Help about Composition Tax Adjustment For india

Hello, bhuwan.kotabagh.

It’s important to have a correct tax liability before paying your taxes to the agency. In QuickBooks Online, default tax agencies are created by the system to have Input and Output tax accounts in the Chart of Accounts. This mean that when you create an invoice, the Output tax account is credited. While the Input tax account is debited if you enter a bill.

Prior to making tax payments to the agency, you would need to make an adjustment entry to offset the amounts in the Input and Output tax accounts. Then, transfer their difference to the Tax Payable account (to book the liability).

To make tax adjustments, you can follow these steps:

1. Go to Taxes on the left panel.
2. From the Tax drop-down, select the agency (GST, VAT & CST, or Service Tax) you want to perform the adjustment for. You can also click the right or left arrows on the carousel to select the relevant agency. 
3. You would be taken back to the Tax Centre page and here you can verify that the Tax Payable balance shown for the agency has been updated.
4. Next, in the Action column, click Record Payment (or click the drop-down arrow and select Record Payment) and record the tax payment.

Here's a sample screenshot for a visual guide:

You can read this article for reference: What is Tax Adjustment and how do I use it?.

Feel free to get back to me here if you have any follow-up questions or other concerns. Have a good one!