How to Pass Vat Adjustment Entry in Tally

Yesterday, one of my follower (who is experienced accountant) came in my office for solving his accounting problem. He was taken one week ago appointment on my telephone. So, he told following problem.

Sir, how can we pass VAT adjustment entry in Tally? Actually, he is servicing as accountant in a company. His state Govt. has increased VAT  from 4%  to 5% and surcharge 10% of his company's products. But, in tally, there is no option to change the VAT Rates, so, he was interested to know to adjust VAT and its entries if he passed all entries with 4%.

His question was good. But, I took the time. So, today,  I am solving his problem. Its solution is also important for all those who are working on Tally.

Before passing the VAT adjustment entries, I want to tell that Tally has option to Adjust VAT when rates will change or there is 48 other reasons, we need to adjust VAT. So, for every adjustment of VAT, journal entry will be different. So, today, I just taking my friend's problem and I am answer according to his problem.

For example : Goods purchased Rs. 1000. Goods sold Rs. 2000. Old VAT Rates 4%. New VAT Rates 5% + 10% surcharge.

1st Step : Create Voucher Type in Account info in Tally.ERP 9

Just create VAT Adjustment and keep it under journal. For creating, just go to account info >> voucher type.



2nd Step : Pass the Adjustment of VAT in Journal Voucher

Just go to voucher entries. Choose journal voucher. In journal voucher, choose, VAT adjustment. Now, it will ask the reason of adjustment, choose other from 49 options.



Because VAT is increased from 4% to 5%. It means net increase in input vat is only 1%. Total purchase is Rs. 1000.  Total purchase's 1% is Rs. 10 and surcharge is 10% which is calculated on Rs. 50 and it will be Rs. 5. So, total value of vat increase  is Rs. 15.


It means our (creditors) current liability will increase. So,

VAT input account Dr. 15

Creditor Account Cr. 15

Accept the voucher entry.

Pass next voucher entry for adjusting vat output.

ecause VAT is increased from 4% to 5%. It means net increase in input vat is only 1%. Total sale is Rs. 2000. Total sale's 1% is Rs. 20 and surcharge is 10% which is calculated on Rs. 100 and it will be Rs. 10. So, total value of vat increase  is Rs. 20+ 10 = Rs. 30

It means our (debtors)  current asset will increase. So,

Debtor Account Dr. 30

Output VAT Account Cr. 30

Watch following video for more clear this concept 




If you want to solve your accounting problem personally, you can get also appointment at our official telephone no. 01762500250. 

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Accounting Education: How to Pass Vat Adjustment Entry in Tally
How to Pass Vat Adjustment Entry in Tally
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