GST – Goods and Services Tax

ST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

Types of taxes under GST

There are currently three types of GST

• CGST – Central GST – Applies to sales within the state – goes to Central Government
• SGST – State GST – Applies to sales within the state – goes to State Government
• IGST – Integrated GST – Applies to sales outside the state – goes to Central Government

For example, if you sell something within the state, 50% of the GST will be CGST and 50% of the GST will be SGST. But when you sell something outside a state, 100% of it will be IGST which will go to the Central Government.

Steps to enable GST features in Tally

Step 1 – Go to Gateway of Tally > F11: Features > F3 : Statutory & Taxation

Step 2 – In the screen you will find the following options : –

• Enable goods and service tax (GST): Yes
• Set/alter GST Details: Yes.

This will display another screen where you can set GST details of the company such as the state in which the company is registered, registration type, GSTIN number etc.

Step 3 – Press Y or Enter to accept and save.

Steps to create ledgers with GST

After creating a company and activating GST features, you need to create ledgers that will enable you to pass accounting entries in Tally ERP 9.

Step 1 – Go to Gateway of Tally > Accounts Info > Ledgers > Create

Step 2 – Create ledgers such as Purchase, Sales, State GST, Central, Integrated GST, Stock item names etc.

Step 3 – Select the appropriate group to which such ledger belongs for example state tax under duties and taxes group.

Step 4 – Enter the other related information required and press Y or Enter to accept and save.

After creating ledgers we can proceed with preparing Accounting entries in Tally ERP 9. For that go to – Gateway of Tally > Accounting Vouchers

There are many accounting vouchers in Tally such as Payment, Receipt, Contra, Sales, Purchase, etc. After choosing the relevant voucher we start passing the accounting entries.

Tally Accounting Entry and GST

The first step before passing an Accounting Entry in Tally is to make GST Calculation. But first, let’s take an example for our understanding. For example: M/s ABC Ltd of Mumbai sold goods worth Rs. 50,000/- to M/s XYZ Inc. of Ahmedabad; GST rate applicable for the given product is 18%

• GST Calculation – M/s ABC Ltd has to collect GST and say it is 18%. Then GST will come at Rs. 9,000/-.
• Taxable Value – This is the portion on which tax will be levied (i.e.,) Rs. 50,000/- in this case.
• Type of Tax to select – Since it is a transaction involving Inter-State trade, the ledger to create and select while preparing Accounting entry is IGST ledger.
• Rate of Tax to be fed during Tax Ledger creation screen – 18% IGST (Tax type : Integrated Tax) .
• Tax rate to key while preparing Stock Item Ledger – 18% IGST and Tally will automatically bifurcate and distribute the tax rate to CGST and SGST as 9% each.
• Other ledgers to create – Create XYZ Inc., ledger along with GSTIN number.

Now we have to go to the Accounting Voucher Screen and fit these details in Sales Voucher screen (F8). We are also not required to worry about tax calculation as Tally automatically calculates Tax amount portion based on the details fed in Stock Item Creation Screen and Tax ledger creation screen.

Sales Invoice and GST

GST Sales can be of two types :

• Local Sales on which CGST and SGST are applicable.
• Interstate Sales on which IGST is applicable.

Before making sales entry in Tally, you need to create ledgers relates to sales. You must create the following types of sales ledger and fill the related information required to create these ledgers :

• Local sales
• Interstate sales
• CGST
• SGST
• IGST
• Item name
• Party Account

Under Party account, you must also mention whether the party is composite dealer, consumer, registered or unregistered dealer.

Steps for Sales Invoice

Step 1. Go to Gateway of Tally > Accounting Vouchers > F8 Sales. For invoice no, write the serial number of the bill.

Step 2. In Party A/c name column, select the party ledger or the cash ledger.

Step 3. Select the relevant sales ledger. If it is local sale ,then select sales ledger for local taxable sales and if it is interstate sale, then select the sales ledger for interstate sales.

Step 4. Select the required items, and specify the quantities and rates.

Step 5. In case of local sales, select the central and state tax ledger. If it is interstate sales, select the integrated tax ledger.

Depending on your requirements, you can include additional details in your invoice by clicking F12: Configure such as buyer’s order no, delivery note no etc.

View GST details – You can view the tax details by clicking Tax Analysis then, click F1, to view the detailed tax break-up. In the sales invoice, press Alt+P to print the invoice in the required format. For multiple copies: Press Alt+P and then Alt+C to select the number of copies.

Purchase Invoice and GST

Purchases can be of two types :

• Local Purchases on which CGST and SGST are applicable.
• Interstate Purchase on which IGST is applicable.

Before making purchase entry in Tally, you need to create ledgers relates to purchases. You must create the following types of purchase ledger and fill the related information required to create these ledgers:

• Local Purchase
• Interstate Purchase
• CGST
• SGST
• IGST
• Suppliers Account

Under suppliers account, you must also mention whether the supplier is registered or unregistered. If he is registered, then enter the GSTIN number of the supplier.

Steps for Purchase Invoice

Step 1. Go to Gateway of Tally > Accounting Vouchers > F9 Purchase. Under supplier invoice column, enter the sales invoice no of the supplying party and under date column, enter the date on which the sales invoice was passed by the supplier.

Step 2. In Party A/c name column, select the supplier’s ledger or the cash ledger.

Step 3. Select the relevant purchase ledger. If it is local purchase ,then select purchase ledger for local taxable purchases and if it is interstate purchase, then select the purchase ledger for interstate purchases.

Step 4. Select the required items, and specify the quantities and rates.

Step 5. In case of local purchase, select the central and state tax ledger. If it is interstate purchase, select the integrated tax ledger.

View GST details by

• Click Tax Analysis.
• Click F1 : To view the detailed tax break-up.

Steps for GSTR-3B Report in Tally

Step 1 – Go to Gateway of Tally > Display > Statutory Reports > GST > GSTR-3B.

Step 2 – This report is in the same format as GSTR-3B in the GST Portal. Take a print out of the report. To print the report –

• Press Ctrl+P to print the GSTR-3B report.
• In the Print Report screen, press Enter. The report is created in the word format.
• Press Ctrl+S to save the word file.

Note: Make sure that MS Word is installed on your computer or use Google Docs

Step 3 – Go to GST Portal and fill in all the details manually.

Step 4 – Submit your return, pay taxes (if any) and file your GSTR-3B.