GST Composition Dealer Purchase Entry in Tally

GST Composition Dealer Purchase Entry in Tally

A Composition Dealer buys goods from Unregistered or Composition Dealer, without paying GST, but they pay GST when buying from Registered Supplier. However, the GST charged in Purchase Bill, if any, on purchasing from regular dealer, is to be borne by the Composition Dealer, as its own cost, as Composition Dealer cannot claim Input Tax Credit on purchases. So, Accounting Treatment and Tax Ledger set up for Composition Dealer would be bit different.

GST Composition Purchase Ledger creation in Tally

GST Composition Dealer Ledger Account Set Up in Tally

GST paid in purchase invoice for goods purchased from registered dealer, is to be treated as expenses as Composition dealer is not entitled to claim ITC.

At Accounts Ledger creation / alteration (GoT>Accounts Info>Ledger), at Under, select Direct Expenses (NOT Duties & Taxes) to treat the Tax as Expense Accounts.

Purchase GST Account set as Expenses for Composition Dealer

At Type of ledger, select Not Applicable from the list of Types of Ledger (as it is not Tax, Discount or Rounding Off).

GST Type List for Ledger Accounts in Tally

Consequently, you will set the Method of Appropriation to allocate the amount of the ledger to respective stock Item. At method of appropriation in Purchase Accounts, select the method from the list of allocation methods

Item Value Allocation methods list in Tally

To allocate the Tax (CGST / SGST / IGST) as the case may be to Item Value (to know the actual purchase cos of the respective Item), at the respective ledger accounts, click F12:Configure and set Yes at Allow method of appropriation (used in purchase invoice) .

Purchase Cost Configuration for Account Ledger in Tally

This way, create ledger accounts for all the Tax Accounts (CGST/SGST/UTGST/IGST).

GST Composition Dealer Purchase entry from Registered Dealer in Tally

Registered Dealer would be charging GST for sales to Composition Dealer. So, in the Purchase Invoice for purchases from Registered Dealer, Composition Dealer would pay SGST / UTST / CGST (for Intra State Purchase) and IGST (on Inter State Purchase).

Purchase Invoice by Composition Dealer in Tally

Enter Purchase Voucher as usual (Got>Accounting Voucher>F9:Purchase to get Purchase Voucher entry screen . Enter Item details. Select the Tax Account and enter the Amount . Select the Items, enter Quantity, Rate, Discount Rate (if any). After all the Items are entered, select the SGST/ UTGST and CGST or IGST, as the case may be, and enter the Amount.

Stock Item Purchase Cost Allocation for GST Composition Dealer in Tally

The GST Amount in the Purchase Invoice would be allocated to item as cost of purchase, on the basis of Allocation option , selected for Tax Ledger Accounts .

In case of multi rate tax invoice of purchase , Tax amount would be correctly allocated to Items in the Purchase Invoice if all the Item bear same Tax rate. Otherwise the allocation would not be correct .

Stock Summary with showing allocated purchase cost in Tally

The Tax would be allocated uniformly among all Item on the basis of allocation (Value/ Quantity), without any regard to Tax rate charged on the Item.

GST Composition Dealer Purchase under Reverse Charge in Tally

In case of Purchase of Service under Reverse charge (like Transport Charges etc), the Composition Dealer has to pay Tax as per Normal rates applicable.

GST Set up Expense Ledger Account under Reverse Charge in Tally

Create a Ledger Account (GoT>Accounts Info>ledger > Create) to get Ledger entry screen .

Composition Dealer GST set up for Expense Ledger Account in Tally

At Set / Alter GST Details, set Yes to get GST Details screen. Select Services at Type of Supply. At GST Details screen (F-5B), set Yes at Is Reverse Charge Applicable. Enter the normal Tax rate applicable for the Service (Tax liability on Reverse Charge would be computed at this Rate)

Composition Dealer GST Details set up for Expenses Ledger Account under Reverse Charge in Tally

Composition Dealer Supplier Ledger GST set up in Tally

Create a Ledger Account (GoT>Accounts Info>ledger > Create) to get Ledger entry screen. At State, select the State of the supplier.

Composition Dealer Supplier Ledger Account GST set up in Tally

At Set / Alter GST Details, set Yes to get GST Details screen. At GST Details screen, at Registration Type, select the Registration Type from list. Enter GSTIN for Registered Supplier.

Composition Dealer Supplier Ledger GST details set up in Tally

Composition Dealer Purchase Invoice for GST Reverse Charge Entry in Tally

Create Purchase Invoice (GoT>Accounting Voucher>F9:Purchase to get Purchase Voucher entry screen. Click I:Accounting Invoice button to get Accounting Invoice entry Format. Select the Ledger Account and enter Amount.

Purchase Invoice for Service under Reverse Charge

Effect in GSTR-4 Report for Reverse Charge in GSTR-4 Report

Select GoT>Display>Statutory Reports> GST>GST Reports>GSTR-4 to get GSTR-4 Report, showing the Tax Liability of Purchase under Reverse Charge, computed at Normal rate as specified for the Ledger Account .