---
title: "Standard Operating Procedure (SOP): Passing VAT Reconciliation Journal in ERPNext"
space: "Wiki"
url: "https://support.aakvatech.com/wiki/standard-operating-procedure-sop-passing-vat-reconciliation-journal-in-erpnext"
updated: "2026-07-22"
---

**Frequency:** Monthly (Before 20th of every month)  
**Purpose:** To reconcile Input VAT and Output VAT and pass a VAT Payable journal entry in compliance with Tanzanian VAT regulations.

---

### 1. **Pre-Requisites**
- Ensure all sales and purchase invoices for the month are submitted and approved.
- Output VAT and Input VAT accounts are correctly set in **Sales Taxes and Charges Templates** and **Purchase Taxes and Charges Templates**.

---

### 2. **Accounts Used**
- **Input VAT Account:** e.g., `Input VAT - A`  
- **Output VAT Account:** e.g., `Output VAT - A`  
- **VAT Payable Account:** e.g., `VAT Payable - A`

---

### 3. **Procedure**

#### Step 1: Generate VAT Report
1. Go to **Accounts > Reports > General Ledger**.
2. Filter by:
   - **Posting Date**: First to last day of the month.
   - **Accounts**: Input VAT and Output VAT.
3. Note the balances:
   - **Output VAT**: VAT collected from customers.
   - **Input VAT**: VAT paid to suppliers.

#### Step 2: Calculate VAT Payable
- **VAT Payable = Output VAT – Input VAT**  
- If Input VAT > Output VAT, you have a **VAT Credit**.

#### Step 3: Create Journal Entry
1. Go to **Accounts > Journal Entry > New**.
2. Fill in:
   - **Posting Date**: Last day of the month.
   - **Company**: Your company in Tanzania.
3. Add Accounts:
   - **Debit Input VAT Account** with Input VAT amount.
   - **Credit Output VAT Account** with Output VAT amount.
   - **Balance** the difference to **VAT Payable Account**.

   Example:
   | Account               | Debit (TZS) | Credit (TZS) |
   |------------------------|--------------|---------------|
   | 2100 - Input VAT       | 1,000,000    |               |
   | 2300 - VAT Payable     |              | 500,000       |
   | 2200 - Output VAT      |              | 1,500,000     |

4. **Save and Submit** the Journal Entry.

---

### 4. **Post-Reconciliation (Payment via Journal Entry)**

1. **Obtain GEPG Control Number** from TRA portal.
   - This will be used as the **Reference No**.
   - The date the control number was generated will be the **Reference Date**.

2. Go to **Accounts > Journal Entry > New**.

3. Fill in:
   - **Posting Date**: Date of generating the control number.
   - **Reference Number**: GEPG Control Number.
   - **Reference Date**: Date of control number generation.

4. Add Accounts:
   - **Debit VAT Payable Account** (e.g., `2300 - VAT Payable - TZS`) with the amount payable.
   - **Credit Bank Account** (e.g., `1000 - CRDB Bank - TZS`) with the same amount.

   Example:
   | Account                | Debit (TZS) | Credit (TZS) |
   |------------------------|-------------|---------------|
   | 2300 - VAT Payable     | 500,000     |               |
   | 1000 - CRDB Bank       |             | 500,000       |

5. **Save and Submit** the Journal Entry.

6. Attach GEPG payment proof or receipt in the Journal Entry for audit trail.

---

### 5. **Compliance**
- Journal must be posted and VAT paid by **20th of every month**.
- Archive VAT reports and Journal Entry PDF for audit.