Activating GST For Your Company: Tally ERP Material Unit - 3 GST

Tally ERP Material Unit – 3 GST
Activating GST for Your Company

To use Tally.ERP 9 for GST compliance, you need to activate the GST feature. Once activated,
GST-related features are available in ledgers, stock items, and transactions, and GST returns
can be generated.
To activate GST
1. Open the company for which you need to activate GST.
2. Press F11 > F3.
3. Enable Goods and Services Tax (GST) - Yes.
4. Set/alter GST details - Yes.
Prepared by G.Janakirama Reddy, Vijetha Degree College Page 1

State: Displays the state you have selected for your company. Helps in identifying local
and interstate transactions. If you change the state, it will be updated in the company
details.
Registration Type: Displays Regular by default. This is a non-editable field.
5. Specify the GSTIN/UIN for the business. This can be printed in the invoices as required.
You can specify this later.
6. Specify Applicable from date. GST will be applicable for your transactions from this
date onwards.
7. Set the option Enable tax liability on advance receipts to Yes to activate calculation

of tax liability on advance receipts. This options is disabled by default. (Applicable
from Release 6.1.1)
8. Set the option Enable tax liability on reverse charge (Purchase from unregistered
dealer) to Yes to activate calculation of tax liability for reverse charge on URD
purchases. This option is disabled by default. (Applicable from Release 6.1.1)
Topic 2: Features of GST

GST is one indirect tax for the whole nation, which will make India one unified common market.
GST is a single tax on the supply of goods and services, right from the manufacturer to the
consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of
value addition, which makes GST essentially a tax only on value addition at each stage. The final
consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off
benefits at all the previous stages.
(i) GST would be applicable on “supply” of goods or services as against the present
concept of tax on the manufacture of goods or on sale of goods or on provision of
services.
(ii) GST would be based on the principle of destination based consumption taxation as

against the present principle of origin-based taxation.
(iii) It would be a dual GST with the Centre and the States simultaneously levying it on a
common base. The GST to be levied by the Centre would be called Central GST (central
tax- CGST) and that to be levied by the States [including Union territories with
legislature] would be called State GST (state tax- SGST). Union territories without
legislature would levy Union territory GST (union territory tax- UTGST).
(iv) An Integrated GST (integrated tax- IGST) would be levied on inter-State supply

(including stock transfers) of goods or services. This would be collected by the Centre
so that the credit chain is not disrupted.

(v) Import of goods would be treated as inter-State supplies and would be subject to

IGST in addition to the applicable customs duties.
(vi) Import of services would be treated as inter-State supplies and would be subject to

IGST.
(vii) CGST, SGST /UTGST& IGST would be levied at rates to be mutually agreed upon by
the Centre and the States under the aegis of the GSTC.
(viii) GST would replace the following taxes currently levied and collected by the Centre:
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a) Central Excise Duty;
b) Duties of Excise (Medicinal and Toilet Preparations);
c) Additional Duties of Excise (Goods of Special Importance);
d) Additional Duties of Excise (Textiles and Textile Products);
e) Additional Duties of Customs (commonly known as CVD);
f) Special Additional Duty of Customs (SAD);
g) Service Tax;
h) Cesses and surcharges insofar as they relate to supply of goods or services.
(ix) State taxes that would be subsumed within the GST are:
a) State VAT;
b) Central Sales Tax;
c) Purchase Tax;
d) Luxury Tax;
e) Entry Tax (All forms);
f) Entertainment Tax (except those levied by the local bodies);
g) Taxes on advertisements;
h) Taxes on lotteries, betting and gambling;
i) State cesses and surcharges insofar as they relate to supply of goods or

services.
(x) GST would apply to all goods and services except Alcohol for human consumption.

(xi) GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural gas)
would be applicable from a date to be recommended by the GSTC.
(xii) Tobacco and tobacco products would be subject to GST. In addition, the Centre
would continue to levy Central Excise duty.
The following are the key features of the GST model:-

1. Dual Goods and Service Tax : CGST and SGST
2. Inter-State Transactions and the IGST Mechanism:The Centre would levy and
collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of
goods and services. The IGST mechanism has been designed to ensure seamless
flow of input tax credit from one State to another. The inter-State seller would pay
IGST on the sale of his goods to the Central Government after adjusting credit of
IGST, CGST and SGST on his purchases (in that order). The exporting State will
transfer to the Centre the credit of SGST used in payment of IGST. The importing
dealer will claim credit of IGST while discharging his output tax liability (both
CGST and SGST) in his own State. The Centre will transfer to the importing State
the credit of IGST used in payment of SGST.
3. Destination-Based Consumption Tax:GST will be a destination-based tax. This
implies that all SGST collected will ordinarily accrue to the State where the
consumer of the goods or services sold resides.
4. Computation of GST on the basis of invoice credit method: The liability under the
GST will be invoice credit method i.e. cenvat credit will be allowed on the basis
of invoice issued by the suppliers.
5. Payment of GST: The CGST and SGST are to be paid to the accounts of the
central and states respectively.
6. Goods and Services Tax Network (GSTN):A not-for-profit, Non-Government
Company called Goods and Services Tax Network (GSTN), jointly set up by the
Central and State Governments will provide shared IT infrastructure and services
to the Central and State Governments, tax payers and other stakeholders.
7. INPUT TAX CREDIT (ITC) SET OFF : ITC for CGST & SGST will be taken for taxes
allowed against central and state respectively.
8. GST on Imports : Centre will levy IGST on inter-State supply of goods and
services.Import of goods will be subject to basic customs duty and IGST.
9. Maintenance of Records : A taxpayer or exporter would have to maintain
separate details in books of account for availment, utilization or refund of Input
Tax Credit of CGST, SGST and IGST.

10. Administration of GST : Administration of GST will be the responsibility of the
GST Council , which will be the apex policy making body of the GST. Members of
GST Council comprised of the Central and State ministers in charge of the
finance portfolio.
11. Goods and Service Tax Council: The GST Council will be a joint forum of the
Centre and the States. The Council will make recommendations to the Union and
the States on important issues like tax rates, exemption list, threshold limits, etc.
One-half of the total number of Members of the Council will constitute the
quorum of GST council.
Benefits of GST
1. GST will bring numerous benefits to all stakeholders viz industries,
government and citizens. Some of these benefits are listed below:
2. Seamless Flow of Credit: GST will facilitate seamless credit across the
entire supply chain and across all States under a common tax base.
3. Elimination of Cascading effect: Goods & Service Tax would eliminate the
cascading effects of taxes on production and distribution cost of goods
and services. The exclusion of cascading effects i.e. tax on tax will
significantly improve the competitiveness of original goods and services in
market will lead to beneficial impact to the GDP growth of the country. It is
felt that GST would serve a superior reason to achieve the objective of
streamlining indirect tax regime in India which can remove cascading
effects in supply chain till the level of final consumers.
4. Revenue Gain: Revenue will increase under GST regime because of
widening of the dealer base by capturing value addition in the distributive
trade and increased compliance.
5. Enhanced Transparency: GST regime shall enhance transparency in the
indirect tax framework and is expected to bring down the rate of inflation.
6. Zero rated Exports: Under the GST regime, exports will be zero rated in
entirety unlike the present system where refund of some taxes is not
allowed due to fragmented nature of indirect taxes between the Centre and
the States. All taxes paid on the goods or services exported or on the
inputs or input services used in the supply of such export goods or
services shall be refunded.

7. GST will boost Indian exports, thereby improving the balance of payments
position. Exporters will be facilitated by grant of provisional refund of 90%
of their claims within seven days of issue of acknowledgement of their
application, thereby resulting in the easing of position with respect to cash
flows.
8. Increased Uniformity: Uniform GST rates will reduce the incentive for
evasion by eliminating rate arbitrage between neighbouring States and that
between intra and inter-State sales. Harmonization of laws, procedures
and rates of tax will make compliance easier and simple.
9. There would be common definitions, common forms/formats, common
interface through GST portal, resulting in efficiencies and synergies across
the board. This will also remove multiple taxation of same transactions
and inter-State disputes like the ones on entry tax and e-commerce
taxation existing today.
10. Increased Certainty: Common procedures for registration of
taxpayers, refund of taxes, uniform formats of tax return, common tax
base, common system of classification of goods or services along with
timelines for every activity will lend greater certainty to taxation system.
11. Increased Digitalisation: GST is largely technology driven. The
interface of the taxpayer with the tax authorities will be through the
common portal (GSTN). There will be simplified and automated
procedures for various processes such as registration, returns, refunds, tax
payments, etc. All processes, be it applying for registration, filing of
returns, payment of taxes, filing of refund claims etc., would be done online
through GSTN. The input tax credit will be verified online. Electronic
matching of input tax credit across India will make the process more
transparent and accountable. This will encourage a culture of compliance.
This will also greatly reduce the human interface between the taxpayer and
the tax administration, leading to speedy decisions.
GST Classifications

You can create a GST Classification in order to record the tax rate and other details for a
category of goods attracting a specific GST rate. For example, creating GST Classifications
based on HSN. When this classification is used in relevant masters and transactions, the tax
details of the goods or services will be automatically captured. In case the department
changes, the tax rate for any HSN in future, alter the GST Classification and assign the new
rate.
You can create GST Classifications for an accounts-only company as well. Depending on the
grouping used for GST Classifications, you can tag those to Sales, Purchase, Services, Income
and Expense ledgers.
To create a GST classification, under F11: Features > Statutory and Taxation, enable the

options Enable Goods and Services Tax (GST)?and Set/alter GST details?. In the GST
Details screen, set the option Enable GST classification? to Yes.
To create a GST classification based on HSN code
1. Go to Gateway of Tally > Accounts Info. > Statutory Info. > GST

Classifications > Create.
2. Select the Nature of Transaction, if required.
Note: The nature of transaction is identified based on Registration Type, State and Country of
the party. Therefore, there is no specific requirement to select nature of transaction.
You need to change the nature of transaction in case of branch transfers, consignment
transfers, works contract, and so on, accordingly.

3. Enter the rates applicable for Integrated Tax, and Cess, if any. The rate entered for
integrated tax will be equally divided between central tax and state tax. You can specify
further GST details for the GST classification by clicking F12: Configure.
To use a GST classification for setting GST details
1. Go to Gateway of Tally > Display > Statutory Reports > GST > GST Rate Setup.
2. Select the items that have the specified HSN Code.
3. Click Set Rate, and select the GST Classification.

Notice that tax details disappear from the GST Tariff Details screen as the details are
taken from the GST Classification.
Create different classifications for items falling under other HSNs, and assign the
classification to the required items.
To alter a GST classification

Classifications > Alter.
2. Specify the new rate, press Enter twice, provide the revised applicability from date, and
save.
To create a GST classification based on SAC

2. Provide the details as required.
To use a GST classification for setting GST details for a service
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

2. Enable Set/alter GST Details?.
3. In the GST Rate Details screen, select the GST Classification created for Annual
Maintenance Contract.
4. In Type of Supply, select Services.
Create different classifications for services falling under other SACs, and assign the
classification to the required services.
To create a GST classification for cess based on quantity or value

2. Enter the percentage of Integrated Tax. The Central Tax and State Tax rates are

displayed.
3. For Cess, the cursor moves to the Rate column. Press Backspace to select

the Valuation Type as Based on Value and Quantity. Enter the cess Rate and cess
rate per unit.

Note: You can also select the Valuation Type of cess as Based on Value and Quantity in
the GST Rate Details screen of Tax Rate History.
4. Accept the GST Classification Creation screen.
Exemptions under GST Registration

GST registrations will start latest by 1st July 2017. There are some people who are
exempted from the GST Registration based on what is the nature of their supply.
The taxpayers who are exempted from GST Registration are:
 Agriculturists
 Persons falling in Threshold Exemption Limit
 Persons making Nil-Rated/ Exempt supplies of goods and services
 Persons making Non-Taxable/ Non-GST supplies of goods and services
 Activities that are neither Supply of Goods nor Services
 Persons making only supplies covered under reverse charge
Now lets us study the details of each and every person who has been exempted:
1. Agriculturists
An agriculturist is a person who supplies the products out of his cultivation land. They
will be given exemptions from GST Registration. Agro-inputs like fertilizers, seeds,

irrigation (electricity is required), machinery and all other agricultural services are also
exempted under GST regime.
2. Persons falling in threshold exemptions limit

A business entity with an annual turnover less than Rs. 20 lakh is given exemptions
from GST registration. But there are some special category states (Arunachal Pradesh,
Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim,
Tripura, Himachal Pradesh and Uttarakhand) where this threshold limit is Rs. 10
lakh.
3. Persons making Nil-Rated/ Exempt supplies

These are the persons who are engaged in the business of supplying common items
which are in the exemptions list of GST. Some of them are mentioned below :
1. All unprocessed food like rice, wheat, bread, milk, vegetables, cereals, eggs,
meat, fish, salt etc.
2. Train travel by local and sleeper classes
3. Education
4. Healthcare (but not medicines)
5. Hotels, lodges with room rent less than Rs 1,000
6. Kid’s colouring /drawing books
7. Bindis, sindoor, bangles, etc
4. Persons making Non-Taxable/ Non-GST supplies
Such items do not come under the purview of GST:

5. Activities that are neither Supply of Goods nor Services

These include:
1. Services by an employee.
2. Services by any Court or Tribunal.
3. Functions and duties of –
o MPs, MLAs, Members of Panchayats, Municipalities and other local
authorities;
o Person holding any Constitutional Post;
o Person as a Chairperson or a Member or a Director in a body.
4. Funeral Services.
5. Sale of land and building.
6. Actionable claims (other than lottery, betting, and gambling).
6. Persons making only supplies covered under reverse charge

The Central Government has on 19th June 2016 via Notification No. 5/2017 exempted
such persons from obtaining registration who are only engaged in making supplies of
taxable goods or services, the total tax on which is liable to be paid on reverse charge
basis by the recipient of such goods or services. This notification shall come into force
on 22nd June 2016.
In case you are confused about GST as a business owner, feel free to consult the GST
experts at LegalRaasta. You can get comprehensive assistance with GST
Registration and GST Return Filing Online. You can also use our GST
software online for doing end-to-end GST compliance.
GST Exempted Services
1. Services by Government or a local authority excluding the following services—

(A) services by the Department of Posts by way of speed post, express
parcel post, life insurance, andagency services provided to a person
other than Government;
(B) services in relation to an aircraft or a vessel, inside or outside the
precincts of a port or an airport;
(C) transport of goods or passengers; or

(D) any service, other than services covered under clauses (i) to (iii) above,
provided to business entities.
2. Services by the Reserve Bank of India
3. Services by a foreign diplomatic mission located in India
4. Service by way of access to a road or a bridge on payment of toll charges
5. Transmission or distribution of electricity by an electricity transmission or
distribution utility
6. Service Tax Exemptions to be continued in GST as decided by GST Council
7. Services by way of renting of residential dwelling for use as residence
8. Services by way of—
9. extending deposits, loans or advances in so far as the consideration is represented by way
of interest or discount (other than interest involved in credit card services);
interstate sale or purchase of foreign currency amongst banks or authorised dealers of

foreign exchange or amongst banks and such dealers;
10. Services by way of transportation of goods

(i) by road except the services of—
(A) a goods transportation agency; or
(B) a courier agency;
(ii) by inland waterways;
11. Services provided to the United Nations or a specified international organization.
Exemption may be notified by way of issuing notification under section 55 of CGST/SGST Act.
GST Exempted Goods

1. Live animals
2. Meat and edible meat offal
3. Fish, crustaceans, molluscs & other aquatic invertebrates
4. (Fish, crustaceans, molluscs & other aquatic invertebrates)
a. Fish seeds, prawn / shrimp seeds whether or not processed, cured or in frozen
state
b. All goods, other than processed, cured or in frozen state
5. Dairy produce; bird’s eggs; natural honey; edible products of animal origin, not
elsewhere specified

i. Fresh milk and pasteurised milk, including separated milk, milk and
cream, not concentrated nor containing added sugar or other sweetening
matter, excluding Ultra High Temperature (UHT) milk
6. Products of animal origin, not elsewhere specified or included
7. Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage
8. Edible vegetables, roots and tubers
a. Fresh vegetables, roots and tubers other than those in frozen or preserved state
9. Edible fruit and nuts; peel of citrus fruit or melons
a. Fresh fruits other than in frozen state or preserved
10. Coffee, tea, mate and spices) Mate a bitter infusion of the leaves of a South American
shrub
1. All goods of seed quality
11. Cereals
a. All goods [other than those put up in unit container and bearing a registered brand
name].
12. Products of milling industry; malt; starches; inulin; wheat gluten
13. Oil seeds and oleaginous fruits, miscellaneous grains, seeds and fruit; industrial or
medicinal plants; straw and fodder
14. Lac; gums, resins and other vegetable saps and extracts
15. Vegetable plaiting materials; vegetable products, not elsewhere specified or included
16. Sugar and sugar confectionery
How to enter an Import Purchase under GST in Tally?

You can account for the import of goods using a purchase invoice, record tax payment, and raise
liability on the tax payable.
In an import transaction, GST applicability depends on the type of import:
Taxable Import: Integrated tax is applicable. Select Imports taxable in Nature of Transaction in
the purchase ledger created for taxable imports.
Exempt Import no Tax is applicable. Select Imports Exempt in Nature of Transaction in the
purchase ledger created for Exempt Imports.
To Record Taxable imports under GST:
1. Go to Gateway of Tally - Accounting Vouchers - Purchase (F9)

In Party's A/c Name, Select the supplier's ledger
Select the stock item and enter the quantity and rate.
Provide GST Details and enter to save.
Press Ctrl + A to save the details.
You can view the corresponding impact in GSTR - 2 and drill down Import of goods Invoices
for more details.
In Party A/c Name, Select the supplier ledger. Select the stock item, and enter the quantity and
rate. Provide GST Details - Yes, to enter additional details regarding the import.

To include customs duty in the taxable value.
Go to purchase invoice recorded earlier. Select the purchase ledger. Select the stock item, and
enter the quantity and rate. The GST Details screen will appear.
Calculate the value of custom duty according to the rate specified by the department, and add it
to the original Taxable value. Enter the total amount in Taxable Value.
Press Ctrl + A to accept.
You can view the corresponding impact in GSTR - 2

To add the column Eligible Integrated Tax amount to GSTR - 2, open the table Import of Goods Invoices in
GSTR - 2, press F12 and enable the option Show Eligible Amount? Now GSTR 2 along with the column for
eligible amount will appear as shown below:
Recording Export Sales under GST
You can record the export of goods using a sales voucher.
In an export sales transaction, taxes are applicable based on the type of export:
● Taxable export: Integrated tax is applicable. Select Exports Taxable as

the Nature of transaction in the sales ledger created for taxable
exports.
● Exempt export: No tax is applicable. Select Exports Exempt as

the Nature of transaction in the sales ledger created for exempt
exports.
● Export under LUT/bond: No tax is applicable. Select Exports

LUT/Bond as the Nature of transaction in the sales ledger created for
exports under LUT/bond.
o Export under LUT/bond is applicable when you have signed up a

letter of undertaking with the department for the export of goods
without the payment of duty.
o To provide details of the LUT/bond, enable the options Enable Goods
and Services Tax (GST)? and Set/alter GST details? in Statutory and
Taxation features. In the Company GST Details screen that opens,
enable the option Provide LUT/Bond details?, and enter the details in
the LUT/Bond Details screen.

To record export sales transaction
1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales.
2. In Party A/c name, select the customer ledger or the cash ledger.
3. Select the sales ledger. You can also create separate sales ledgers for taxable exports,
exempt exports, and exports under LUT/bond, and select them during the transaction.
4. Select the integrated tax ledger if it is a taxable export.
5. Provide GST details - Yes, if you want to enter additional details regarding the export
transaction.
Sales with LUT/Bond

Record a sales invoice for sales against LUT/Bond:
● With sales ledger predefined with nature of transaction Exports LUT/Bond.
● Without selecting tax ledger.

Print the invoice by enabling the following options:
● Print GST Analysis of Items?
● Print HSN/SAC details?
● Print GST % column?
● Print HSN/SAC column?
The printed invoice appears with the GST analysis and tax rate as shown below:

How to enter Local purchase & Interstate Purchase under GST in

TALLY ERP 9
In this session we will learn How to enter purchase or Inward supply under GSTin Tally ERP
9. We have chosen two types of purchase for this tutorial.
1. Local Purchase :As per GST rule Local purchase is the movement of goods and services
within the state that is Intra-State is called local Purchase. For local purchase CGST &
SGST is applicable.
2. Interstate Purchase : It is the movement of goods and services between two states,
Which means the buyer and seller exists in two different states of India. This type of purchase
attracts IGST only.
Example For GST Local Purchase
V-Traders ( Delhi) Purchases 100 Coir Mattress ( HSN CODE – 94041000 ) Bharath
Traders ( Delhi) @ 150/ Mattress + 18 % GST on 01-08-2017.
Lets enter this local purchase in Tally ERP 9.
Activate GST in Tally ERP 9

To activate GST, Go to
Gateway Of Tally > F11 Features > F3: Statutory & Taxation
Activate the following options
Enable Goods and Service Tax ( GST) :Yes

Set/Alter GST Details : Yes ( Do not set rate at this level)
Enter the details as shown below.
Know more About Activation Of GST in Tally

Setup GST rates for purchase voucher entry
You can setup GST rate at various level of Tally, at company level ,stock group level,stock item
level,ledger group level,ledger level etc. In this tutorial we are setting GST at stock item level.
To set up GST rate at stock item level Go to
Gateway of Tally > Inventory Info > Unit of Measure > Create
Here we can choose No ( Number ) as unit.and UQC is NOS-NUMBERS
Now let’s create stock item coir mattress

To do this go to
Gateway of Tally > Inventory Info > Stock Item > Create
Enter a journal voucher for input service distributor credit ISD) under GST in Tally ERP
9
Enter the details as shown in the below image
Set/alter GST Details : Yes, Press enter GST rate details as shown below

If all the options shown above are not visible to you Press F12 :Configure Button and enable the
options you want.
When you add tax type , enter integrated tax as 18 % as per our example, the Central tax and state
tax will shown automatically.
Press enter to save all the screens o create stock item
Know How to setup GST rates

Create Purchase Ledger
To create a purchase ledger, you have to go to
Gateway of Tally>Accounts info > Ledger > Create

Let’s name this Purchase ledger as Purchase-GST, Enter the details as shown below and save the
screen to create purchase ledger.
Create GST tax ledger CGST & SGST for Local purchase
Now we need tax ledgers for purchase entry. As mentioned earlier local purchase attracts Central
tax ( CGST) and State Tax ( SGST) You have to create these tax ledgers, to do this go to,
Gateway of Tally> Accounts Info> Ledger> Create

Enter the CGST details as shown below
Name : CGST
Under: Duties&taxes
Type of duty/tax :Central Tax

In the same manner create SGST Ledger also

Create Suppliers (Sundry Creditors) Ledger for Local

Purchase.
For local purchase the supplier should be in the same state of the buyer,Let’s create the supplier
ledger Bharath Traders as per this tutorial.
To do this go to
Gateway of Tally>Accounts Info> Ledger > Cretae
Enter the details as shown below.
Name : Bharath Traders

Under: Sundry Creditors
State : Delhi ( This should be accurate for gst purchase entry )

set/alter GST details : Yes, press enter key ,the GST Details screen will pop-up
Registration type : select the GST registration type of Supplier whether composition , consumer ,
Regular or unregistered. let’s select it as a regular dealer.
Is a e-commerce operator : No
GSTIN/UIN : GSTIN of the supplier. see below image.
Press enter and save all screens.
How to enter Local purchase under GST

As per GST rules a transaction is said to be Local purchase ,only when the buyer and seller are in
the same state, also the transaction attract state tax and central tax. Let’s see how a local purchase
transaction is entered.

How to enter a journal voucher for TCS adjustment in GST in Tally ERP 9 ?
1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase.

2. Enter the date by pressing F2 Date button.
3. Enter the supplier invoice number from the purchase bill
4. Select Party account name ,here bharath traders
5. Select the purchase ledger we had created.
6. Enter name of item,here coir mattress
7. Enter Quantity & rate, the total amount automatically calculated, Press enter key twice.
8. Select the Central tax ledger and State Tax Ledger. The tax amount will be calculated
automatically.
You can view the tax details by clicking A: Tax Analysis. Click F1: Detailed to view the tax break-up.

Interstate Purchase under GST

A business is buying goods or service from another state is called interstate purchase. For example
National enterprise from KERALA is buying Auto spare parts from Maya Traders DELHI. This is a
case of interstate purchase for National enterprises.
Let’s take the following example for Interstate purchase voucher entry.
V-Traders ( Delhi) Purchases 1000 Coir Mattress ( HSN CODE – 94041000 ) Vignesh Traders
( Tamil Nadu) @ 155/ Mattress + 18 % IGST on 01-12-2017.
For interstate transactions apart from above we need two new ledgers
Create Supplier Ledger for Interstate purchase

This is like normal ledger creation but you have to take care of the state of the supplier, this should
be correct other wise the report will not be accurate.
Go to Gateway of Tally> Accounts Info>Ledger create
Enter GST details as below

Press enter and save all screens
Create IGST Ledger

To create IGST Ledger, go to
Gateway of Tally>Accounts Info > Ledger >Create

Name : IGST
Under : Duties & Taxes
Type of duty/tax : GST
Tax type : Integrated tax
Press enter and accept the screen.

Purchase ledger creation for Interstate purchase voucher

entry
To create purchase ledger for interstate purchase go to
Gateway of Tally> Accounting Info >Ledger >Create
Enter the details as shown below
Name: Purchase IGST (Let’s name this ledger as purchase IGST)

Under: Purchase Account.
Is GST Applicable : Applicable
set/alter GST Details ?: No
Type of supply : Goods
What is Table-wise GSTR-1 ?
Interstate GST is the tax attracted by interstate purchase.
How to enter interstate purchase voucher ?

1. Change the date by pressing F2 shot cut keys
2. Enter supplier Invoice number

3. Enter party account name

4. Enter Purchase ledger
5. Enter name of item, Quantity & Rate
6. Press enter twice to select tax ledger & select IGST tax ledger as created earlier.The tax
amount is calculated automatically.
The final screen look like this
Click on Tax analysis to know tax details
Enter in Inter state sales gst for tally

GST rules comprise two types of Invoices.

1. Tax Invoice : Tax invoice under GST is an invoice issued by a registered person at
the time of removal of goods or in case of movement of goods. or at the time of delivery
or making it available to recipient in any other case.( Where there is no movement of
goods involved and In case of Service). GST Act also makes it mandatory that
any registered person buying goods or services from unregistered person shall
issue a payment voucher as well as a tax invoice.
2. Bill of Supply : A registered person selling exempted goods and services( GST rate
zero) or availing composition scheme shall issue Bill of Supply.
Learn More About : Sale Voucher Entry
What is Local sale (intra state) and Interstate sale?
Local sale : Local sale or intra-state sale is where the seller is registered and place of
supply of goods are in same state . Local sale attract taxes CGST & SGST . CGST shall be
deposited to central government and SGST shall be deposited to state government.
Interstate Sale : A sale is called interstate when the location of supply and place of
delivery is in different states. This types of sale attract tax called IGST. This tax revenue is
shared by both state government and Central government.
How to enter Local Sale entry under GST ?
Consider this example ,We can enter this local sale example into tally erp 9 under GST
regime.
On 01-01-2018 ; ABC Ltd Sold 100 Pieces of Wrist Watches @ Rs 1200 ( HSN :
9102) GST Rate : 18 % to Time Center . Both ABC Ltd & Time centre are in
same state.
We can begins with scratch,
At the time of company creation make sure that you have selected the right state
Now we need to activate GST in tally to do this go to
Gateway of Tally > F11 Features > F3 Statutory
Enable Goods & Service tax (GST) :Yes
Set Alter GST Details : Yes , Enter state registration type GSTIN/UIN etc.
And save the screen.
Learn More about : How to activate GST in tally erp 9
You can set GST Rates and HSN/SAC Codes here if required. In this example we can set
GST rate at stock item level.
Creation of Ledgers for GST Sales entry
We should create the following ledgers to enter GST sales voucher
1. Sales Ledger (Sales Account)
2. Party Ledger ( Sundry Debtors)
3. CGST Ledger ( Duties & taxes )
4. SGST Ledger ( Duties & taxes)
Creating sales ledger for GST sale entry

Lets name it Local sale go to
Gateway of Tally > Accounts Info > Create
Name : Local sale
Under: Sales Accounts

IS GST Applicable : Yes

Set/alter GST Details : No ,here we are not setting GST Rate and other details ,We can set it
at stock item level.
Type of Supply : Goods
The sales ledger creation screen is as shown in the below images.
Press enter & save the screen.

Party ledger sundry debtor ledger creation for GST sale voucher
Name : Time Center
Under : Sundry Debtors
Maintain balance bill by bill : Yes
In mailing details
Enter address
Set/alter GST details : Yes, GST details screen will appear.Enter
Registration Type , GSTIN/UIN and other details

Now press enter and save all screens.
More on creating Sundry Debtors & Sundry Creditors Ledger

GST tax ledger creation CGST & SGST
In local sale seller has to collect CGST ( Central Goods & Service Tax ) and SGST (State
Goods and Service Tax ). Lets learn How to create these tax ledgers in tally erp 9.
Creating State tax SGST Ledger

Go to Gateway of Tally > Accounts Info > Create
Name : SGST
Type of duty /tax : GST
Tax type : State Tax
Inventory Values are affected : No
Percentage of calculation : 0 ( here do not enter any tax rate)
Rounding Method : Select rounding method & rounding limit. The SGST ledger creation
screen looks like this.
Press enter and save.

Creating Central tax CGST Ledger

Create CGST Ledger in the same way as mentioned above, Only change is
Name: CGST
Select tax type as : Central Tax
Below is the screen shot of CGST ledger creation
Now save the screen by pressing Ctrl + A or enter Key.
Create Stock Item for GST sale entry

We are creating stock item for GST transactions. We are setting tax rate and HSN code at
stock item level. If your company is dealing with multiple products with different gst rates
and HSN Codes setting GST RATE &HSN /SAC Codes at stock item level is desirable. If you
are dealing a single products with same gst rate and HSN/SAC code,then set GST rate /HSN
code at company level.
Read our Advanced study on : setting GST Rate setting up and HSN /SAC and Find
HSN /SAC
Create stock item for GST
Go to Gateway of Tally > Inventory Info >Stock Item > Create
Name :Wrist watch
Under : Primary ( Here You can create a stock group by pressing alt+c leave as it is )
Unit : You can select stock unit , if not already created press Alt +C shortcut key to create
one.
Read How to create unit of measure in tally
The unit creation screen will appear, Create Pieces as unit if you are selling in pieces as
described in the below image. Right UQC Code must be selected during stock item creation.
This is important while filing GST Return in GST Portal.
Enter and accept the screen. the unit will have created. Now you are in Main screen of stock
item creation.
GST Applicable : Applicable
Set/alter GST Details : Yes ( This is where we can set GST Rate & HSN /SAC )
GST Details screen will appear. PRESS F12 CONFIGURE & activate the following options
Allow HSN/SAC details : Yes
Show All GST tax types : Yes
Press enter & accept the screen.

Now enter GST details of stock item.
HSN/SAC : 9102
Calculation type : On Value /On Item rate whichever you want.
Taxability : Taxable
Integrated Tax : Enter Total GST Rate 18 , Tally will split the state tax and central tax.

Press enter and save ,you will be back to stock item creation screen.
Type of supply : Goods
Enter opening balance if any, The final screen look like below.
Press enter and save the screen.

How to Enter GST Local sale voucher ?
Now we have created all the masters required for entering GST sale voucher. Please note
that the GST Voucher and auto calculation of CGST & SGST will work only
from Applicable date entered in the GST activation screen.
Let’s enter this transaction
On 01-01-2018 ; ABC Ltd Sold 100 Pieces of Wrist Watches @ Rs 1200 ( HSN :
9102) GST Rate : 18 % to Time Center .
1. Go to Gateway of Tally > Accounting Voucher > F8 Sales
2. Select the date by pressing F2 Date button.
3. Enter Reference Number if Any.
4. Select Party Name under Party A/c Name. Hit enter Key, Party details screen will
appear, enter all the details required for delivery and transportation as shown below.

Press enter and save the screen to come back to sales voucher.
Select Sales ledger as created : ‘Local sale ‘ Press enter , A tax classification details will
appear.
Press enter and save.
Select items selling : Wrist watch

Enter Quantity, Rate, The amount will be auto calculated, Hit enter Key twice from Amount
field after selecting all items.
Select GST Tax ledger CGST & SGST , The tax amount automatically calculated.
Press Enter Key and accept the

Before saving ,Lets print the GST local sale invoice/bill.
How to print GST sale Invoice/Bill?
GST law makes some fields in Invoice mandatory ,they are , Invoice Number , Date ,Name
of customer,Billing Address, Shipping Address, GSTIN of Buyer and seller. Place of supply,
HSN Code/SAC Code. Item details, Taxable value, discount if any, Tax Amount.
No of copies of Invoice
Three copies are required for sale of goods Original for Buyer, Duplicate for transporter
and triplicate for Seller. In case of supply of service; two copies are required, Original
For Service Receiver and duplicate for Service provider.
How to Print GST invoice ?
Click on Print Button of GST sales voucher or Press Alt+P, (Access the sales voucher in
alteration mode if you have already saved the voucher).
The Voucher Printing Dialogue box will appear.

To get more printing options Click F12 Configure button , the printing configuration screen
will open in-front of you.
You can see so many GST related options in the configuration screen, If you Press F12
Configuration once again you will get more options

Activate the GSTIN , HSN/SAC ,Taxable Values, and other options as required by GST law.
Press enter and accept the screen. You will get back to printing dialogue box.
How to print multiple number of copy of GST invoice ?

In the printing dialogue box Press Alt + C or click on copies
A new box will appear.
Enter Number of Copies : 3
Type of Copy : Triplicate for Goods ( Only if Transporter copy is required other wise select
duplicate) & Duplicate for Service Invoice.

Press enter and save the box, you will again return back to Print dialogue box ,Now press
enter ,The invoice will have printed.

How to Enter GST inter state sale voucher ?

Now let’s do an interstate sale entry with an example.
On 01-01-2018 ABC Ltd ( Kerala) Sold 1000 Kg Aluminium wire ( HSN-7605 – GST Rate
18 %) @ Rs 150 /KG to Sree Murugan Metal ( Tamil Nadu ).
To do this entry you have to create the following Ledgers & Stock items.
1. Sales Ledger (Sales Account)

2. Sree Murugan Metals Ledger ( Sundry Debtors) Location should be Tamil
3. IGST Ledger ( Duties & taxes ) Integrated tax ledger. Here is the screen shot of all
three ledgers required.
Sale Ledger creation for interstate sale
Party ledger creation for GST interstate sale

While creating party ledger, you should enter the right state in the Mailing details. and enter
the Party GSTIN in GST details.

Creating Integrated Tax ( IGST) Ledger?

For interstate sale Integrated tax IGST is applicable which will be shared among state and
central government. Let’s see how to create integrated sale ledger.
Name: IGST
Type of duty/tax : GST
Tax type : Integrated Tax
Hit enter key & save the screen.
Create Stock item & Unit

Here is the unit creation screen shot

Stock Item creation for IGST Sale

Gateway of Tally > Inventory Info> Stock Item > Create
Name : Aluminium Wire
Units : KG
GST Applicable : Applicable
Set/alter GST Details : Yes — GST Details screen will appear.
Save the screen, you will be back to stock item creation
How to enter Interstate sale voucher ?

All masters are ready now, let’s enter this interstate sale transaction into tally. to do this

Go to Gateway of Tally> Accounting Vouchers > F8 Sales

Enter the following details
Ref Number if any
Party A/c Name : Murugan Metals ,press enter key enter despatch details ,order details
and buyer details in supplementary screen.
Sales Ledger : Interstate Sale (Select the sales ledger created for interstate sale ) Press
enter ,the tax classification screen will appear.
Select Interstate Sale Taxable

Name of Item : Aluminium Wire, enter quantity rate
In the next line select IGST ledger, the tax will be calculated automatically.
Press enter & save the screen.

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Tally ERP Material Unit – 3 GST

Activating GST for Your Company

1. Open the company for which you need to activate GST.

3. Enable Goods and Services Tax (GST) - Yes.

4. Set/alter GST details - Yes.

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Registration Type: Displays Regular by default. This is a non-editable field.

7. Set the option Enable tax liability on advance receipts to Yes to activate calculation

Topic 2: Features of GST

(ii) GST would be based on the principle of destination based consumption taxation as

(iv) An Integrated GST (integrated tax- IGST) would be levied on inter-State supply

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(v) Import of goods would be treated as inter-State supplies and would be subject to

(vi) Import of services would be treated as inter-State supplies and would be subject to

a) Central Excise Duty;

b) Duties of Excise (Medicinal and Toilet Preparations);

c) Additional Duties of Excise (Goods of Special Importance);

d) Additional Duties of Excise (Textiles and Textile Products);

e) Additional Duties of Customs (commonly known as CVD);

f) Special Additional Duty of Customs (SAD);

h) Cesses and surcharges insofar as they relate to supply of goods or services.

(ix) State taxes that would be subsumed within the GST are:

b) Central Sales Tax;

e) Entry Tax (All forms);

f) Entertainment Tax (except those levied by the local bodies);

h) Taxes on lotteries, betting and gambling;

i) State cesses and surcharges insofar as they relate to supply of goods or

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The following are the key features of the GST model:-

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To create a GST classification, under F11: Features > Statutory and Taxation, enable the

To create a GST classification based on HSN code

1. Go to Gateway of Tally > Accounts Info. > Statutory Info. > GST

2. Select the Nature of Transaction, if required.

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To use a GST classification for setting GST details

1. Go to Gateway of Tally > Display > Statutory Reports > GST > GST Rate Setup.

2. Select the items that have the specified HSN Code.

3. Click Set Rate, and select the GST Classification.

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To alter a GST classification

1. Go to Gateway of Tally > Accounts Info. > Statutory Info. > GST

To create a GST classification based on SAC

1. Go to Gateway of Tally > Accounts Info. > Statutory Info. > GST

2. Provide the details as required.

To use a GST classification for setting GST details for a service

1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

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2. Enable Set/alter GST Details?.

4. In Type of Supply, select Services.

To create a GST classification for cess based on quantity or value

1. Go to Gateway of Tally > Accounts Info. > Statutory Info. > GST

2. Enter the percentage of Integrated Tax. The Central Tax and State Tax rates are

3. For Cess, the cursor moves to the Rate column. Press Backspace to select

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4. Accept the GST Classification Creation screen.

Exemptions under GST Registration