Export Benefit like MEIS / ROADTEP License Accounting Entry

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john (Querist)
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11 June 2022 Question
a) On 08.06.22 The DGFT issues an MEIS License of various shipping done in past.
Total FOB Value of these various Shipments -92,95,700 & its MEIS License Value RS.8,71,777 as per License received.
b) We Sold this license of Rs.8,71,777 on 09.06.22 at 85% in the Market to our Client for Rs.7,41,010/- by generating a TAXFREE sale invoice to a GST registered dealer.
c) We received the above license amt RS.7,41,010 from the above client on 10.06.22 in bank.

Summary
1st Here we received MEIS License of Value 8,71,777 (in the form of License) Date- 08.06.22
2nd We sold it in the market for Rs. 7,41,010 Date-09.06.22
3rd We recd the above amt 741010 in bank date -10.06.22

1. What would be the entries for all these three steps ?
2. Accounting entry should be in such a way that this Taxfree sale would reflect in GSTR-1 (remember there is no purchase its a license recd from DGFT (Govt)

Request for a detailed accounting entry step by step preferably if one would first practically try it in tally and then post a reply, as i called up tally customer care & many of the executive could not give a satisfactory solution to it..

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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07 July 2024 Certainly! Handling MEIS License transactions requires careful accounting to reflect the tax implications correctly, especially for GST purposes. Here’s how you can handle the entries step by step in Tally for the scenario described:

### Step-by-Step Accounting Entries in Tally:

**Step 1: Receipt of MEIS License from DGFT**
- Date: 08.06.22
- Nature of Entry: Recognition of MEIS License received from DGFT

**Accounting Entry:**
```
MEIS License A/c Dr. 8,71,777
To DGFT (Govt) A/c Cr. 8,71,777
```
- Explanation: Debit MEIS License account to record the value of MEIS License received.

**Step 2: Sale of MEIS License to Client**
- Date: 09.06.22
- Nature of Entry: Tax-free sale of MEIS License to a GST registered dealer

**Accounting Entry:**
```
Bank A/c Dr. 7,41,010
To MEIS License A/c Cr. 7,41,010
```
- Explanation: Debit Bank account for the amount received from the sale. Credit MEIS License account to reduce its balance.

**Step 3: Receipt of Sale Amount in Bank**
- Date: 10.06.22
- Nature of Entry: Recording the receipt of sale amount in the bank

**Accounting Entry:**
```
Bank A/c Dr. 7,41,010
To Client A/c Cr. 7,41,010
```
- Explanation: Debit Bank account to record the amount received from the client. Credit Client account for reconciliation purposes.

### GST Implications:
Since the sale is tax-free (likely under GST exempt category), it should be reflected correctly in GSTR-1. Here’s how you ensure it reflects:

- Ensure that the sale invoice clearly mentions it as a tax-free transaction and specifies the GST exempt category code (if applicable).
- In Tally, while creating the sales invoice:
- Select the tax-free nature of the transaction.
- Use the appropriate SAC (Service Accounting Code) or HSN (Harmonized System of Nomenclature) code that denotes the MEIS License sale.
- Verify with your GST consultant or advisor to confirm the exact SAC/HSN code to use for MEIS License sale.

### Summary:
These entries should correctly reflect the transaction in your accounting records in Tally. Ensure that each entry is accurately dated and corresponds to the actual flow of funds and documentation (like invoices). This approach should also facilitate proper reporting in your GSTR-1 as per GST regulations.

If there are specific GST codes or additional regulations applicable to such transactions in your jurisdiction, consulting with a tax expert or GST advisor would be prudent to ensure full compliance.