GST set up for Accounts and Inventory Masters in Tally
GST set up in Masters in Tally
Some Masters are created exclusively for GST (like GST Tax Ledger Accounts, GST Classification etc), while in most of the Masters, you need to set up additional fields for GST.
GST Set up in Accounts Masters in Tally
- Party Ledger Accounts (Customer / Supplier Ledger)
- Sales / Purchase Ledger Accounts
- GST Ledger Accounts (CGST, SGST, IGST)
- Other Ledger Accounts transacted in Sales Purchase Invoice / Debit Credit Notes (like Packing charges, Freight etc)
- Other GST Ledger Accounts transacted in Payment / Receipt Voucher (like Advance, Penalty, Interest on delayed payment etc)
- Income / Expenses Accounts Taxable under GST
- Unit Master
- Stock Group
- Stock Item
- GST Classification
GST Set up in Unit of Measure (UoM) Master in Tally
Different organisations use different nomenclature for Unit (e.g Pcs. Nos). To standradise the Units in standard nomenclature, standard Unit Quantity Code (UQC) must be used in Invoices, other GST documents & Reports.
So, in Unit Master, apart from Unit Code, UQC is also to be set. This code is carried in the Item on selection of Unit Code in Item Master.
At UoM Master entry alteration screen, atUnit Quantity Code (UQC), select the appropriate UQC from the list.
When you select the UOM in Stock Master creation, the mapped UQC is not displayed. So, you cannot identify unmatched Units during Item Master creation itself.
UoM (Unit of Measure) Master set up in Tally
If proper UQC is not set in Unit Master, mismatch will occur in GST Reports. You may set up unmapped UQC, in all Item Master through GoT>Display> Statutory Reports>GST>Map UoM-UQC option.
Planning for GST Rate & HSN Code set up in Tally
For each Item, GST rate is to be specified. Similarly HSN Code is also be specified for each Item. These two properties are directly linked with Stock Item. So, normally, these are specified in Stock Item master creation. However, there are several alternative features to set up these 2 attributes to multiple Stock Items in one shot, instead of specifying for each Item in Item master
However, unless set up in proper methodical way, conflict, confusion and even Tax computation mistake are likely to crop up.
We explain the process of set up of GST rates and HSN Code, in Stock Item Master (at Individual Stock Level) and in higher levels impacting multiple Stock Items
GST Rates Set Up : GST Rates are to be set for each Item. For quicker set up, some alternate short cut methods are also available to set up Rates for multiple Items at a time, like :
- Company level Set Up : Set up the GST Rates at Statutory & Taxation feature, as explained in earlier chapter. The GST rate set up at Company Level would be applicable to all Items for which GST is activated.
- GST Classification : You may create GST classification Master and set GST rates for each Classification. On linking Stock Item with GST Classification, the GST rates would be carried from GST Classification. In such case, GST Rate is not to be entered at individual Stock Item Master.
- Stock Group : GST Rates may also be set up at Stock Group. In such case, GST Rates would be carried from Stock Group and GST Rate is not to be entered at individual Stock Item Master.
- Purchase Ledger Account : GST Rates may also be set up at Purchase Ledger Account. In such case, GST rates in the Purchase Invoice would be carried from selected Purchase Ledger in the Invoice.
- Sales Ledger Account : GST Rates may also be set up at Sales Ledger Account. In such case, GST rates in the Purchase Invoice would be carried from selected Sales Ledger in the Invoice.
- Income / Expenses Account : GST rates may be specified in Income / Expenses Ledger Account.
HSN / SAC Code Set Up : In the same way as GST Rate, HSN / SAC Code may also be set up at GST Classification, Stock Group, Stock Item, Income / Expenses Ledger Accounts.
Now with so many options to set up GST rates, you must make proper plan for entry of GST Rates & HSN / SAC, so that no conflict arises in case of transaction and the rates are picked up from ONE specified record only.
Unless you understand the implications properly and carefully enter GST rates at higher level, desist from the lure of advantage of entering GST rates at higher level. It is highly recommended that you set up GST Rates and HSN / SAC Codes in Stock Item (Inventory level) and in case of Income / Expenses Accounts (Accounts Level) only and no where else.
Consequences of GST set up at multiple places
- Conflict in GST Rate : In case of conflict in GST rate (if specified at multiple places), wrong rate may be applied in Invoice. Return may be wrong
- Conflict in HSN / SAC Code : HSN / SAC Code may not be printed in Invoice / GST related reports, or may be wrongly printed.
GST Classification in Tally
GST Classification represent unique identification for same type of Products. For example, the organisation may be producing / dealing with various types of GI Pipes (Galvanised Iron Pipes) of different diameter / length, brand, description, having same Classification / HSN. In that case, it is convenient to create Classification Master and link the Stock Item to respective classification.
In such case, it may be seem to be convenient to create GST Classification and link Stock Item / Stock Group, with the respective Classification. The GST details (GST Rates etc) as entered in Classification Code would be carried into the Stock Item Master, from the Classification Code (no need to enter the details in Stock Item / Stock Group master).
Normally Classification Master are created for each Tax rate and then linked to Stock Item so that Tax rate need not be entered for each Stock Item, individually.
However, it is recommended NOT to create Classification Master. Enter GST Rate directly into Stock Item, to avoid conflict and complications arising form change in rate in Items in subsequent period, due to government notifications.
To avoid complexity & conflicts arising from rates specified in Classification, you may not activate Classification in Statutory & Taxation Features set up for the Company, as explained earlier.
However, we explain the steps of GST Classification, for those who might still find it useful.
GST Classification Master creation in Tally
At Gateway of Tally, select Accounts Info>Statutory Info>GST Classification>Create (or Inventory Info>Statutory Info>GST Classification>Create) to create GST Classifications.
GST Classification Master entry in Tally
Now enter as follows:
- Classification Name : At Name, enter Classification Name. You may link specific tax rate for each Classification, create a classification for each applicable rate.
- Transaction Nature : At Nature of Transaction, select the applicable nature from the list, or specify Unknown (in that case, nature of transaction would be specified at Invoice / Ledger Accounts entry)
GST Trasnsaction Nature in Tally
- Taxability : Select the Taxability from the list. Select Taxable or Nil Rates, as the case may be.
GST Taxability list in Tally
- GST Rate : At Integrated Tax, enter the GST rate. Enter zero for Nil Rated classification.
- Cess : Enter Cess Rate, if applicable.
GST Classification Master Configuration Set Up in Tally
At GST Classification entry / alteration screen, click F12:Configure to get Configuration screen to set up set up GST Configuration.
GST Classification Configuration in Tally
You may set the options to show the relevant info in entry / edit screen, as required.
GST Rates components Entry in Tally
You may enter consolidated GST rate (Integrated Tax) or individual component (State Tax & Central Tax). At Configuration screen , at Show all GST Types, set as follows:
GST Consolidated Rate entry : Set No to enter consolidated rate at Integrated Tax. 50% of the rate specified at Integrated Tax would be automatically set internally at State tax and Central Tax each.
GST Consolidated Rate entry in Tally
GST Individual Rate entry : Set Yes to show individual rates for CGST, SGST, IGST, on entering the consolidated tax rate at Integrated Tax .
GST Components Rate entry in Tally
It is recommended to set No at the option Show all GST Types and enter only Integrated tax . The rates for State tax and Central Tax would be automatically set.
Other Info: You may also set up like Reverse Charge (Enable Reverse Charges Calculation), Input Tax Credit eligibility (Set ineligible Input Credit) etc. but it is better to specify them at Voucher level, instead of setting at Classification level.
Linking Masters with Classification: Having set Classification masters, you may link Classification at any Stock Master (Stock Group / Stock Item). The GST details would then be carried form the linked Classification Master to the linked Master.
GST Set up for Stock Item Group in Tally
The Stock Group are used to group similar items, based on some attributes, as per convenience of the user (like use, nature, supplier, buyer, locality etc). of the Items. So, all the Items under a Stock Group may or may not carry same rate of GST, depending on how the Item groups are organised.
If GST rates of all Items of any Stock Group are same, then you may specify GST Rates at Stock Group, for convenience. The GST Rate as entered at Stock Group would be carried at all the Stock Items placed under the Stock Group. Otherwise, do not specify GST Details for the Stock (specify GST Rate at Stock Item level), described next.
To avoid complexity & conflicts arising from rates specified in Stock Group, do not specify GST details at Stock Group Master. However, we explain the steps of GST set up at Stock Group, for those who might still find it useful.
GST details entry in Stock Item Group in Tally
To set up GST Rates for Stock Groups, at Gateway, select Accounts Info>Stock Group and then select Create (to create a new Sock Group) or Alter (to enter GST Rate details for the Stock Group) to get Stock Group Entry / Alteration screen .
At Group entry / alteration screen, at Set / Alter GST Details, set Yes to get GST Details entry screen, to enter GST Rates for the Stock Group , else set No (and enter the details at Stock Item level)
GST Activation in Stock Item Group in Tally
GST details set up in Stock Group in Tally
At GST Details entry screen , enter GST details for the related Stock Group, as follows:
- Taxability : Select the GST Taxability as applicable for the Stock Group from the drop down list. Select Taxable for Taxable Items (Tax not zero), Exempt for Exempted Items, and Nil Rated for Zero rated items (Exempt and Nil Rated are different, though no Tax is chargeable for both of them. Be careful!).
- Tax Rate : Enter the Tax Rate for Taxable Stock Groups (these fields do not appear for Nil Rated and Exempted Stock Groups):
- Integrated Tax Rate : If all the Stock Items under the Stock Group bear same GST rate, enter the total GST rate
- Cess : Enter Cess Rate if applicable, other wise leave zero.
GST Rate set up in Stock Item Group
Other Info: By setting respective options at Configuration , you may also set up like Reverse Charge (Enable Reverse Charges Calculation), Input Tax Credit eligibility (Set ineligible Input Credit) etc. , but it is better to specify them at Voucher level, instead of setting at Classification level.
GST Details set up in Stock Item Group in Tally
When you set yes at Select valuation Type, the columns valuation Type is displayed showing Based on value. However, this is only for info and you cannot set the Valuation Type at Masters like Classification Master or Stock Group Master.
Linking of GST Classification with Stock Group: If Classification is activated, as explained, at Classification (F-5B), you may select Classification (or press Alt+ C at Classification, to create new Classification), if all the Stock Items placed under Stock Group relate to same GST Rate as per selected Classification (GST details will be internally carried from Classification, you do not have to enter them), otherwise select Undefined at Classification (set GST rate details at Stock Item level, as explained).
Other details : You may set other details, as per Configuration options set, as discussed, like HSN/SAC Details etc (or set them at Item Level)
GST Stock Item Group Configuration in Tally
GST Stock Item Group Configuration in Tally
GST Set up in Stock Item in Tally
An organisation registered under GST must set up GST Details for each Stock Item, irrespective of the fact whether the Item is Taxable or Non Taxable (even for Zero Rate, Exempted Items or Non GST Items). It is recommended NOT to set up GST Rate at any place, other than Stock Item.
At Gateway, select Accounts Info>Stock Item and then select Create (to Create a new Stock Item) or Alter (to enter GST Rate details for existing Stock Item) to get Stock Item Creation / Alteration screen.
GST Set up in Stock Item in Tally
At Stock Item Creation / Alteration screen, under Statutory Information section, set as follows:
- GST Applicable : Select the Applicability from the list. Select Applicable, even if the Item is Exempt, NIL rated or Non GST (Items out of scope of GST). In GST returns, you have to file details of sales of NIL rated, Exempt and Non GST Items.
GST Applicability List
- GST Rate Details : At Items for which you have set GST Applicable, at Set / Alter GST details, set Yes to get GST Details screen , to enter GST rate details for the Stock Item.
- Type of Supply : Select Goods / Service as applicable from Supply Type list.
GST Supply Type List
- Rate of Duty : This is not relevant for GST Rate. So do not enter GST Rate here. GST rate should be entered at GST Details screen.
GST Rate entry in Stock Item in Tally
At GST Details entry screen , enter the Stock Item GST Rate, as follows:
- Calculation Type : At Calculation Type, select the applicable Type from the list.
- On value : Select on value when GST is computed at specified rate on Value ( Normally, GST is applicable on sale value (select On value) of the Item). So, On Value is applicable for most of the Item
- On Item rate : Select it when GST Rate is applicable depending on price range (like Footwear). In such case, you need to specify Range of price and GST rate (explained next)
- Taxability: Select Taxability from the list :
- Taxable : Select Taxable for Items on which GST is charged. Most of the goods / services are Taxable
- NIL rated : Select Nil Rate for Item on which GST Rate is zero (like Meat)
- Exempt : Select Exempt for Item which are exempt from GST (like Cereals) & Non GST Item (like Petrol / Alcohol)
GST Taxability Type List in Tally
- Tax Rate : As explained for Stock Group, for Taxable Stock Items, enter the Tax Rate for the Stock Item as follows (these fields do not appear for Nil Rated and Exempted Stock Groups):
- Integrated Tax Rate : Enter the total GST Rate (e.g 12%). 50% (i.e 6%) is shared by State (SGST/UTGST) and 50% (i.e 6%) is shared Centre (CGST).
- Cess : Enter Cess rate if applicable, otherwise leave zero.
To enter individual rates for CGST, SGST, IGST, at Configuration screen, set Yes at Show all GST Types, set No to show only Integrated Tax. Half of rate specified at Integrated Tax would be automatically allotted to CGST and SGST each, no need to enter rates separately).
Stock Item GST Rate details entry in Tally
GST on Exempted & NIL Rated Goods
Form point of view of customer, exempted & NIL rated goods are same for GST, as GST is not charged in either exempted goods nor in NIL rated goods. However, Suppliers of zero-rated goods and / or services can still reclaim all their input GST, but the suppliers of exempt goods are either not registered for GST, or if they are, they cannot reclaim their input GST.
NIL Rate is used to reduce the price of a good. Governments commonly use NIL-rated goods to lower the tax burden on low-income households by zero-rating essential goods.
Other Info: You may also set up like Reverse Charge (Enable Reverse Charges Calculation), Input Tax Credit eligibility (Set ineligible Input Credit) etc. but it is better to specify them at Voucher level, instead of setting at Stock Item level
GST Rate set up on Price Range in Tally
For some Items (like Shoes) and services (hotel tariff), variable GST rate is applied, depending on Price range. For such Items, at Calculation Type, select On Item Rate .
GST Rate set up on Price Range in Tally
Consequently, you get a screen to set Variable GST rate on price slabs, for the Stock Item.
Price Range GST Rate set up in Tally
Under Rate column, enter the price range (at Greater than & Upto) and the corresponding Tax Rate & Cess rate (if any). To charge Tax on additional charges also linked with the Stock Item, set Yes at Consider Additional Expenses / Income ledger for slab rate calculation, else set No (additional Expenses will not be included).
GST Rate set up in Multiple Stock Item Group / Stock Item in Tally
To set / modify GST rate of any Item / Group select GoT>Inventory Info> Tax rate set up >GST to get GST Rate set up screen showing the details of Tax rated of Items / groups .
Multiple Stock Item GST Rate set up / alteration
Select The Item / Group and click S:Set Tax rate button to get the GST details screen. Now enter / modify Tax details as explained.
GST Rate set up Buttons in Tally
Stock Item GST Rate Change : To modify Tax Rate of a Stock Item (if entered wrong or GST rate is altered subsequently by government notification), select GoT>Inventory Info>Stock Item>Alter and them select the Stock Item to get Stock Item alteration screen. At Set / Alter GST details, set Yes to get GST details screen.
Stock Item GST Rate History in Tally
Now modify the details. If you change the Tax rate, you will get another prompt to enter the date from which the revised Tax is effective. At Applicable from, enter the revised date
GST Rate change Effective Date entry in Tally
To see the Tax rate History of any stock Item, at GSR details entry screen, click L:Tax Rate History button to get the Date wise Tax Rate, showing all the Tax rates set up from the beginning and changed subsequently, in chronological order.
Buttons at GST Rate entry
HSN / SAC Code
HSN / SAC are unique codes used for identification of Goods & Services, irrespective of different nomenclature used at different countries, places and trade.
- HSN : HSN (Harmonized System of Nomenclature) is a multipurpose international product nomenclature for products, developed by the World Customs Organization (WCO), and adopted by Customs Tariff Act 1975. HSN Codes are divided into 21 Sections, 99 Chapters. For example, HSN Code for Plastic Material are classified through 3900 00 00 to 3914 00 00)
- SAC : Service Accounting Codes, as were being used in Service Tax, for Services. It is 8 digit code (for example, 00440014 is the SAC for Courier Services for the purpose of Tax collection)
HSN / SAC details set up for Stock Item Masters in Tally
Like GST Rates, you may optionally enter HSN / SAC Codes, at the entry screen for respective Stock Master (GST Classification, Stock Group or Stock Item). Toenter HSN for the Stock Group, Stock Item, click F12:Configure to get Configuration Screen. At Configuration, set Yes at Allow HSN / SAC details and enter HSN/ SAC details (HSN Description & HSN Code) also .
HSN / SAC details set up in Stock Item Master in Tally
This is useful when all the Items of the Master record (GST Classification / Stock Group) bear same HSN.
Sales & Purchase Ledger Accounts planning for GST
Instead of setting GST rate in Inventory master (Classification, Stock Group, Stock Item), you may set up GST details in Ledger Accounts (Sales / Purchase Ledger). First plan the structure of Sales / Purchase Ledger Accounts. You may create one Sales Ledger Account / Purchase Ledger for all types of sales / purchase, separate Account for Intra State / Inter State transactions, and further separate Sales / Purchase Accounts for each GST Rate (to reconcile GST & Accounts Reports properly).
Depending on the plan, enter GST rates in Sales Accounts, only when you create separate sales Accounts for each Tax rates, otherwise, do not enter GST rates at Sales Accounts. The Rates would be picked up from rates specified in Stock items.
It is recommended to create separate Sales & Purchase ledger account for Intra State, Inter State & International (Export / Import) transactions.
GST set up in Sales Ledger Account in Tally
At Gateway, select Accounts Info > Ledgers . Now select Create to get Ledger creation screen, or select Alter and select the Sales ledger to get Sales Ledger Alteration screen .
GST Set up in Sales Ledger Account in Tally
At Sales Ledger creation / alteration screen , at Inventory values are affected, set Yes. Under Statutory Information section, set GST details as follows:
- GST Applicability : At Is GST Applicable, select GST Applicability from the Applicability list.
GST Applicability List in Tally
- GST Rate Activation : At Set / Alter GST details, set Yes to get GST Details screen to enter GST details for Sales Ledger Account related with a specific GST rate, otherwise set No (consequently, GST details entry screen will not appear).
GST rate set up in Sales Ledger Accounts
- Type of Supply : Select Goods / Service, as applicable, as explained for Stock Item
GST Supply Type List in Tally
GST Details set up in Sale Ledger Account in Tally
Having set Yes at Set / Alter GST details , at GST Details entry screen, enter as follows:
- Transaction Nature: At Nature of Transaction, select the transaction nature from the list .
GST Transaction Nature list in Tally
- Tax Details : At Taxability, select the Taxability from List.
- Tax Rates : Enter the GST Tax Rates
Similar to Stock Item, you may view GST Rate History (press At+L) and set up GST Configuration (press F12:Configure).
GST Set up in Purchase Ledger Account in Tally
Set up GST details in Purchase Ledger. At Gateway, select Create to get Ledger creation screen, or select Alter and select the Purchase ledger to get Purchase Ledger Alteration screen
GST set up in Purchase Ledger in Tally
At Purchase Ledger creation / alteration screen, at Inventory values are affected, set Yes.
Under Statutory Information section, set GST details as follows:
- GST Applicability : At Is GST Applicable, select GST Applicability from the Applicability list (as explained for Sales Ledger).
GST Applicability List in Tally
- GST Rate Activation : At Set / Alter GST details, set Yes to get GST Details screen to enter GST rates for Purchase Ledger Account related with a specific GST rate (i.e different Sales Ledger for each Tax rate), otherwise set No (consequently, GST details entry screen will not appear).
- Type of Supply : Select Goods / Service, as applicable, from the list
GST Supply Type List in Tally
GST details entry in Purchase Ledger in Tally
At GST Details entry screen, enter as follows:
GST rate set up in Purchase Ledger
- Transaction Nature: Select the transaction nature from the list .
- Tax Details : Set the Tax details, as explained for Stock Item.
GST Transaction Nature list in Tally
Similar to Stock Item, you may view GST Rate History (press At+L) and set up GST Configuration (press F12:Configure).
GST Details in Sales / Purchase Ledger Accounts in Tally
If you Yes at Set / Alter GST details in Sales / Purchase Ledger, you need to specify Tax rates and Classification for Sales Purchase Ledger Account. In that case, you will need to create separate Sales / Purchase Account for each Tax Rate and Nature of Transaction at Tax Rate details screen . This would create complication in Voucher Entry for Sales / Purchase and adjustment of Tax. In fact, Tax Rate should be specified at Stock Item and Nature of Transaction Should be specified in in Voucher. So, set No at Set / Alter GST details in Sales / Purchase Ledger, to keep your system simple
GST Set up for other Ledger Accounts in Tally
Sometimes, Revenue Accounts (Expenses / Income) / Other Non revenue Accounts are added in sales / Purchase Invoice, on which GST is charged. For such Accounts, you have to set up GST details so that GST is computed on the amount on such ledger accounts in Sales / Purchase voucher.
GST Set up in Revenue Ledger Accounts in Tally
Create Expenses Ledger as usual (GoT>Accounts Info>Ledger>Create) to get Ledger creation screen.
GST set up for Expenses Ledger Accounts in Tally
Enter Ledger Account Name, at Under select Account Group (Direct / Indirect Expenses or any sub group). At Type of Ledger, select Not Applicable, At Is GST Applicable, select Not Applicable, At Set Alter GST Details, set No. At Include for Assessable Value for GST, select GST from list. At Appropriate to, select Goods / Services / Both (select Both for combination of Goods & Services), as the case may be. At method of Calculation, select Based on Quantity / Based on Value as the case may be. Such Expenses ledger would be used in Purchase Invoice / Sales Invoice of Purchase of Goods, Services or combined Goods & Services, with appropriate set up.
GST set up for Income Ledger Account in Tally
GST Set Up in Fixed Asset in Tally
Create Expenses Ledger as usual (GoT>Accounts Info>Ledger>Create) to get Ledger creation screen (F-12E). Click F12:Configure and set Yes at Allow GST for Non Revenue Accounts.
Enter Ledger Account Name, at Under select Account Group (e.g Current Assets / Fixed assets or any sub group).
GST Set Up for Fixed Assets in Tally
At Is GST Applicable, set Yes to get GST Details screen and set the GST Rates.
GST Details Set Up on Fixed Asset in Tally
GST on Additional Charges in Sales Invoice in Tally
Sometimes, additional GST chargeable expenses are added in Invoice (like Freight). In sales Invoice, the charge is made for expenses incurred by the supplier. So, in Sales Invoice it is additional revenue added in the Bill (like an Income Account). For buyer, who enters such Invoice with additional charge as Purchase Invoice, the additional charge is Expense.
GST Set up for Income Accounts in Tally
So, create such additional charge as Expense Account (to be included Purchase Invoice) and Income Account (to be included in Sales Invoice)
GST details set up in Income Accounts in Tally
GST on Additional charge in Sales Invoice
Sometimes, additional GST chargeable expenses are added in Invoice. Even if you charge to realise for some expenses (like Freight, handling Charges, Delivery Charges, Packing Charges etc) which has been incurred by you, you must treat such additional amounts charged in Sales Invoice, as Income (not as expenses). In PL Statement, you may adjust such Income against the related Expenses (or treat them as Miscellaneous Income), like you adjust the amount collected as Freight from Buyers against the expenses incurred for Outwards Freight, or treat income of Outwards Freight realised in Sales Bill as Miscellaneous Income.
However, GST is charged separately as per applicable GST rate set up for the Ledger Account.
Now in sales Invoice, GST would be charged on the ledger amount, at rate specified in the Ledger Account master. In the same way, you should create Expense Ledger Account to be selected in Purchase Invoice.
Dual way GST treatment of Additional Charges in Invoice
We have explained additional Ledger Account for Revenue Accounts, in 2 ways, which are included in Sales / Purchase Bills of Tradable Items
- Ledger Account with specified GST Rate: Ledger Account in which GST is applicable at specified rate. In such account, Is GST Applicable is set to Applicable, Set / Alter GST is set to Yes (F-12G), and GST rate is set in the ledger account. In Invoice, GST is charged according to tax Rate specified in Ledger Account.
- Ledger Account with unspecified GST Rate : Ledger Account which amount is apportioned to Items in the Invoice and GST charged as per Item rate, to which the Ledger amount is apportioned. In such case, Is GST Applicable is set to Not Applicable, Set / Alter GST is set to No. At Include In Assessable Value for Calculation of, select GST from the list. In Invoice, apportioned expense amount is adjusted with Item value and GST is charged as per GST rate applicable for the Item. In such case, the ledger amount get apportioned to the Item, as per apportionment rule specified, and becomes part of the Item value
GST Ledger Account Creation in Tally
Now create GST Ledgers for Integrated Tax (IGST) for Inter State transactions; Central Tax (CGST) & State / UT Tax (SGST/UTST) for Intra-State transactions and Cess Ledger Accounts.
It is recommended that you create separate Tax Ledger Accounts for each Tax Type, for Output GST (for Sales Invoice) and for Input GST (for Purchase Invoice), for better control and accounts reconciliation with GST Reports.
At Gateway, select Accounts Info>Ledger and create the Tax Ledger Accounts for Output Tax and Input Tax
Tax Ledger Account Name : At Name, enter the Tax Ledger name
- Parent Group : At Under, select Duties & Taxes at Parent Group
- Type of Tax / Duty : At Type of Tax / Duty, select GST
- Tax Type : At Tax Type, select the Tax type applicable from the list, for the Tax Ledger
This way, create a Tax Ledger for each Tax component of GST.
At percentage of Calculation, enter 0% as the Tax rate would be specified at Stock Item. If you create separate Tax Account for each Tax rate, then you may create separate Tax Account for each Tax Type (IGST/CGST/SGST) and specify Tax rate, However, that would create too much complications.
GST Cess Ledger Account Creation in Tally
If GST Cess is applicable on products dealt with by you, then you have to create a cess account also, in the same way as GST Accounts. In case of Tax Type, select Cess from the list.
GST Cess Ledger Account in Tally
At Valuation Type, select as follows:
- Based on Quantity : If the Cess is charged based on Quantity for all products dealt with by you
- Based on Value : If the Cess is charged based on Value for all products dealt with by you
- Any : If Cess is charged on different methods for various products, like based on Value for products, based on Quantity for products some products, and also based on Value & Quantity on some products
GST Cess Valuation Type List in Tally
GST set up for Party Ledger in Tally
Set up GST details of all Parties, i.e Customer & Suppliers (whether registered under GST or not). You may enter the details individually in each Ledger Account (useful for new edger creation) or enter for Multiple Ledger Accounts under a Group (convenient for quick entry of GST details, for already created Ledger Account Masters).
GST Activation for Party Ledger Accounts
GST set up in individual Party Ledger Account : At Gateway, select Accounts Info > Ledgers. Now select Create to get Ledger creation screen, or select Alter and select the Party ledger to get Ledger Alteration screen
State: At ledger creation / alteration screen, at State, select the State at which the Party is registered under GST.
GST Details activation: At Set/ Alter GST details , set Yes to get GST Details screen to enter GST details of the Part Ledger Account
The Mailing Details / Tax Registration Details at the right part of Ledger Account screen is available only when you have set Yes at
GST Details entry in Party Ledger Account
GST Details entry for Party Ledger : At GST details screen of the Party Ledger Account, enter as follows:
- Registration Type : At Registration Type, select the appropriate type from the list. Select Regular for Registered B2B parties (registered Parties who buys for resale). Select Consumer (Customers who buy for Consumption) for B2C parties, Unregistered for Parties who are not Registered under GST (normally for Suppliers).
- GSTN / UIN: Enter the 15 digit GSTIN of the Party correctly. The first 2 digits of the GSTIN (representing State Code) must match with the State selected at Party Leger screen .
- Party Type : Select Party Type form the Party Type list (select Not Applicable for Parties other than Export / SEZ/ Embassy/ UN Body/Government Entity). So, for most commercial parties, at Party Type, you will select Not Applicable.
Party GST Type List
- E-commerce Operator : At Is e-commerce operator, set Yes if the Party is e-commerce operator, otherwise set No.
- Transporter : At Is a Transporter, set Yes for Transporter, else set No (for Non Transporter)
GST set up for Multiple Party Ledger Accounts : To quickly enter the GST details for multiple parties in one screen, at Gateway, select Display>Statutory Reports>GST>Update Party GSTIN, select the desired Account Group
Multiple Party GSTN set up
At Update Party GSTIN screen , showing Ledger Accounts of selected Account Group. Now enter the data in blank fields (or modify data) of GST Particulars of the Parties. At respective columns (like State, Registration Type), select from the list as explained. At GSTIN, enter the GST Registration of the Party correctly.
Multi party GSTN / UIN updation
Pending GSTIN List : Click Show pending / Show all toggle button to show list of all Ledger Accounts under the selected Group, or show only Ledger Accounts for which GSTIN / UIN is pending (not entered).
GST Party Account set up Buttons
Address : To show the Address details also (complete address of multiple lines : F-15B), in the report screen click F12:Configure button and set Yes at Show Party Address, else set No (address column will not be shown)
You have seen that GST Rates may be entered at various levels, like at Company level (at GST activation), at Classification, at Stock Group and finally at Stock Item (the lowest level). You should ensure that the Rates (and other info) do not conflict. If you enter rates at any higher level, then do not enter rate at lower level. The Rates at the lower level would be carried from higher level, as follows:
- Company level : Rates entered at Company level (Statutory Features), would be carried to all Items in the Company.
- Classification level : Rates entered at Classification level, would be carried to all Stock Items to which the classification is linked.
- Stock Group level : Rates entered at Stock Group level, would be carried to all Stock Items under the Stock Group
- Stock Item level : This is the lowest level for specifying GST rates. The rates specified would be applicable when no Rates are specified at any higher level.
To avoid rate conflict at various levels, the safest method is to specify GST Rates only at Stock Item Level and skip GST Rate details at all higher levels.
To view / enter / edit GST details of Items in one shot, from one screen, select GoT>Inventory Info> Tax Rate Set Up>GST to get the list of Groups & underlying Stock Items (with filled up GST details, if any).
GST Rate set up for Multiple Stock Items in Tally
All the Stock Groups / Stock Items would be listed in hierarchical structure of Stock Groups. Now you can set unfilled data in respect of GST as explained earlier, very quickly. Select the Stock Group / Item (place the cursor on the line and press space bar, the line will turn green on selection).
Now click S:Set Rate button to get GST details entry screen, as explained, to enter / edit the GST details (GST Rates and other info).
GST Rate set up in Stock Item button Bar in Tally
From the buttons at the right side button bar, you may filter the list for specific tax rate (F5:Tax Rate wise), initialize (make zero) the GST Rates (C:Clear Rate) for all Stock Items under a Stock Group, etc.
Having entered the GST Rate at Stock Item master ,
GST Cess rate set up in Stock Item in Tally
At Cess rate, select Valuation Type from the list as follows:
- Based on Value : Select Based on Value and enter the Cess Rate. Cess would be computed on Taxable Value of the Item
- Based on Value & Quantity : Select Based on Value & Quantity and enter the Cess Rate in % (e.g 5%) and also Cess Rate per unit (e.g 2/ unit). Cess would be computed in parts. The first part of the Tax would be computed on % of Value at the specified Rate. The second part of the Tax would be computed on Quantity (Units) at the specified Rate / unit. These two components would be added and the Total amount of cess would be charged.
- Based on Quantity : Select Based on Quantity and enter the Cess Rate per unit (e.g 2 /unit)
GST Cess rate Valuation Type list in Tally
We have explained set up of GST Rates for individual Stock Item, Stock Group, Classification for understanding the organisation and method of GST details set up, for academic purpose (useful for students and organisations with few Stock Items). However, for organsiations with large number of Stock Items, GST set up through Multiple screen may be much quicker & easier.
Create Stock Item Master as usual (GoT>Inventory Info>Stock Item>Create) to get Stock Item entry screen.
Stock Item master with for MRP based GST in Tally
Enter Stock Item Name, UoM.
MRP based Stock Item Master GST Rate Set Up in Tally
At Stock Item entry screen, click F12:Configure button to get Stock Item Configuration screen .
Stock Item Configuration in Tally
- At Stock Item Configuration screen . set Yes at Allow MRP Marginal for Stock Items. Consequently, you will get additional option Set / Alter MRP details at Stock Item master screen.
- At Set / Alter MRP details , set Yes to get MRP Details screen .
Stock Item master MRP Set Up
At MRP Details screen, set as follows:
- At Allow MRP Modification, set Yes to allow modification of MRP Rate / unit at Invoice level (during Invoice entry), else set No to prevent change of MRP at Invoice entry).
- At Consider MRP rate for Calculation of GST rate in slab rate, set Yes to set Rate as per price slab, as explained
Under GST, Tax is computed on supply value, irrespective of MRP. So, MRP is not of much relevance in GST, as were in earlier regime (where Tax were charged on MRP on some Items). But in Tally, features have been carried from earlier regime (for compatibility)
GST Set up for Services Accounts is similar to Stock Item as explained. Select GoT>Inventory Info>Create to get Stock Item creation screen. At Units, select Not Applicable, At Type of Supply, select Services.
GST Set up for Service Item in Tally
At Set Alter GST Details, set Yes to get GST Details screen. Set the Calculation Type & GST Tax rates, as applicable.
GST Details set up in Service Item in Tally
GST Reverse Charge in Tally
Some goods and services are classified as reverse charge (Buyer liable to Pay GST). So, GST is not charged in Invoice, but GST Liability for Buyer is created (and reported in GSTR-1)
GST Reverse Charge set up in Ledger Account : Create Accounts Ledger (for Sales Ledger Account) as usual. Select GoT>Accounts Info>Create to get Ledger Account creation screen.
GST Reverse Charge Set up in Tally
At Under, select the Account Group, At Type of Ledger, select Not Applicable, At Is GST Applicable, select Applicable, At Set / Alter GST Details, set Yes to get GST Details screen. At Type of Supply, select Goods / Services as applicable. At GST Details screen, select the Nature of Transaction from list. Set the applicable Tax Rate (chargeable as Reverse Charge).
GST Reverse Charge details set up in Tally
GST on Discount in Invoice
Discount may be allowed at Item Level (separately for each item in the Invoice), or Invoice Level (common discount on the whole Invoice).
- Item level Discount set Up : For Item level Discount, select GoT>F11:Fetaures>Inventory Feature to get Inventory Features screen. Now set Yes at Use Separate column in Discount, as usual. Consequently, in Invoice entry, you get a separate column for Discount to enter Discount Rate. The Discount is reduced from Sales Value. GST would be computed on Sales Value net of Discount. So, no separate Discount Ledger is needed. So, no separate set up for GST is needed. You create invoice with Discount column as usual.
- Invoice Level Discount set up : To allow Discount at Invoice Level (as expense / income), you have to create a separate Expense Ledger for Discount Allowed on sales, a separate Income Ledger for Discount Received on Purchase, and set up GST for such ledger accounts, so that GST is computed after reducing the Discount from Item Value. In case of multiple Item Invoice, the Discount is apportioned to each Item as per apportionment rules as set up in the Discount Ledger. GST is computed as per applicable Rate for each item after reducing the apportioned amount of Discount from Item Value.
GST Set up in Discount Ledger Account in Tally
Create a Discount Ledger Account as usual (GoT>Accounts Info>Ledger>Create) to get Ledger Creation screen.
GST Set up for Discount Ledger Account in Tally
As Discount amount is charged to separate Ledger Account, it is treated like an Expense (not reduction from sales). We have already explained Revenue Ledger Account creation enabling for GST. As Invoice Level Discount is also treated as Expense, set up GST in the same way as explained for GST enable Revenue Account.
At Under, select Expenses Group (e.g Direct Expenses), to place Discount Account under Expenses Group. At Type of Ledger, select Not Applicable (do not select Discount). At Is GST Applicable, set Not Applicable, At Set Alter GST Details, set No (as you do not need to set up GST rates for Discount Account). At method of Calculation, select Based on value / based on Quantity as applicable. In case of multiple Item Invoice, the Discount would be reduced proportionately from the Item value as per
For Invoice level Discount allowed on Sales, you should create Discount Allowed on Sales as Expense Account (under Direct Expense). Similarly, For Invoice level Discount received on Purchase, you should create Discount Received on Purchase as Income Account. The GST setting should be set in way.