Introduction of GST and Invoice creation in Tally

1. TALLY.ERP 9 RELEASE 6.0.1
By Prof. Ganesh Channa

2. WHAT IS GST – GOODS AND SERVICES TAX
 GST is an acronym for Goods and Services
Tax.
 It will replace VAT, CST and Service Tax and
instead there is only one tax in GST.
 For example, currently if I sell a product in
Gujarat, I will have to pay VAT (Value Added
Tax) and if I sell it out of Gujarat, then I will
have to pay CST (Central Sales Tax) because I
live in Gujarat.
GST

3.  But in the GST , you have to pay GST and no
different taxes like VAT and CST and many
more.
 The main advantage of GST is a single taxation
system.
 Currently every state has different VAT and
CST acts and rules and people are often
confused about the taxation system.
 Therefore, in GST , remove all the confusion
about different kinds of taxes, because there is
only GST.
GST

4. 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
GST

5.  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.
 Now that you have a basic understanding of how
GST works, we can go ahead to understand the
working of GST in Tally along with its accounting
and calculation.
 Before you can understand accounting of GST in
Tally, you need to understand the calculation of
GST in Tally. GST

6. CALCULATION OF GST IN TALLY
 But before you go away, let me tell you one
important thing.
 Here I am trying to explain you that how GST
will work in Tally because the functionality of
GST in Tally is almost same as VAT or CST or
Service Tax.
 And therefore, even with the current
functionality you can do accounting entries
of GST in Tally.
 So, let us get started about the calculation of GST
in Tally.
GST

7. LET’S TAKE AN EXAMPLE.
 Aditya sells Google Pixel to Amit for Rs. 57,000 in
Gujarat.
 Aditya has to collect GST and say it is 18%. Then
GST will come at Rs.10,260.
 As you have read above, if you sell within the state
there are two types of GST which will be attracted.
 They are CGST and SGST.
 In this example, it would be half each. That means
9% CGST and 9% SGST.
 It will be Rs. 5,130 CGST and Rs. 5,130 SGST.
 How the governments will deal with this is none of
our business. We just have to be sure about how much
taxes we have to pay.
 Yes, GST is that simple.
GST

8.  Don’t worry!
 I have explained this same example down in the post
in Tally. But I want you first understand the
calculation so it will be very easy for you to learn it in
Tally.
 It is similar to current calculation of Service Tax, VAT
and CST. We put the amount of the product and then
calculate taxes on it.
 For example, if I currently provide a service of Rs.
10,000 then service tax would be 15% which
comes to Rs. 1500.
 The point I am trying to put here is that GST has no
doubt made the calculation of taxation and the whole
system of taxation easy, but it is still calculated in
the same old way.
GST

9.  And therefore, we can prepare ourselves by
understanding it and knowing the calculations
even before GST gets implemented.
 Coming back to the example, even if Aditya had
sold the product to Amit from Gujarat to
Maharashtra and not in Gujarat, the GST
calculation will be the same.
 The rate may change or the return filing may get
changed but the calculation will be the same.
 And this time, it will be 100% IGST.
 This is how you can calculate GST in Tally or on
your calculator.
GST

10. ACCOUNTING OF GST IN TALLY
 Well, if you know basic accounting entries in
Tally, it will be very much easy for you to
understand the accounting of GST in Tally.
 As I have said before in this post that the
calculation part of the GST will remain same as
previous taxes which it will replace and
therefore accounting will also be almost
similar.
 So, let us take the above example and try to
understand the accounting of GST in Tally.
GST

11.  In the above example, Aditya sold Google Pixel to
Amit for Rs. 57,000.
 The accounting entry for the Aditya in his books will
be as under. Aditya is the seller here.
 Cash or Amit’s A/c Dr 57,000
 To Sales A/c 57,000
 This was a simple entry without GST. Now with GST
of Rs. 10,260 at the rate of 18% the entry will be as
follows.
 Cash A/c Dr 67,260
 To Sales A/c 57,000
 To CGST A/c 5,130
 To SGST A/c 5,130
 The above was a simple calculation of GST.
GST

12.  The ledger of CGST and SGST can be created under
Duties and Taxes same as we create ledgers for all the
current taxes.
 Here is how you can create the GST – Goods and
Services ledgers in Tally.
 From Gateway of Tally, go to Accounts Info.
 Then select Ledgers.
 Now select Create under Single Ledger.
 Now Type CGST and select Duties and Ledgers from List
of Groups.
 In Type of Duties/Taxes, select others.
 Select 9% in Percentage of Calculation.
 Select Method of Calculation On Total Sales.
 Select Normal Rounding in the Rounding Method.
 And, lastly select the Rounding Limit to 0. GST

16.  CGST and SGST entry in Tally
 From the above picture you can easily see that we
have sold Google Pixel to Amit for Rs. 57,000 and
GST of Rs. 10,260 which is divided in two different
parts namely CGST and SGST.
 It is a simple sales entry but with GST.
 Now if we assume we sold the Google Pixel to Amit
who is from a different state which is Maharashtra,
the accounting entry in Tally for the same will be
almost similar to above.
 The only change it will have is of IGST –
Integrated Goods and Services Tax because of
interstate transaction.
GST

18. IGST entry in Tally
It is exactly the same except for IGST.
The amounts that I have entered in CGST, SGST and
IGST will appear in the Balance Sheet on the Liabilities
side because we have to pay that to the Government.
And therefore, it is our liability. It amuses me because
the accounting is same as current taxation system.
So currently if you create a ledger as I have told above
and pass the entry, you can do the accounting of
GST in Tally.
Isn’t it amazing that without any kind of add-on and
before even the commencement of GST in India, you can
do the accounting of GST in Tally.
This is because whatever you require for the accounting
of GST in Tally is already present in Tally except for one
thing. GST

19. WHAT IS GSTIN?
 So far, for any dealer registered under state VAT
law, a unique TIN number is issued by the
respective state tax authorities. Similarly, a
service provider is assigned a service tax
registration number by the Central Board of
Excise and Custom (CBEC).
 All of these businesses will be assigned a unique
Goods and Services Tax Identification Number
(GSTIN)
GST

20. PROPOSED GST IDENTIFICATION NUMBER
(GSTIN)
 Here’s a complete break-up of the proposed GST
Identification Number. Each taxpayer will be
allotted a state-wise PAN-based 15-digit Goods
and Services Taxpayer Identification Number
(GSTIN).
 The first two digits of this number will represent
the state code as per Indian Census 2011
 The next ten digits will be the PAN number of
the taxpayer
 The thirteenth digit will be assigned based on the
number of registration within a state
 The fourteenth digit will be Z by default
 The last digit will be for check code

21.  A format of proposed GSTIN has been shown in
the image below.
GST