Last Updated on: 10th August 2026, 12:05 pm

Account Master GST Set Up in Tally Prime 7

Setting up GST in Accounts Masters (Ledgers) is the process of defining how specific ledger account interact in relation to GST structure, to set Tax Type & GST Rate, GST Calculation and other GST related info GST in transaction documents and relevant GST returns.

GST Set up in Accounts Masters – Concept, Purpose & Implications

For the purpose of GST set up, Ledgers may be categorised like, Sales, Purchase, Tax, Party (Buyer & Seller), or Expense and assigned specific GST attributes like taxability, tax rates, and supply types.

The primary goal is to automate tax calculation in vouchers and ensure compliance by capturing data for GSTR-1 and GSTR-3B.

Correct GST setup in Accounts Ledgers enable auto calculation of Tax. Incorrect configuration may cause tax not appearing in invoices or being flagged as “Uncertain Transactions” in reports.

Select GoT>Create>Ledger to get Ledger creation screen to set Ledger Configuration options

Sales Purchase Accounts Masters GST set up in Tally Prime 7

At Accounts Ledger creation screen, click F12:Configure to get Ledger Configuration screen. There are many options in Accounts Ledger Configuration. However, Only the options closely relevant or GST settings are shown here.

Set the Configuration options to customise the Ledger creation screen for GST relevant Accounts as per needs. Only the options activated would appear in the Ledger entry screen for input. So, if some input options are not seen in the Entry screen. Click F12:Configure and activate the option first, then the options would appear in the entry screen.

Ledger creation GST Configuration

Sales Ledger GST Configuration – Key options

In TallyPrime 7, the F12: Configuration screen within the Sales Ledger creation allows to unlock hidden fields for advanced tax and accounting scenarios. To see all available options, you first set Yes at Show more configurations and Yes at Show all configurations

Key options specifically relevant to Sales Ledger GST setup

Numerous cofiguration options are shown. Only the options relevant to GST set up in Sales Ledger are explained.

• Enable Reverse Charge calculation: Set Yes tospecify if the ledger is used for transactions where the recipient is liable to pay tax. It is used for reporting supplies where the tax liability falls on the buyer rather than the seller, such as certain notified services. Consequently, Sales transaction would accurately reflected in specific sections of GST returns like GSTR-1, identifying it as an RCM-eligible supply.
• Set ledgers to behave as duties and taxes : Set Yesto track tax amounts under non-tax groups, such as Current Assets, normally to track Input Tax Credit separately from current liabilities. On setting Yes, the ledger will provide tax-specific configuration fields (Tax Type, Duty Type) even if it is not under the standard “Duties & Taxes” group.
• Provide HSN/SAC details : Set Yes to allow entry of HSN code and description fields at the ledger level, to allows to define a specific classification for a particular sales stream instead of Company-level defaults.
• Select appropriation methods to allocate additional costs : To enable the “Include in assessable value calculation for” and “Method of calculation” fields. It is primarily used for Secondary Supply or income ledgers (like packaging or freight charges) to be added to the value of goods to determine the total taxable amount. For a standard Common Sales Ledger, this must be set to Not Applicable to ensure GST is calculated strictly on the item rates; choosing GST here for a main sales ledger could lead to incorrect tax bases.

For most businesses, Common Sales Ledger configuration should be kept  simple by setting HSN and Rate details to As per Company/Group, to dynamically pull the correct rates from individual Stock Items, the most foolproof system

Purchase Ledger GST Configuration – Key options

Configuration screen within the Purchase  Ledger creation to unlock hidden fields for advanced tax and accounting scenarios. To see all available options, you must first set Show more configurations and Show all configurations to Yes.

• Enable Reverse Charge calculation: Set Yes to Activates the field “Applicable for Reverse Charge” within the ledger master. It is used for inward supplies where the buyer is liable to pay the tax instead of the supplier. Consequently, transactions are properly reflected for reporting in the RCM sections of GSTR-3B and for calculating liability in GSTR-2 reports.
• Set ledgers to behave as duties and taxes : Set Yes toAllows the ledger grouped under a non-tax category (like Current Assets) to function as a GST duty ledger, to track Input Tax Credit (ITC) separately from current liabilities or for Composition Dealers who need to add purchase tax to the item cost, It enables tax configuration fields (Tax Type, Duty Type) for ledgers not under the “Duties & Taxes” group.
• Select appropriation methods to allocate additional costs : : To  enable selection of apportion additional expenses (at “Method of appropriation to allocate additional costs in purchase invoice” at Ledger creation screen)like freight, insurance, or duties directly into the purchase cost of each stock item, ensures real Stock Valuation by reflecting the true landing cost of the goods.
• Include in assessable value calculation for GST : Determines (available only when Method of Application of Stock Value is Not Applicable)if the value of this ledger should be added to the base amount before tax is calculated. Normally used for service charges or expenses that form part of the total taxable value of the purchase cost, to calculate GST on the combined value (Item Price + Ledger Value),

Sales Ledger vs. Purchase Ledger GST Set Up Options

Many of the Accounts Ledger Confguration and Accounts Ledger entry/ Alteration options ae similar, both for Sales & Purchase Ledger. The comparative differences are specifically pointed out here.

Feature	Sales Ledger Configuration	Purchase Ledger Configuration
Reverse Charge (RCM)	Used to flag outward supplies where the customer pays the tax.	Used for inward supplies where the business itself pays the tax to the government.
Appropriation for Costs	Primarily used for secondary supplies (e.g., packaging) in a Composite Supply to include in the principal item’s value.	For Stock Valuation; taxes or expenses directly to the Purchase Cost is directly added of the item.
Assessable Value	Used for service incomes or additional charges that increase the taxable base for the customer.	Used to add external procurement costs into the base value for calculating the final purchase GST.
Common Ledger Setup	Configured to pull rates from the Stock Item to handle various sales tax rates.	Configured as “As per Company/Group” to dynamically capture various purchase rates from items.

For a standard Common Purchase Ledger, it is highly recommended to keep ‘Include in assessable value’ as ‘Not Applicable’ and ‘GST Rate Details’ as ‘As per Company/Group’ to allow Tally to pull specific rates from stock items automatically.

Sales Purchase Accounts Ledger GST set up

Having set up the necessary Ledger Configuration options, now set up / enter GST related data in respective Accounts Ledger entry (GoT>Create > Ledger, or Alter  GoT>Alter > Ledger) to get Ledger creation screen.

The special points related to GST Set up in Sales & Purchase Ledger Accounts

Ledger Account Name: Enter the Ledger Account Name. At Ledger creation, for Sales Ledger, select Sales from List of Groups; for Purchase  Ledger, select Purchase  from List of Groups;.

• At Include in Assessable Value Calculation, select GST
• At GST Applicability, Select Not Applicable for Sales Ledger, Applicable for other Taxable expenses
• At Include Assessable value calculation : Select Goods. Services, or Goods & Services
• HSN/SAC & Rate Details:
  • Common Ledger: For businesses with multiple rates, set these to As per Company/Group, to pull the specific rate from the Stock Item instead of the ledger. This is the most appropriate and fool proof methods
  • Specific Ledger: For fixed-rate ledgers, the details may be directly set up in the ledger. Howver this is normally not recommended, as explained later.
• Type of Supply: Select Goods or Services.

GST Accounts Ledger creation (CGST, SGST/UTGST, IGST)

GST Ledger creation Configuration : The configuration optins ae explained. Noe st the option as explained

At Type of Duty/Tax to GST, select the specific tax type (Central, State, or Integrated).

• Input GST under Current Assets: If you like to keep Input Tax Credit separately under Current Assets (instead of Duties & taxes) from liabilities Tax Ledgers, select Current Assets, at under, Press F12 and Set Yes at Behave as duties and Taxes Ledger
• GST Ledger under Duties & Taxes : Alternately, you may select Duties & taxes at Under, At Type of Duty select GST, and then at Tax Type select SGST/UTGT, IGST, CGST, Cess, as appropriate. At Additional Cost allocation of Purchase, select Not Applicable

Taxable Expense / Service  Accounts GST Set Up

• Expenses subject to GST : For expenses that attract GST (like freight or packaging), At GST Applicability select Applicable.
• Assessable Value Calculation: If an expense (like service charges) needs to be included in the taxable value of goods, at Include in assessable value calculationselect Appropriate to (Goods, Services, or Both) and at Method of calculation, select (Based on Quantity or Value).

Party Ledgers (Customers and Suppliers) GST Set up

• Registration Details: Select the Registration Type (Regular, Composition, etc.) and enter the GSTIN/UIN.
• Multiple GST Address & Registrations: If a party has branches in different states:

Press F11 and set Yes at enable Multiple Addresses and enter the Address / GSTIN of each office in a subscreen,  to allow select  correct branch during voucher entry.

Common Sales/ Purchase Account GST Set Up

To create a common Sales / Purchase  ledger for multiple GST rates, configure the ledger to act as a “pass-through,” allowing to pull specific tax rates directly from Stock Items. GST rates should not be specified in Ledger Account.

Steps to Create Common Sales Ledger Account

• Create ONE Sales Ledger Account under Sales Account Group. Set Yes at Inventory Values are Affected. At Include in Assessable Value, set GST. At GST Applicability, set Applicable.  At Type of Ledger, select Not Applicable.
• HSN/SAC & Rate Details:  At HSN/SAC Details,select As per Company/Group. At Set GST Rate Details, select  As per Company/Group.
  By selecting “As per Company/Group, no Fixed GST rate is pre assigned to the ledger Account. GST rate would be picked up from Stok Item.
• At Type of Supply, Select Goods or Services, depending on your business.
  Press Ctrl+Ato save the ledger.

Benefits of using Common Sales / Purchase Account  : Only one Sales / Purchase ledger is to be created. There would be  no mistake in selecting Sales / Purchase Ledger in entry for Sales / Purchase Invoice. Tally will automatically set proper GST Rate and GST related details, with proper Computation, in Invoice and all GSTR Returns.

GST Set up in Sales / Purchase Ledger – Explanations

Setting GST related options in Ledger Account creation is quite confusing and baffling due to unstructured options and prompts. The user often get confused in selecting the proper option. Any mistake has serious implication in Invoicing and GST Returns. The following important fields in Accounts Masters are explained in details for correct set up

• Inventory Values are affected: Determines if the ledger transaction should update stock quantities and valuation. Set Yes for core trading ledgers (Sales/Purchase) to link them with inventory masters. For additional costs (freight/packaging), set No to prevent duplicate quantity entries while the value can still be apportioned to item costs.
• Include in Assessable Value: Combines the ledger’s value with the item’s price  to create the total taxable base for GST. Useful for “Composite Supplies” (like freight, insurance) where the additional charge must attract the same tax rate as the principal Stock Item.
• GST Applicability: Defines if the ledger itself is subject to GST rules. Select Applicable for primary sales/purchase ledgers. For additional costs, normally set to Not Applicable if the tax is being derived from the principal item’s rate via the “Include in Assessable Value” setting.

Sales Purchase Common Ledgers and Additional Costs Ledgers Setup Rules

Ledger Type	Inventory Values are affected	Include in Assessable Value	GST Applicability
Common Sales Ledger	Yes	Not Applicable	Applicable
Common Purchase Ledger	Yes	Not Applicable	Applicable
Taxable Additional Cost (Sales)	No	GST	Not Applicable
Taxable Additional Cost (Purchase)	No	GST	Not Applicable

Value-Based Taxable Additional Charges GST Set Up

When setting up a Taxable Additional Cost in Purchase, set the following additional options to ensure valuation is based on value:

• At Include in assessable value calculation for, select GST.
• At Appropriate to, select Goods
• At Method of calculation, select ‘ Based on Value’ to apportion on Item value,  or ‘Based on Quantity’ to apportion on Item Quantity,

Additional Charges Ledger GST Set up – Practical Example

A Purchase Invoice contains three Items A-0 (GST rate 0%) – value Rs 5000,  B-5, (GST rate 5%),  value Rs 7000,  C-12 (GST rate 12%). value Rs 10000, Additional amount of GST on two heads, Rs 3000 is added. GST is added on respective Items are added as per rules. Both the Buyer & Seller are regular registered persons.  Explain how the additional charges (Rs 3000) would be apportioned to the individual items, based on value.

Explain the set up of the three options as mentioned in previous question for Purchase Ledger Account and the Expenses Ledger Account.

For the instant example, the setting and apportionment are explained below

1. Apportionment of Additional Charges (₹3,000)

As the additional cost to be apportioned Based on Value, Calulation would be done as follows

Total Base Value: ₹5,000 (A-0) + ₹7,000 (B-5) + ₹10,000 (C-12) = ₹22,000.

Additional Cost Apportionment Calculation :

• Item A-0: (5,000 / 22,000) × 3,000 = ₹681.82. Tax remains 0%.
• Item B-5: (7,000 / 22,000) × 3,000 = ₹954.55. This amount now attracts 5% GST.
• Item C-12: (10,000 / 22,000) × 3,000 = ₹1,363.64. This amount now attracts 12% GST.

The additional cost effectively increases the “landing cost” and the taxable base of each item according to its own GST rate.

Ledger Configuration Setup

The ledgers should be configured as follows:

Field	Purchase Ledger Account	Expense Ledger (Additional Cost)
Inventory Values are affected	Yes	No
Include in Assessable Value	Not Applicable	GST
GST Applicability	Applicable	Not Applicable

Specific Setup Rules for the Expense Ledger: For pro-rata value-based distribution, following set up should be done, in expense ledger account.

• At Appropriate to, Select Goods.
• At Method of Calculation: Select Based on Value.

By setting GST Applicability to ‘Not Applicable’ on the expense ledger, it does not attract its own independent tax rate but instead “inherits” the rates of the items it is attached to (0%, 5%, and 12% in your case).

Reflection in GSTR-3B : The above transaction would be reflected in Buyers GSTR 3B as follows:

As the additional charges were apportioned based on value, it would appear in Table 4 (Eligible ITC). The Input Tax Credit (ITC) would be computed on the final landing cost (Item Value + Apportioned Expense) for each taxable item.

GSTR-3B Table 4 (Eligible ITC) Breakdown

Item (Rate)	Taxable Value in	ITC in GSTR-3B
Item A-0 (0%)	₹5,681.82	₹0 (Nil Rated/Exempt)
Item B-5 (5%)	₹7,954.55	₹397.73 (Approx. Total GST)
Item C-12 (12%)	₹11,363.64	₹1,363.64 (Approx. Total GST)

Key Implications for the Buyer

• The buyer will claim a total ITC of approximately ₹1,761.37 in GSTR-3B.
• The additional ₹3,000 is added to the “Purchase Cost” in books, reflecting on stock valuation as true cost of acquiring those goods.

Additional Charges Apportionment – Multi UOM based on Quantity

When apportion Method of a taxable additional charge is set as Based on Quantity of different UoM, numeric value of the quantity for each item is considered, regardless of the specific Unit of Measure (UOM) used.

The Apportionment Mechanism

Example: Different UOMs in One Invoice

Suppose you have a purchase invoice with the following items and a Freight Charge of ₹3,000:

• Item A (0% GST): 100 Kg
• Item B (5% GST): 150 Liters
• Item C (12% GST): 50 Pieces

Calculation Steps: Assuming Taxable additional charges – Rs 3000

• Total Numeric Quantity: (100 + 150 + 50 = 300) units.
• Apportionment for Item A: (100 / 300) X 3,000 = ₹1,000. This amount attracts 0% GST.
• Apportionment for Item B: (150 / 300)  X 3,000 = ₹1,500. This amount attracts 5% GST.
• Apportionment for Item C: (50 / 300) X 3,000 = ₹500. This amount attracts 12% GST.

Ledger Setup Rules

To achieve this result, Expense Ledger must be configured as follows:

Field	Configuration Setting
Include in Assessable Value Calculation for	GST
Appropriate to	Goods
Method of Calculation	Based on Quantity
GST Applicability	Not Applicable (to inherit item rates)

Implication

Because the apportionment is based on quantity rather than value, an item with a low numeric quantity will bear more of the additional cost than high numeric quantity item. This directly impacts the taxable base and the final GST calculation for each line item.