the supplier’s ledger with the total amount (including VAT).

Step 5: Calculating Input VAT Credit:

1. Go to Gateway of Tally > Display > Statutory Reports > VAT > VAT Computation.
2. Check the Input VAT credit available against the VAT ledger.

Step 6: Adjusting Input VAT Credit:

1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal.
2. Debit the Input VAT ledger and credit the VAT Payable ledger to adjust the input VAT credit against the VAT liability.

Step 7: Calculating Depreciation:

1. Go to Gateway of Tally > Accounts Info > Ledger > Create.
2. Create a ledger named “Depreciation” under the group “Indirect Expenses”.
3. Record depreciation entries as per the applicable rates and methods.

Step 8: Recording Sale of Fixed Asset:

1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales.
2. Enter the date of sale, buyer details, and other necessary information.
3. Debit the buyer’s ledger with the sales amount (excluding VAT).
4. Credit the “Fixed Assets” ledger with the original purchase cost.
5. Credit the “VAT @ X%” ledger with the VAT amount charged on the sale.

Step 9: Paying VAT Liability:

1. Go to Gateway of Tally > Display > Statutory Reports > VAT > VAT Challan Reconciliation.
2. Check the VAT payable amount.
3. Go to Gateway of Tally > Accounting Vouchers > F5: Payment.
4. Debit the VAT Payable ledger and credit the bank ledger for paying the VAT liability.

Step 10: Updating VAT Returns:

1. Go to Gateway of Tally > Display > Statutory Reports > VAT > VAT Returns.
2. Generate VAT returns and file them as per legal requirements.

Throughout these steps, ensure compliance with VAT regulations and consult with a tax advisor if needed.

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