Tally

GST Accounts System Overview in Tally Accounting Software

Posted by Asok K Nadhani on

Last Updated on: 5th July 2024, 01:47 pm

GST Accounts System Overview in Tally Accounting Software

GST Details set up for Company in Tally Accounting Software : Organisation may be registered under two GST schemes. Accordingly they wuld set up GST details in the Company

  • GST Composition Dealer set up in Tally Accounting Software : As per GST rules, small dealers having  a threshold range of  turnover, as notified, require statutory GST registration under Composite Dealers scheme . To enable GST accounting system, these organisations need to Activate and set up GST under Composite Dealers scheme.
  • GST Regular Dealer set up  in Tally Accounting Software: As per GST rules, dealers having  a threshold range of  turnover, as notified, require statutory GST registration under Composite Dealers scheme. To enable GST accounting system, these organisations need to Activate and set up GST under Regular Dealers scheme.

Tally maintains effective date of change & trail of GST details change. The rules of maintenance of GST records and statutory returns for GST Composite Dealer and Regular Dealers are different. In this post, we will discuss separately the process of GST maintenance under both schemes.  

Multiple GST Registration set up in one Company in Tally Accounting Software : An organisation may have multiple GST registrations. For proper GST Compliance, the organisations often create separate Tally Compnaies, merge all companies with GST numbers of a Company. With new feature of Multi GST Company, maintain all GST registration details, selecting the relevant registration number, maintain all transactions in one Company and  file separate GST Returns for each GST registration in compliance of GST Rules.  

GST Ledger Accounts in Tally Accounting Software : It is recommended to create separate GST Ledger Accounts Masters,  for each type of GST, like IGST, SGST/UTGST, CGST. GST cess ledger may be created, if  GST Cess is applicable (like Luxury & demerit products). GST details are to be set up for such ledger Accounts for proper computation.   Some organisations may prefer to maintain separate ledger accounts for Input Tax paid and Output Tax collected, for easier reconciliation. But they have to make additional Journal entries for adjustment of these accounts to compute net Tax Liability.  

Payment of GST to Governmentin Tally Accounting Software: GST is to be deposited, for Net GST Liability as per GDT returns, with the government through proper challan. Voucher entry for such Tax deposit are to be recorded with all relevant details adjusting the respective accounts. Tally offers Tax Payment transactions, like  payment through GST Cash Ledger, Credit Ledger, etc, as per rules.  

Input Tax Credit in Tally Accounting Software: The GST liability on OutPut Tax (tax collected by dealer from customer through Sales etc, payable to Government), may be adjusted by Input Tax Credit (tax paid through Purchase Bills). Such adjustments are made through proper journal entries, and effected in statutory Tax Returns.   

GST Rate entry in Tally Accounting Software : You may opt to break up GST rates for IGST, CGST and SGST / UTGST, separately  for each Item, or specify combined GST rate. If combined GST rate is specified, it is split up equally for SGST/UTGST and CGST.  

GST Rate set up in Tally Accounting Software : Tally allows to setup GST rates at various levels.

  • GST Rate set up for Company in Tally Accounting Software : You may set up GST Rates are at Company Level, if same GST rate is applicable for all Items. This may be useful for organisation dealing with same type of Items. The GST Rate is then applied to all Items sold by the organisation. However, later on, if Company starts dealing in other Items, or GST authorities declare different GST Rates, you need to set Rates at lower level. It may also cause wrong computation of GST, if not properly re-set at proper time. So, it is recommended not to set GST at Company level.
  • GST Rate set up at Stock Group  in Tally Accounting Software: You may set up GST Rates are at Stock Group Level, if same GST rate is applicable for all Items in the Stock Group. However, Stock item may be regrouped later on for other reasons and the GST rate may differ within some Stock Item Groups. Normally, Stock Group is not based on GST point of view. It is aimed for better management as per nature of Goods. For example for a retail shop, Items under Stationery goods may be different type. So, avoid GST rate set up at Stock Group level, even if current GST rate for all Items within the Stock group is same. As later on rates may change differently between the Items
  • GST rate set up at GST Classification in Tally Accounting Software: Tally provides a GST master based on HSN / SAC, a classification notified by GST authorities, based on class of Goods. GST Classification master may be created linked with specific HSN/ SAC Codes. This is useful only when you have several Items of same HSN / SAC Code, and you properly set up HSN/ SAC Code for each Stock Item (otherwise GST computation would be wrong).

Setting GST rates at GST Classification, you may save time on setting GST rate for each Stock Item.  Create GST Classification Master and set up proper HSN / SAC Code. Craeful entyr of GST Classification and proper HSN/ SAC Code set up proper HSN/SAC Code in Stock Item Master. This may simplify GST rate set up. However, you should be careful about any change in respect of HSN/ SAC by the GST authorities. Check that the GST computation is not affected. In such case, make proper modification, or enter GST rates at Stock Item level. GST classification master creation requires additional info, which may not be relevant and appropriate for all organisations. So, check if GST classification is relevant and useful for you. Otherwise don’t use GST Classification Master, and set up GST rate in Stock Item level only, as explained.

  • GST set up in Stock Item in Tally Accounting Software : You must set up GST details properly in each Stock Item. As explained, it is highly recommended to set up GST rates at Stock Item level, instead of higher levels, as explained.

GST Rate are applicable on nature of Stock Item. It is not linked with organisation as a whole, or type of Organisation. It is not also linked with Sales Account or Purchase Account. Though Tally provides to set up GST details in Purchase and Sales Ledger. If you do so, you need to maintain multiple Purchase / Sales  Ledger for each type of sale and Classification of Goods and selection of proper Account in Voucher. So, do not set up GST details in Sales / Purchase Ledger. It will complicate accounts. At best, you may create separate sales ledger for domestic and export sales for easier reconciliation and reporting. Provide appropriate GST info in Voucher only.

  • Application of GST Rate in Tally Accounting Software : When GST Rates are set at multiple levels, like Company, Stock Group, Stock Classification, Stock Item etc, the GST Rate found in lowest level is applied. So, if GST rates are set in Stock Item level, it would be applied, ignoring GST rates in Company or in other Masters.

So, HSN Code/ GST rate may be set up in higher masters and then individually overridden in specific Stock items, with caution. This may make GST Rate set up simpler, but requires careful tracking. Otherwise, GST computation may be wrong.

  • GST rate set up at multiple levels in Tally Accounting Software : So, GST Rate may be set up in higher masters and then individually overridden in specific Stock items, with caution. This may make GST Rate set up simpler, but requires careful tracking. Otherwise, GST computation may be wrong.

 HSN Code set up in Company and in Masters in Tally Accounting Software : HSN (Harmonized System of Nomenclature) code is an internationally accepted product coding system is used for classifying the goods under GST. Under GST rules, HSN Codes are mandatory for certain organisation. HSN should be used for easier classification and GST computation, even if it is not mandatory. Like GST Rate, HSN Code may be set up at various levels in Company or In Masters. HSN Code cannot be specified in Voucher. It would be carried from the Master transacted in the Voucher. HSN Code is linked with GST Classification master.

  • HSN Code set up for Company in Tally Accounting Software : If all the products have same HSN Code, you may set up HSN Code at Company Level, which would be carried at all Stock Items.
  • HSN Code for Stock Group in Tally Accounting Software: If HSN Code is same for items in a Stock Group, you may set HSN Code for respective Stock Group.
  • HSN Code for Ledger Account Group / Ledger Account in Tally Accounting Software: Though Tally advises and encourages to set up HSN Code at Ledger Account Group, it is poor accounting planning. Setting HSN Code at Ledger Group / Ledger would multiply number of Ledger Accounts as per transaction type and Party, and would create more complications , than simplifying it. So, do not set up HSN Code in Accounts Ledger or Accounts Group.
  • Application of HSN Code in Tally Accounting Software: When HSN Codes are set at multiple levels, like Company, Stock Group, Stock Classification, Stock Item etc, the HSN found in lowest level is applied. So, if HSN rates are set in Stock Item level, it would be applied, ignoring GST rates in Company or in other Masters.
  • HSN Code set up at multiple levels in Tally Accounting Software : So, HSN Code may be set up in higher masters and then individually overridden in specific Stock items, with caution. This may make HSN Code set up simpler, but requires careful tracking. Otherwise, GST computation may be wrong.

 On-line validation of HSN/SAC Code : HSN/SAC Codes must be entered as allotted by GSTN authorities. Organisation making e-Invoice, e-way Bill, may validate HSN/SAC on-line, through valid login through Tally. It is recommended o validate HSN/SAC while creating Stock Item (or Stock Group having same HSN Code for all Items) in Tally. On the other hand, HSN Code of mass records of Stock Item may be validated after creation of Stock Item Masters. When a New Stock Item is added, the HSN code should be validated. This will ensure that correct HSN codes are recorded in all transactions.    

GST Unit Quantity Code (UQC)  for Stock Item UoM in Tally Accounting Software :  Map UoM UQC. However, UQC for many common UoMs are not available. For such case, the quantity is to be converted through respective conversion factor.  

Special characters in Voucher Number : Tally offers option to resolve conflict between voucher number for GST reconciliation. For example, the organisation may prefer to reconcile Purchase Invoice using its own voucher number and date, instead of Party’s Voucher Number and date, may ignore special characters like hyphen, front slash, and leading zero in Invoice number etc, for smooth work. To avoid this problem, always enter the Suppliers Number exactly as specified by supplier in their supply document.  

Multiple GST rates for single Stock Item in Tally Accounting Software: For stock Item Master, multiple GST Rate may be applicable as per Sales Price Slabs. Price slabs and respective GST rates may be set for Stock Item Stock Group,  

Voucher Numbering Methods in Tally Accounting Software : GST rules provide that Voucher numbers should be unique. Tally offers wide range of voucher numbering options, with suffix, prefix, to cerate multiple voucher series. In Automatic numbering scheme, you may opt for renumbered or retaining original numbers. Reallocation of unused voucher number (on Voucher deletion or conversion between Regular and Optional), to align the voucher numbers in sequence, complying to GST rules. Voucher numbering for GST is a complex process, specially if several series of Vouchers are used and the organisation has multiple GST registration, to keep a common series of voucher numbers, throughout the organisation, across all registration numbers.

  • Edit log impact on Voucher Numbering method change in Tally Accounting Software:If Voucher numbering method is changed subsequently, which causes change in Voucher Number, Edit log will report for all affecting Vouches.

GST Set up in Accounts Ledger Masterin Tally Accounting Software: GST is ot be activated in following types of Accounts Ledger Master, and specify related details:

  • GST Set up in Sale, Purchase Ledger Account in Tally Accounting Software: If GST is applicable for the organisation, activate GST feature for Sale & Purchase Ledger Account. You may not specify any GST related details in Sale / Purchase Account, in GST details screen. Item related GST set up in Stock Item, are carried in Voucher. Transaction related GST details are specified in Voucher.
  • GST set up in Service Ledger Accounts in Tally Accounting Software : If GST is applicable for the organisation, activate GST feature for Service Income Ledger Account. You may specify SAC Code in Service Ledger Account. You may specify GST Rate in Service Ledger Account, if uniform GST rate is applicable.
  • GST Set up in Customer Supplier Ledger Account in Tally Accounting Software : You need to set up GST details of Customer / Supplier in respective Ledger Account, like GSTN, whether belongs to Economic Zone, Treatment of pr special characters and leading zeros in Voucher number, for reconciliation,

 Expense / Income Ledger Accountsin Tally Accounting Software: In Income / Expense ledger on which GST is applicable, etc., activate GST options.  Now set up GST related info like, GST Taxability, method of assessable value calculation of the expense account, etc. Like Purchases, the expenses would be eligible for Input Tax Credit.  

On line Validation of Customer / Supplier GSTINin Tally Accounting Software: It is important to mention correct GSTIN of Parties, otherwise ethe reconciliation would not be matched, the dealer will not get ITC credit.   Organisation making e-Invoice, e-way Bill, may validate GSTIN on-line, through valid login through Tally. It is recommended to validate GSTIN while creating Party Ledger Account Master (Customer & Supplier) in Tally. Alternatively, GSTIN of mass records of Party Ledger Account Master may be validated after creation of Party Ledger Account. When a Party is added, the GSTIN should be validated. This will ensure that proper GSTIN are recorded in all transactions.  

GST RCM set up in Tally Accounting Software : Certain goods and services For Goods (like cashew nuts, tobacco leaves, silk yarn, coal, raw cotton) and services (like transportation services, legal services, courier services to send goods outside of India), etc, attract GST under Reverse Charge Mechanism. In such case, the buyer has to pay specified GST and claim ITC. For such Items / services, respective RCM info has to be incorporated for proper computation of Tax Liability under RCM.  

Accounting of GST paid by Composition Dealer in Tally Accounting Software : Composition Dealers are not allowed to claim ITC on GST paid by them on purchases. Accordingly the GST paid on purchase of taxable items from registered dealers is  treated as allocable expense to Stock Items as Purchase value.  

GST on Advance money Received  from Customersin Tally Accounting Software: GST  becomes payable  on Advance received from buyers on for supply of Taxable Goods or Services. So, GST liability is created on receipt of advance and reflected in GST return.  

GST on Sale of Goods by Registered Dealersin Tally Accounting Software: GST is charged according to place of supply (Inter State, Intra State, SEZ, Export). So, GST set up should be done in Buyer Master record for proper treatment of GST in Sales Invoice.

  • GST in Inter State : IGST is charged on specified GST rate for Inter State sale of Goods (the seller and buyer belong to different state).
  • GST in Intra State : SGST/ UTGST and CGST are equally charged at specified Rate for Intra State sale of Goods (the seller and buyer belong to same State / UT).
  • GST in Sale to Special Economic Zone (SEZ) : Sale to customer in Special Economic Zone is considered as zero rated supply. So, no GST is charged on sales to customer in Special Economic Zone in India.
  • GST in Export Sale : Export of Goods is considered as zero rated supply. So, no GST is charged on Export sales to other countries from India.

GST non-Chargeable Supply : Supplies on which No GST is chargeable, may be classified as:

  • GST Exempted supply: Supply of certain goods are exempted from GST. No GST is charged on sale of such goods.
  • GST NIL Rated Goods : On some Items of Goods, the GST rate is nil (Like Salt, Cereals etc). No GST is charged by seller. No Input Tax credit of Inputs or Input services is allowed for providing Nil rated Goods or Services. So, ITC is not allowed even if any GST is paid on for supply of NIL rated goods.
  • Non GST Goods : Goods outside thy preview of GST, like Petroleum Products, Alcohol for human consumption etc. No GSt is charged on such products.
  • GST Zero Rate Supply : In case of Goods Export from India to foreign country, or Sale to a customer in Special Economic Zone in India is considered Zero rate supply. No GST is charged on such sales.

All other supplies are Taxable.   e-way Bill (EWB) : eWay Bill (EWB) is document of transportation of Goods, over threshold value (Rs 50000),  by motorised vehicle, from one place to another, by a registered Dealer. E-way Bill (EWB) is to be generated through GST portal on entry of relevant details of goods.

  • E-way Bill (EWB) profile set up : The organisation must create a profile for e-way bill (EWB) in the GST portal, and set up for e-way Bill (EWB) in Tally.
  • E-way Bill (EWB) generation : Tally provides in-built features to generate e-way Bill (EWB) while creating Sales related voucher like Sales Invoice, Debit Note, Credit Note etc., in compliance with GST rules,  in data secured environment.
  • e-way Bill (EWB) Instant generation on voucher entry: E-way Bill (EWB) may be generated instantly on voucher entry.
  • Multiple e-way Bill (EWB) Generation: Instead of single e-way Bill (EWB) generation instantly on voucher entry,  Multiple e-way Bills may be generated through e-way Bill (EWB) register, in one shot, as convenient to user.
  • e-way Bill (EWB) Bulk Generation: For even faster work, bulk e-way Bill (EWB)data may be sent to portal and generate e-way Bill (EWB) in one shot.
  • EWB Part B updation: Transporter details etc, not entered in Part B of EWB, at the time of  generation, may be updated at a later stage. Such updation may be undone if necessary.
  • Actions on e-Way Bill (EWB): Generated EWB may be updated and cancelled, undo cancellation, undo updation, EWB extension, undo EWB extension, View EWB info in the portal, through Tally, The updation and undo operations updates the info in Portal also.

GST Reportsin Tally Accounting Software: The GST related report may be classified as :

  • GST details in Reports in Tally Accounting Software: GST details may be included in Accounting and Inventory Report, where applicable (like Sales & Purchase Register, Debit & Credit Notes, Delivery Notes, Stock Journal Vouchers etc), on setting the appropriate report configuration options for the Report.
  •  GST specific Reports  in Tally Accounting Software: These excusive GST related reports are available only when GST is activated and GST related transactions ate recorded. The Reports are available under GST Report menu. Such Reports may be classified as :
    • GST Reports: These are ancillary Reports containing GST details, helpful for GST reconciliation, GST computation, setting up of GST info in Masters, etc.
    • GST Statutory Returns: These reports show the statutory GST return to be filed with GST authorities as per rules.
      • GSTR -1: This Report contains details of Outwards Supply. GSTR-1 may be viewed in 2 formats, The Return View format is aligned to GSTR-1 Return, divided into Tables of GSTR -1 Return. The Nature View Report shows Sales data organised in Tax Nature..
      • GSTR-2: This Report contains details of Input Purchases, Advanced received and adjusted, etc,  GSTR-2 may be viewed in 2 formats, The Return View format is aligned to GSTR-2 Return, divided into Tables of GSTR -2 Return. The Status View Report shows data organised in Acceptance Status of Vouchers, helpful for reconciliation of Output and Input documents, by respective buyer and seller.   
      • GSTR-3B : It shows a summary of Taxable value of Output, Input & Tax Amount, Exempt, Nil and NoN GST turnover, ITC, Reverse Charge, Import of Service, adjustment of Advances, etc.

At the  top of each Statutory Report, each report, summary of voucher counts analysis according to various category, for easy reconciliation and error fixation. Next level successive details may be viewed through Drill down from respective Item in the Report.  

Filing of GST returns on portal : The GST Return may be filed on GST portal in following ways:

  • Creating JSON File in Tally and uploading to Portal through Portal Dashboard: After getting the correct GST Statutory returns, to file the Return on GST portal, respective JSON files are generated in Tally. The JSON files are the uploaded to the GST portal, through GSTN portal dashboard.
  • Creating JSON File through Offline Tool and uploading through Portal Dashboard: Export the Return files for each Table from Tally into CSV / EXCEL format. Import the Tally exported files through GST offline Tool. Export the details into JSON file and then upload the JSON file to Portal through GSTN portal dashboard.
  • Direct filing to the Portal: Inn this method, copy the details from Tally and upload directly into respective sections of portal, without converting to JSON. You may also manually fill the data directly into porta/ However, this may be convenient only for organisation having small volume of Data.