Tax Journals

Article
09/23/2013

Taxes must be recorded according to your company's accounting system and government regulations. Tax returns and tax records must be maintained separately for each location. Journals capture taxes for all general ledger accounts for financial and statutory records.

With tax journals, you can do the following:

Post opening balances in financial and statutory records
Adjust tax
Compute and record tax in general ledger accounts

Tax Journals for Excise Duty, VAT, and Service Tax

Journals can be used to obtain opening balances, apply structures, adjust excise duties, and update statutory records for the following:

Excise duty. For more information, see How to: Set Up a Warehouse Location for Excisable Trading Goods.
VAT or sales tax. For more information, see How to: Set Up VAT.
Service tax. For more information, see How to: Set Up Service Tax.

Opening Balances for Excise Duty

You must enter existing excise duty balances and quantity balances into the journal so that these balances are reflected in the Register General (RG) registers. To enter opening balances, you need to do following:

Post the opening balance values of recoverable excise and payable excise to the register through the general journal.
Enter the quantity of excisable goods using the inventory journal.
Record transactions according to the Excise Control Code (ECC) number.
Record the opening balance for excise payable if no excise record is selected.

For more information, see How to: Enter Opening Balances in Excise Registers.

Applying Structure for Excise Duty

You must apply structure to the journal lines. The tax rate is applied from the related group in the general ledger account. For more information, see How to: Set Up Excise Tax in the General Ledger and as a Payment Structure.

Adjusting Excise Duty

Using the journal, you can correct and modify adjustments in the following reports:

RG 23 A Part II. For more information, see How to: Print RG 23 A and RG 23 C Reports.
RG 23 C Part II. For more information, see How to: Print RG 23 A and RG 23 C Reports.
RG 23 D. For more information, see How to: Print RG 23 D Reports.

Excise duty journals record adjustments against general ledger accounts for appropriate ECC numbers. The RG register and financial books must reflect the adjusted values. Adjusting excise duty enables you to post the 50 percent of your entries that have been deferred as Central Value Added Tax (CENVAT) receivables for capital goods.

Updating Statutory Records for Excise Duty

General journals and inventory journals update the following excise records:

RG 23 A Part I. For more information, see. How to: Print RG 23 A and RG 23 C Reports.
RG 23 A Part II. For more information, see. How to: Print RG 23 A and RG 23 C Reports.
RG 23 C Part I. For more information, see How to: Print RG 23 A and RG 23 C Reports.
RG 23 C Part II. For more information, see How to: Print RG 23 A and RG 23 C Reports.
RG 23 D. For more information, see How to: Print RG 23 D Reports.
Personal Ledger Account (PLA) register. For more information, see How to: Print Personal Ledger Account Reports.
Daily Stock Account (DSA). For more information, see How to: Print Daily Stock Reports.

Opening Balances for VAT or Sales Tax

You must enter existing VAT register balances so that these balances are reflected in the VAT register and financial books. To enter opening balances, you need to do following:

Post the value of the opening balance for the VAT recoverable account and VAT payable account to the VAT register and financial books using the general journal.
Record transactions according to the Tax Identification Number (TIN).

For more information, see How to: Enter Opening Balances for Input VAT and Output VAT.

Applying Structure for VAT or Sales Tax

You must apply structure to the journal lines. The tax rate is applied from the related group in the general ledger account. For more information, see How to: Set Up Tax or Charge Groups and Structures.

Adjusting Sales Tax and VAT

Using the journal, you can record VAT and sales tax adjustments against general ledger accounts according to the appropriate TIN. To record adjustments for sales tax, you can select warehouses or locations in the journals. For more information, see VAT Adjustment Journal Window.

Updating Statutory Records for VAT or Sales Tax

You must update the following excise tax records for the general journal and the inventory journal:

VAT purchase register
VAT sales register
Outward or inward branch transfer register

For more information, see General Journal Window.

Opening Balances for Service Tax

You must enter the existing service tax balances so that these balances are reflected in the input service credit register. To enter opening balances, you need to do following:

Post the opening balance value for the recoverable service tax and payable service tax to the register using the general journal.
Record transactions for the appropriate service tax registration number.

For more information, see How to: Enter Opening Balances for Service Tax.

Applying Structure for Service Tax

Adjusting Service Tax

You can record service tax and educational cess (eCess) adjustments to service tax against any general ledger account for the appropriate service tax registration number. The adjusted values are reflected in the service tax register and the financial books.

Updating Statutory Records for Service Tax

You must update the following service tax records for the general journal and inventory journal:

Input service credit register
Input service distribution register
Service receipt register