Accounting for Supply of Services (SAC)

Learning Objectives

Is class ke end tak student:

  • Goods aur Services accounting ka difference samjhega.
  • Supply of Services ka GST concept samjhega.
  • Service Income Ledger create karega.
  • SAC ka basic concept samjhega.
  • Service par GST calculate karega.
  • Local service invoice enter karega.
  • Interstate service invoice enter karega.
  • B2B aur B2C service transaction samjhega.
  • Service advance ka accounting karega.
  • Service invoice ke against receipt record karega.
  • Service credit note ka practical karega.
  • Service outstanding verify karega.
  • GST Tax Analysis verify karega.

Core Concepts: Goods vs Services & SAC

Supply of Services: Jab business customer ko koi service (consultancy, IT support, maintenance, legal, advertising, etc.) provide karta hai, us transaction ko service supply ke framework mein account kiya jata hai.

Goods vs Services Comparison

Basis Goods Services
Nature Physical items Activities / Facilities / Intangible
Inventory Track Usually maintained Usually not maintained
Item Setup Stock Item commonly used Service Ledger / Accounting Invoice
Classification Code HSN Code SAC (Services Accounting Code)
Example Laptop, Printer, Bulb Consultancy, Legal, Maintenance
Stock Effect Yes (Inward / Outward movement) Generally No stock impact
SAC (Services Accounting Code): Services ko GST classification ke liye SAC codes ke through classify kiya jata haCorrect SAC identify karke service ledger mein GST rate configure kiya jata hai.

Accounting Invoice vs Item Invoice

Services ke transaction mein stock item include nahi hota, isliye TallyPrime mein Accounting Invoice Mode use kiya jata hai:

Press F8 (Sales) → Press Ctrl + H (Change Mode) → Select 'Accounting Invoice'

Master Setup for Service Accounting

Service Income Ledgers (Under Indirect Income):

  • Consultancy Fees: GST Applicable → SAC & GST @ 18%
  • Training Fees: GST Applicable → SAC & GST @ 18%
  • IT Support Fees: GST Applicable → SAC & GST @ 18%
  • Maintenance Income: GST Applicable → SAC & GST @ 18%
  • Advertising Income: GST Applicable → SAC & GST @ 18%

Service Expense Ledgers (Under Indirect Expenses):

  • Professional Fees, Legal Fees, Audit Fees, Advertising Expenses, Repair & Maintenance Expenses.

Practical Walkthroughs in TallyPrime

Practical 1 — Local Service Supply (Accounting Invoice)

01-Jun: Provided Consultancy Service to ABC PvLt(Maharashtra).

  • Taxable Service Value = ₹75,000
  • GST @ 18% = ₹13,500 (CGST @ 9% = ₹6,750 | SGST @ 9% = ₹6,750)
  • Invoice Total = ₹88,500
  • Tally Steps: Press F8 → Mode: Accounting Invoice → Party: ABC PvLtd. → Ledger: Consultancy Fees (₹75,000) → Add CGST & SGST → Save with Ctrl + A.

Practical 2 — Interstate Service Supply (Accounting Invoice)

01-Jun: Provided Annual IT Support to Gujarat Customer (Gujarat).

  • Taxable Service Value = ₹1,20,000
  • GST @ 18% = IGST @ 18% = ₹21,600
  • Invoice Total = ₹1,41,600
  • Tally Steps: Press F8 → Mode: Accounting Invoice → Party: Gujarat Customer → Ledger: IT Support Fees (₹1,20,000) → Add IGST → Save with Ctrl + A.

Practical 3 — Invoice with Multiple Services

Provided multiple bundled services to ABC PvLtd.:

Particulars / Service Ledger Amount (₹) GST Rate CGST (₹) SGST (₹) Total (₹)
Consultancy Fees 30,000 18% 2,700 2,700 35,400
Training Fees 20,000 18% 1,800 1,800 23,600
IT Support Fees 10,000 18% 900 900 11,800
Total Invoice 60,000 18% 5,400 5,400 70,800

Service Advance, Settlement & Adjustments

Full Cycle: Advance → Invoice → Settlement

  1. Advance Received (01-Jun): Customer pays ₹30,000 advance → Press F6 (Receipt) → Credit Party ledger (Ref: Advance).
  2. Service Invoice Raised (02-Jun): Raise Consultancy Invoice for ₹80,000 + 18% GST = ₹94,400 (Ref: New Ref).
  3. Advance Adjustment (02-Jun): Adjust ₹30,000 advance against pending service invoice via Journal / Bill-wise allocation.
  4. Final Settlement (02-Jun): Customer pays remaining balance of ₹64,400 → Press F6 (Receipt) → Link using Agst Ref.

Service Credit Note & Debit Note (Ctrl + F8 / Ctrl + F9)

  • Service Credit Note: Consultancy bill ₹1,00,000 mein ₹10,000 price adjustment kiya → Credit Note for ₹10,000 taxable value + ₹1,800 GST (Total ₹11,800Reduces output GST and customer receivable.
  • Service Expense & Input Tax Credit: Business pays Legal Fees ₹25,000 + 18% GST (₹4,500) to advocate → Booked under F9 Purchase (Accounting Invoice) with eligible ITC.

Complete Practice Sets

Practice Set — Level 1 (Service Incomes)

  1. 01-Jun: Consultancy Fees ₹50,000 (Maharashtra Customer, Local 18%).
  2. 03-Jun: Training Fees ₹25,000 (Maharashtra Customer, Local 18%).
  3. 05-Jun: IT Support ₹75,000 (Gujarat Customer, Interstate 18%).
  4. 08-Jun: Maintenance Income ₹40,000 (Maharashtra Customer, Local 18%).
  5. 01-Jun: Advertising Income ₹1,00,000 (Gujarat Customer, Interstate 18%).

Practice Set — Level 2 (Service Expenses & ITC)

Date Service Expense Taxable Value (₹) GST Rate Supplier Tax Type
01-Jun Legal Fees 25,000 18% ABC Legal CGST + SGST (RCM / ITC)
01-Jun Audit Fees 40,000 18% XYZ & Co. CGST + SGST (Input ITC)
02-Jun IT Service Charges 30,000 18% Tech Supplier CGST + SGST (Input ITC)
02-Jun Advertising Expense 50,000 18% Media Agency IGST (Interstate ITC)

Verification Reports, Common Mistakes & FAQs

Verification Reports in TallyPrime:

  • Sales Register / Purchase Register: Verify service billing values and net taxes.
  • Bills Receivable / Payable: Confirm party balances settled against specific service invoice numbers.
  • GST Tax Analysis (Ctrl + O inside voucher): Confirm SAC application, taxable values, and tax splits.
  • GSTR-1 & GSTR-3B: Verify outward service tax liabilities in GSTR-1 (Table 4/5/7) and eligible service ITC in GSTR-3B (Table 4).

Common Mistakes:

  • Creating physical Stock Items for services instead of using Service Income Ledgers.
  • Entering service vouchers in Item Invoice mode instead of Accounting Invoice mode.
  • Applying IGST on same-state service providers or CGST/SGST on interstate services.
  • Confusing an Advance Receipt voucher with a Taxable Service Invoice.
  • Failing to link final receipt payments with Agst Ref against the service bill.

Frequently Asked Questions:

  • Q: Services ke liye SAC code kahan configure karte hain?
    A: Service Income ya Expense ledger ke GST Details configuration screen mein.
  • Q: Service invoice ke liye voucher mode kaise change karein?
    A: Sales Voucher (F8) mein press Ctrl + H → Select Accounting Invoice.
  • Q: Service purchase par GST ka kya effect hota hai?
    A: Eligible business services ka GST amount Input Tax Credit (ITC) ke roop mein claim kiya ja sakta hai.

Quick Revision & Completion Checklist

Service Accounting Golden Workflow:
Service Rendered → SAC & GST Determination → Accounting Invoice (F8) → GST Tax Analysis → Advance Adjustment / Receipt (F6 Agst Ref) → GSTR-1 & GSTR-3B Verification

Completion Checklist:

  • Difference between Goods & Services accounting understood
  • SAC codes and Service Income/Expense ledgers configured
  • Accounting Invoice mode (Ctrl + H) mastered
  • Local (CGST+SGST) and Interstate (IGST) service invoices recorded
  • Advance receipt, invoice adjustment, and final settlement completed
  • Service credit notes and service purchase ITC verified in GST reports