Record Inward Supply Under Reverse Charge (RCM)

Every registered person is aware of the implications of RCM; they are the ones who must pay the tax when transacting with an unregistered person or a person/service from the GST Council’s notified category.

Tally Prime allows you to record inward supplies that are subject to reverse charge as reverse charge. You can use reverse charge to account for advance payments, inward supply of taxable services, cancellation of advance payments, and purchase returns. Transaction information is included in the GSTR-2 and GSTR-3B reports.  

Set up for Inward Supply Under Reverse Charge 

You can set up the following for inward supplies under reverse charge: 

A] Configure Stock Item 

  1. Gateway of Tally > Alter > type or select Stock Item > and press Enter.
    Alternatively, press Alt+G (Go To) > Alter Master > type or select Stock Item > and press Enter
  2. Select the required stock item.
  3. Specify GST applicability.
  • Set the option GST Applicable to Applicable.
  • Enable the option Set/Alter GST Details.
  1. Provide GST details.
  • Press F12 (Configure) > set the option Enable Reverse Charge calculation to Yes > and save the configuration screen.
  • In the GST Details screen, set the Taxability to Taxable.
  • Set Is reverse charge applicable to Yes.
  • Enter the GST rates.

  1. Accept the GST Details screen and the stock item.

B] Configure Purchase Ledgers – Services 

  1. Gateway of Tally > Alter > type or select Ledger > and press Enter.
    Alternatively, press Alt+G (Go To) > Alter Master > type or select Ledger > and press Enter
  2. Select the required purchase ledger.
  3. Specify GST applicability.
  • Set the option Is GST Applicable to Applicable.
  • Enable the option Set/Alter GST Details.
  1. Provide GST details.
  • Press F12 (Configure) > set the option Enable Reverse Charge calculation to Yes > and save the configuration screen.
  • In the GST Details screen, set the Taxability to Taxable.
  • Set Is reverse charge applicable to Yes.
  • Enter the GST rates.

  1. Accept the GST Details screen and the purchase ledger.

Record Inward Supply Under Reverse Charge 

You can record inward supply of: 

Record inward supply of goods 

  1. Gateway of Tally > Vouchers > press F9 (Purchase).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F9 (Purchase). 
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Item Invoice, in this case).
  3. Press Ctrl+O (Related Reports) > type or select GST – Tax Analysis to view the tax details. Press Alt+F5 (Detailed) to view the reverse charge amount. 
  4. Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    Press Ctrl+I (More Details) > type or select GST – Tax Analysis to view the tax details. Press Alt+F5 (Detailed) to view the reverse charge amount.

  1. Press Esc to return to the purchase invoice. The purchase invoice appears as shown:

  2. Press Enter to save.

Record inward supply under reverse charge for services 

You can create invoices to track the purchase of services attracting reverse charge. 

  1. Gateway of Tally > Vouchers > press F9 (Purchase).
    Alternatively, press Alt+G (Go To) > Create Voucher > press F9 (Purchase). 
  2. Press Ctrl+H (Change Mode) to select the required voucher mode (Accounting Invoice, in this case).
  3. Press Ctrl+O (Related Reports) > type or select GST – Tax Analysis to view the tax details. Press Alt+F5 (Detailed) to view the reverse charge amount. 
  4. Note: If you are on TallyPrime Release 1.1.3 or earlier, follow the step:
    Press Ctrl+I (More Details) > type or select GST – Tax Analysis to view the tax details. Press Alt+F5 (Detailed) to view the reverse charge amount.

  5. Press Esc to return to the purchase invoice. The purchase invoice appears as shown:

  6. Press Enter to save.

Here you go, after completing the detailed 8 steps of configuring GST in Tally Prime, you are ready to start recording your data without a hitch, and your overall time in data entry will be cut down exponentially. In any case, if you skipped any of the previous steps, please double-check them first to avoid any confusion. The steps are as follows:

Step 1) Composition Dealers! Activate GST in Tally

Step 2) Regular Dealers! Activate GST in Tally

Step 3) Update Sales and Purchase Ledgers for GST

Step 4) Create GST Ledgers

Step 5) Update Stock Items and Stock Groups for GST

Step 6) Create Party Ledgers for GST

Step 7) Update a Service Ledger for GST

Step 8) Ledgers for Expenses, Incomes, Non-Revenue Accounts, Invoice Rounding Under GST

Step 9) Record Inward Supply Under Reverse Charge (RCM) [SCROLL UP]