This document outlines the steps to enable and make entries for service tax and TDS in Tally. It describes 3 entries - 1) a journal entry to create an outstanding against the party and TDS on the expense, 2) a second journal entry to deduct the TDS amount, and 3) an entry in the purchase or sales screen to allocate service tax on services. It also provides steps to create a tax adjustment voucher type and make an adjusting entry to reconcile input and output service tax balances.

1. Service Tax & TDS
Enabling Service Tax & TDS:
Gateway of Tally > F11: Features > F3:
Statutory & Taxation

2. FOR ONLY TDS
1ST ENTRY IN JOURNAL (Creating outstanding against party)
Dr. :- Expense account
Cr.:- Party’s account
[then press enter and select “new ref” and create TDS
ON Expense (group:- Duties & Taxes – TDS– then
select appropriate category)]
2ND ENTRY AGAIN IN JOURNAL (TDS DEDUCTION)
First press ALT + S ( TDS DEDUCTION APPEARS)
Dr. :- Party’s account
Cr.:- TDS on Expense

3. For only Service Tax
Entry in Purchase screen (F9) or Sales screen(F8) :-
There should be no quantity & Sale ledger or
Purchase Ledger
• Press F12, set the following options to No
– Use Common Ledger A/c for Item Allocation --NO
– Use Defaults for Bill Allocations -- NO
• Press Alt + I
In Party’s name :- Party’s name
In particular :- 1st ---service type ; 2nd --- service tax
on service type ( choose same service category in
service type)

4. For both Service Tax & TDS
1st :-Entry in Purchase screen (F9) :- There should be no
quantity & Purchase Ledger
• Press F12, set the following options to No
– Use Common Ledger A/c for Item Allocation --NO
– Use Defaults for Bill Allocations -- NO
• Press Alt + I
In Party’s name :- Party’s name
In particular :- 1st ---service type ; 2nd --- service tax on service
type ( choose same service category in service type)
Then press enter till end & Select New Ref :- and create TDS
ON Expense (group:- Duties & Taxes – TDS– then select
appropriate category)

5. For both Service Tax & TDS
2ND ENTRY AGAIN IN JOURNAL (TDS DEDUCTION)
First press ALT + S ( TDS DEDUCTION APPEARS)
Dr. :- Party’s account
Cr.:- TDS on Expense

6. STEPS FOR SERVICE TAX ADJUSTMENT
1st :- CREATE SERVICE TAX ADJUSTMENT SCREEN
FOR THIS GOTO (GATE WAY OF TALLY ACCOUNT
INFO  VOUCHER TYPES  ALTER  JOURNAL)
THEN PRESS ENTER AND GO BELOW ( NAME OF
CLASS) and WRITE “ TAX ADJUSMENT” then press
enter and set following to yes
USE CLASS FOR VAT ADJUSTMENT YES

7. STEPS FOR SERVICE TAX ADJUSTMENT
2ND :- THEN GOTO ACCOUNTING VOUCHER SCREEN AND
PRESS F7 (SELECT “TAX ADJUSTMENT”) -- THEN SELECT
OTHER
THEN :-
Dr –> ALL OUTPUT SERVICE TAX
Cr  ALL INPUT SERVICE TAX
Cr  BALANCE IN “SERVICE TAX PAYABLE” Ledger
(GROUP UNDER INDIRECT EXPENSE)