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1 helpful vote

I need to charge abated rate of service tax to my customers. How should I go about that in QuickBooks?

In QuickBooks abatement works a little differently than reverse charge. For abatement we need to create custom tax codes and group rates.

Let's take an example of Transport service on which government provides 60% abatement on service tax and the tax rates are chargeable as per the table below  :

Service Service Tax @ 14% Swachh Bharat Cess @ .50% Krishi Kalyan Cess @ .50% Total Service Tax
Transport Service 5.6% (After abatement of 60%) .20% (After abatement of 60%) .20% (After abatement of 60%) 6%

We now will have to create new custom rates for Service Tax Agency @ 5.6%, SBC Agency @ .20% and KKC Agency @ .20%

Please visit the Create custom tax rate (India only) article for the steps to create custom tax rates. Follow the steps for all the three agencies.

Once the tax rates are created, we need to group them so that they can be applied together. Please visit the Create group tax (India only) article for the steps to group the tax rates created above. Make sure that all the three rates in the group tax are applicable on the Net Amount.

Once we have the group tax rate created we can now create a service in the product & service list with this abated rate. For that follow the steps below:

  1. Click on the Gear Icon (company name) on the right hand top corner of the screen
  2. Click on Products and Services under Lists
  3. Click on New button
  4. From the new screen select "Service"
  5. Enter Service name, select Category & Service Type
  6. From the Tax drop down select the newly created Group Rate
  7. In the Abatement % text box enter the abatement % that the government provides. For this example it would be 60. This information will be used while generating the "Sales Abatement" report.
  8. Click Save and Close button to save the newly created Service.

We have now created a Service which has abated rate of tax available. We can now use this Service in our sales form and QuickBooks will calculate appropriate tax and we can also see the "Sales Abatement" report to get the details of the abatement and taxable amounts. This report will help us while filing our Service Tax return.

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