Introduction to Accounting Tally ERP 9

 

KLIC TALLY WITH GST

INTRODUCTION TO ACCOUNTING

Business Accounting activity of an organization may be classified into two categories

·         Financial Accounting

·         Inventory Management

FINANCIAL ACCOUNTING

Accounting is the language of business. It can be defined as ACCONTING is the art of recording, classifying and summarizing in a significant manner and in term of money. Transaction and event which are in of least of a financial character and interpreting the result there of it including:

1.      Recording

2.      Classifying Summarizing

3.      Interpreting Financial Event

4.      Information Facility for Decision Making

ADVANTAGE OF THE ACCONTING

1.      To see how much profit or loss from a business by maintaining accounts of business you can find out the profit or loss of the year. It doesn’t calculate the profit/loss of the day or of the week.

2.      To see the overall financial position of the business.

A.      How much money company has to pay to other?

B.      How much company have to get from parties?

C.      Details of business capital

D.     Assets of business.

To see the different ways to getting the profit and loss by which company have suffered loss.

TYPES OF ACCOUNTS

PERSONAL ACCOUNT

Dealing with individual or account of corporate bodies such as person in business dealings for example creditors. Debtors’ capital bank, owner etc.

IMPERSONAL ACCOUNT

There are two types in impersonal account.

REAL ACCOUNT

In real account there is two types.

TANGIBLE ACCOUNT

These accounts relate to things that can be touched. Felt measured it could be fixed or current in nature.

Examples: - cash, Building, Furniture etc.

INTANGIBLE ACCOUNT

They represent things which cannot be touched, but they can be measured in terms of money for

Examples: - Patent A/C, Goodwill A/C etc.

NOMINAL ACCOUNT

It deals with expenses and losses, income and gains. These accounts are opened in book to simply explain the nature of transaction for,

Examples: - Rent, Salary, Electric bill

RULES OF DEBIT AND CREDIT

PERSONAL A/C

a)      Debit the receiver

b)      Credit the giver

IMPERSONAL A/C (REAL A/C)

a)      Debit what comes in

b)      Credit what goes out

NOMINAL A/C

a)      Debit all expenses and losses

b)      Credit all income and gains

 TYPES OF BOOKS

1)     CASHBOOK

These records all receipts of and payments in cash and through cheques. The deposit into bank account and cheque payments are also recorded in the cashbook. A cashbook used to record both cash and bank transaction as two-column cashbook.

2)     JOURNAL

All the day to day transaction occurring In the business are firstly record in a book and is known as journal book or journal. The entry of each and every transaction occurred in the business i.e., firstly done in this book so this book is also known as primary book of account and the entry passed in the journal book or journal is known as journal entry.

3)     GENERAL LEDGER

Contains all accounts of enterprises. It is only book for reclassifying and summarizing all information records in cashbook and journal the recording of transaction in book may be represented as follows.

v Cash Transaction (Recorded in cash book)

v Non-Cash Transaction (Recorded in journal)

Ledger: - classified summary of all transaction.

·        TRIAL BALANCE

All many events are classified under various account heads, which are periodically summarized. This periodically summary known as trial balance. In double entry system for every transaction debit always equal to credit, so in trial balance also debit and credit, so in trial balance also debit and credit totals are balanced. Trial balance is closing balance of all account.

FINAL ACCOUNT

From trial balance following financial statements are made.

Profit and loss account for specific period.

Balance sheet on last date of period.

ASSETS

Anything which will enables business enterprise to get cash or a benefit in nature.

FIXED ASSETS

Assets that are acquired for relatively long periods for carrying on the business of the enterprises and not meant for resale for example land, building plot etc.

CURRENT ASSETS

Assets are held essential for a short period and are meant for converting into cash. They are expected to get converted into cash with one operating cycle of business cash in hand, stocks.
LIQUID ASSETS

Assets are immediately convertible into cash without much loss for example marketable securities, stamps etc.

LIABILITIES

It is the amount, which is business owes and has to return or account for example loan from banks, trade creditor etc.

CAPITAL

It refers to the amount invested by the proprietor in a business enterprise. It is an owners A/C.

i.e., a personal A/C.

REVENUE

IT means income of recurring nature from any source related to business.

EXPENSE

It denoted the cost of service and things used for generating revenue. Expenses is different for loss. An expense is different for loss. An expense is supposed to being some benefit to the firm, whereas, a loss brings no benefit to the from, for example loss or theft, payment to salary electric bill convenes expenses calculating the income or the profit the revenue earned during the period is to be matched with expense incurred in earning that revenue.

CAPITAL EXPENSES

REVENUE EXPENSES

FIANANCIAL EVENTS OF TRANSACTIONS

CREDITORS

Any person who gives credit is a creditor, proprietor gives money to the business so he is creditor to the business creditor is one for whom the business owes.

DEBTOR

Any person who owes money to the business is called a debtor. He is a customer to whom goods are sold on creditor.

SOLVENT

A person which is not in position to pay his debts as they become due. The dies from insolvent debtors are known as bad debtors.

DISCOUNTS

An allowance or deduction allowed from an amount due is discounts payable is an expense of the organization whereas discount received is an income.

INVESTMENT

Investments accounts is a capital account as buying and selling polices, shares are not core business. It cannot be shown in purchases accounts. It is real account and a separate investment account has to maintained.

TO START TALLY

·        Assume that tally software is installed in your computer.

·        Start tally by any of following manner

    Double click on tally icon on desktop.

·        Click run from start menu enter drive, path and executable file name.

·        Explore tally programmed folder through my computer

·        Click programmed, click tally.

·        Tally screen will display.

·        Select company gateway of tally screen is displayed.

Tally screen: - when you start tally gateway of tally screen is displayed.

The gateway of tally screen divided into 4 parts.

INFORMATION ABOUT PRODUCT

The bottom part displays information about software version, release current date and time.

BUTTON BAR

It consists of number of buttons to provide quick access to different options activated buttons are darkened and inactivated button are grayed.

F1 – selects company – Click this button to click a company from lists of companies stored at the location last selected.

F4 – Back up – In order to take, back up of company on floppy disk click on this button

F4 – Restore – In order to restore a company whose back up had been taken on floppy disk click this button.

F11 – Features – To get company features screen to set company specific features.

F12 – Configuration – To set configuration menu to get global configuration that selects all the companies.

CALCULATOR: - Press CTRL+N to activate calculator for performing arithmetic operation by entering number 0 to 9 and press enter to get computer result.

WORK AREA: - in this area you are performing major task. Can be divide into two parts. Left and Right part. The left part displays current period and current data and list of selected companies. Right part displays gateway of tally menu, displaying primary choices depending on activation of options. By pressing ESC, you can return to upper-level menu. 

BASE CURRENCY INFORMATION

At bottom path base currency information to be entered. You can use foreign currency too. You can work in any currency accounting system.

BASIC CURRENCY SYMBOL

Specify symbol of your base currency. For example, we work are using Rs. For rupees tally uses this symbol in reports where necessary.

FORMAL NAME

Same currency is use in different country for Ex., rupees use In Nepal, Pakistan and India so you can write here Indian rupees.

NUMBER OF DECEMAL PLACE

You can specify a value from zero to four to denote the fractional part of currency for ex., fractional part of Indian currency is paisa for which number of decimal places is two.

SHOW AMOUNT IN MILLIONS

In case you want to show amount be displayed in American millions, then click yes.

IS SYMBOL SUFFIXED TO AMOUNT

Some currency has symbol prefixed for ex., Rs. 234.00 or $435. Some currency take symbol at right side 500 yen. 657 liras. Depending upon currency you wish to deal in, choose an appropriate option.

PUT A SPACE BETWEEN AMOUNT AND SYMBOL

With this you end the options for creating a new company press <Enter> to get a small window which promotes to answer Yes or No.

 

ACCOUNTING ORGANIZATION

In manual accounting system accounts are grouped upon preparation of trial balance to prepare final accounts namely profit and loss account and balance. Sheet, so you do not get final account until trial balance is prepared. In tally at time of creation of ledger accounts, you place it under appropriate account group. They provide your ability to classify your accounts and ledgers in a versatile way without any limit number of group, subgroup and number of ledger accounts can be placed under any group.

Tally creates 28 accounts group on its own to make working under tally. It also creates 2 ledger:  cash in hand and profit and loss account. Accounting is based on transactions classified into ledgers, then further classified into groups. All these groups follow a general conversation of accounting standard.

CREATING ACCOUNT MASTER

Masters are account heads, which shows the transaction under the particular account. You can create masters for both accounts and inventory. Can create masters of accounts inventory and import masters. You can create transaction vouchers like account transactions. On report side you can print account and stock summary and ratio analyst you can also display various information on screen and print multi account.

ACCOUNT INFORMATION

This has masters, group ledgers and voucher types. Each one of them clicked would lead you to create (for creation of new account), display (for allowing you to view the information contained in master) and later (allowing you to change the information contained in master).

CREATING ACCOUNTS GROUP

·        To create group company, you must have main company already create in tally.

·        Selects company, press enter, display dialog box.

·        Selects account info, press enter.

Ø Will display account info dialog box.

Ø Select group, press enter, will display dialog box.

Ø Click on create, will display dialog box.

 

ACCOUNTS GROUPS

Accounts group are divided into 4 heads

·        Liability

·        Assets

·        Income

·        Expenditure (expenses)

LIST OF GROUPS

Ø LIABILITY

1.     Bank OCC A/C

2.     Bank OD A/C

3.     Branch divisions

4.     Capital account

5.     Current liabilities

6.     Duties & taxes

7.     Loan (liabilities)

8.     Provisions

9.     Reserve & surplus

10.Retained earning

11.Secured loans

12.Sundry creditor

13.Suspense A/C

14.Unsecured loan

 

Ø ASSETS

1.     Bank accounts

2.     Cash in hand

3.     Current assets

4.     Deposited assets

5.     Fixed assets

6.     Investment

7.     Loans & advances (assets)

8.     Stock in hand

9.     Sundry debtors

10.MSc. Expenses (assets)

 

Ø INCOME

1.     Direct income

2.     Indirect income

3.     Income (direct)

4.     Indirect income

5.     Sales accounts

 

Ø EXPENSES

1.     Direct expense

2.     Indirect expense

3.     Expense direct

4.     Indirect expense

5.     Purchase accounts

 

  

ACCOUNT LEDGER

There are actual accounts heads to which transactions are identified. You make your all voucher entries in these accounts. You have to classify all ledgers into groups. Most of the users working with single ledger. The advance users working with multiple ledgers.

 

CREATING LEDGER

·        Selects company, press enter.

·        Selects accounts info press enter.

·        Selects ledger press enter.

·        Will display ledger dialog box.

 

 

 

There are two types of ledgers

·        Single ledgers

·        Multiple ledgers

 

Each ledger has three options

·        Create

·        Display

·        Alter

On pressing options create in single ledger following dialog box will display: -

Following are options in this dialog box.

Name: - Types name of ledger you want to create.

Alias: - This option will be present, if you had configured master configuration menu for aliases. Give here alternate name for ledger account. You can specify any number of names.

 

UNDER: - From lists of existing groups that display, click appropriate group under which you wished to place this ledger.

 

OPNING BALANCE: - Specify here opening balance in ledger as on date of beginning of books. This is opening balance of accounts taken from previous years. Balance sheet. You have to specify whether it is debit or credit account. By default, tally assumes that assets have debit balances and credit liabilities have credit balances. In case of new company leave it blank.

 

MAILING & RELATED DETAILES: - This option is used in case of group like sundry debtors, creditors, loan and advances. You can give complete name and address of party along with its income tax and sales tax numbers.

 

CURRENCY: - You can specify currency in which ledger will be maintained.

 

TYPES OF VOUCHERS: -

CONTRA VOUCHER

PAYMENT VOUCHER

RECEIPT VOUCHER

PURCHASE VOUCHER

SALES VOUCHER

JOURNAL VOUCHER

CREDIT NOTE VOUCHER

DEBIT NOTE VOUCHER

MEMORANDUM VOUCHER

 

CONTRA VOUCHER IN TALLY

Contra vouchers are generally used by businesses to withdraw cash from banks or to deposit cash in banks. With Tally ERP 9 also provides the denomination of notes to let you tracks a print of the same at the time of depositing money.

This voucher is used for fund transfers between cash and bank accounts only. Like fund transfer from one bank/cash account to another Bank/Cash account, cash Deposit/Withdrawal’s into from bank.

Perform the following steps to have receipt voucher creation screen on your desktop…….

Gateway of tally – accounting voucher – click on

F4 – contra voucher present on the button panel to have the contra voucher creation screen.

 

The following vouchers can be done through the contra vouchers

·        Cash deposited into bank.

·        Cash withdrawal from the bank.

·        Fund transfer from one bank to another bank.

·        Cash transfer to pretty cash.

 

PAYMENT VOUCHER IN TALLY

The payment voucher in tally ERP.9 lets you provide all types of details when creating it. While making payment to a party you can provide details such as the instrument number, and even print the cheque. As soon as you a payment vouchers, you can print the corresponding cheque. To see the list of cheques which needs to be printed, go to banking and click on cheque printing.

Tally ERP.9 supports over 500 banks from both India and abroad. After making the payment you can generate a payment advise in tally ERP.9 and share it with your supplier as it will update him with the details of all your payments.

This voucher records all the payments made through bank and cash. It is also used for payment of fixed assets, purchases, dues to creditors, loans, and advances given, payment of loans and advances given to you earlier.

Gateway of tally – Accounting Voucher – Click on F5 – payment Button present on the button panel to have the payment voucher creation screen.

RECEIPT VOUCHER IN TALLY

When you create receipt voucher, Tally ERP 9 prompts you to take a look at at all the pending invoices for which payments are yet to be received. As and when your costumer makes a payment, you can record details such as against which invoice the payment by cash, cheque or via NEFT/RTGS; and what the instrument numbers are. You can even email this information to your customer. This way you will never lose bank of the payments.

RECEIPT VOUCHER (F6)

The purpose of these voucher is to record all receipt into bank or cash accounts such as receipt from debtors, any income, refund of loans or advances given earlier, sale of fixed assets, etc.…

Gateway of tally – Accounting voucher – Click on (F6)

Receipt button present on the button panel to have the receipt voucher creation screen.

 

PURCHASE VOUCHER IN TALLY

 

The purchase voucher too can be recorded either in the voucher or invoice mode based on the nature of business operations. It comes under accounting vouchers in tally ERP. 9.

Suppose you change your mind and decide to change the mode when entering details of a purchase transactions? what if you have entered all the details and decide to change the mode in the last second?

Tally ERP 9 helps you to convert a voucher into an invoice or vice versa, or without expecting you to re-enter details. It auto adjusts to your preference. Just use the toggle button.

You can add more details by enabling options. Press F12 to do so.

This voucher records all entries related to purchases including cash & credit. You need to enter the item details if inventory value gets effected due to purchases. The entries for cash purchases are automatically entered in the cash book or bank book.

Gateway of tally – Accounting voucher – Click on (F9) purchase

SALES VOUCHER IN TALLY

The sales voucher is most widely used by the users of tally ERP.9 it is a type of accounting vouchers. Depending on the nature of your business it can be created in the invoice mode or voucher mode. In the invoice mode, you can print and provide a copy of the invoice mode you can print and provide a copy of the invoice to your customers.

The voucher mode can be used when you want to basically record transactions for statutory purpose only, and when you don’t necessarily have the need to print and share the information with your customer. Tally ERP 9 gives you the flexibility to address different needs.

The voucher records all entries to sales including cash & credit. You need to enter the item details if inventory value gets effected due to sales. The entries for cash sale are automatically entered in the cash book or bank book.

Gateway of tally – Accounting voucher – Click on (F8) sale

JOURNAL VOUCHER IN TALLY

The journal voucher is used by businesses for multiple purpose, based on their business types some accountants use them for purchases, based and sales as well. Both accounting and inventory journal vouchers are available in tally ERP9.

The inventory journal vouchers can be used to adjust inventory or for movements of inventory from one godown to another.

It is for adjustment between any two ledgers no outside parties, like debtors, creditors branches. Divisions are involved. These are for rectification entries in which as any kind adjustment for Non-cash or Bank transactions are recorded here.

Gateway of tally – Accounting voucher – click on (F7) journal

CREDIT NOTE VOUCHER IN TALLY

The credit note voucher is used generally for a sales return. By default, the credit note is not enabled in tally. ERP 9.

It can be enabled by pressing on F11 and configuring the features while passing credit notes.

You can refer to the original invoice number as well. Upon selection of a party, Tally ERP. Will by default show you all the invoices which have been raised against the particular party for easy references.

Credit note use for giving credit to the party, for example, when a buyer returns the goods (SALE RETURN) or allows himself credit due to rate difference or discount or due to sense adjustment.

This voucher type will be available after configuration of F11 features.

DEBIT NOTE VOUCHER IN TALLY

A debit note is used for purchase returns. With Tally ERP9, a user can either pass a debit note as a voucher or as an invoice where the inventory values also get affected. The debit note voucher can be enabled by pressing F11 and configuring the features. You can provide details of the original invoice numbers as well.

Debit notes are used for debiting party accounts for example in case of purchase return or when you supplier has granted you credit due to different reasons. This voucher type will be available Alt configurations of F11 features.

MEMORANDOM VOUCHER IN TALLY

As the name implies, it is a non-accounting voucher whose entries do not affected you accounts at all. The entries in this voucher are not posted into ledgers. Instead, are stored in a separate memo register. A memo voucher can be converted into a regular voucher, to be included in your books of accounts.

Gateway of tally – Accounting voucher – Click on F10 Memo

This type of memo voucher, which can be used in many situations such as.

Suspense Accounts

Suppose an employee takes an advance for his travelling expenses. Until and unless expenses are incurred, the actual expenditure details cannot be worked out. A memo voucher can be turned to a payment voucher after receiving the details of the expenditure incurred.

ACCOUNTING FEATURES

(F11 CONFIGURATIONS)

INVENTORY MANAGEMENT

Tally is not for accounting only it takes care of inventory also. By inventory we mean stock and items you can enter inventory details while entering vouchers. For convenience of entry tally permits to enter in it invoice format where computation of taxes, duties or other charges can be automated. Selects inventory into menu and press enter to display inventory info dialog box. Following are various inventory terms.

 

STOCK ITEMS

What you receive or issue sell or purchases, each item is a stock. For example, vehicle shop from you by vehicle. Vehicle is a stock item. Similar stock items can be clubbed together and call stock groups. For example, in department store of ready-made garments, gents’ garments can be grouped having pants, shirts etc. similar for children also.

Stock items are measured in unit. Like kg, pcs, lit. Different items may measure in different units. You can create unit of measurements as per your business need. You can specify the unit in which the items are transacted. Tally allows you to specify up to 2 units for a single stock item, one as unit and other as alternate unit. A company has many places to store inventory. Items, they are called godowns normally. Each godown has its inventory. Items, they are called godowns normally. Each godown has its inventory and that when combined with inventory of other godowns give complete picture of companies’ inventory. Tally allows you to create stock items as per your requirements.

NOTE

Stock categories and godowns are not display by default. For that go to features by clicking F11. Go to inventory features do maintain stock category and godown to yes. It will display and menu.

INVENTORY FEATURES

(F12 CONGIGURATIONS)

STOCK GROUPS

Normally thousands of items are traded in organization. It may become unmanage not properly grouped. You can nest groups to any depths.

GENTS CLOTHING

PANT

SHIRT

COATS

LADIES CLOTHING

SARESS

DRESS

OTHER MATERIAL

KIDS

TODDLER ITEM

CLOTHING

TOYS

Grouping of stock helps to get group specific report. If you want stock reports of you can get it. By selecting pants group.

STOCK CATEGORIES

It offers benefits of classifying an item in another dimension. At any moment you can find similar item. For example, sari may be different types like polyester, siphon, silk etc.

Such additional information for item helps when a customer asks for one item, which is not available in stock.

NOTE

Address option available by

Click on F12 (Configuration)

Selects acc/info and press enter

Go to inventory master

Set address for godowns to yes

UNIT OF MEASURE

A stock item is measured in a unit. Ex pieces, liter meter etc. selects this option to create all such units. Many items are measured by a combination of 2 units which is termed as compound units.

Ex (Box of 100 pcs, trip of 6 capsules)

MARKET VALUATION METHOD

A brief explanation of various is: -

FIFO – The full form is first in first out. Consider oldest stock move first.

LIFO – The full form is last in first out. Consider latest good first.

LIFO PERPETUAL – Last purchases continues from previous financial year.

AVERAGE COST – The weighted average for whole year.

MONTHELY AVGRAGE COST – Computed for month instead of year.

LAST PURCHASED COST – Values at latest purchase cost.

STANDARD COST – At the rate that you entered in stock item at standard purchase cost. Applicable for the date of report.

AT ZERO COST – For defective item, which has no commercial value.

INVENTOY VOUCHER

Like accounting inventory has voucher with the help of which you can enter information to tally.

STOCK JOURNAL VOUCHER

Used to transfer of material. It allows you to move stock items from one godown to another without affecting financial account.

RECEIPT NOTE VOUCHER

Whenever you buy goods, you pass a purchase voucher, if you have not received a bill then you have not received a bill then you can have not received a bill then you can simply pass a receipt note. This updates stock of that item but does not affect financial account. After getting bill you can adjust it against receipt note.

REJECTION IN VOUCHER

Some times the party to which you sell your goods you can see. Then as rejection if buyer does not send you debit note immediately. Then you can pass rejection in voucher to bring goods back into your stock.

DELIVERY NOTE VOUCHER

When you sell goods to a customer, you generally raise invoice. Sometimes you send goods out with a delivery note and later raise an invoice against this delivery note.

REJECTION OUT VOUCHER

Sometimes you reject some items from the goods you purchase but send its debit note to the seller later. In this case you can pass rejection out voucher.

PHYSICAL STOCK VOUCHER

This voucher at any given date represents the confirmation actual stock on that date.

INVOICE

These entries are similar to voucher entries. Only different is in voucher entry you first enter accounts allocation then inventory allocation. It is reverse in invoice. Invoice all computation done by tally, you have to enter basic figure like quantity, rate.

ORDERS

Orders are optional documents of pre-invoice stage. You can prepare invoice even without incorporating ordering system. Order do not affect inventory.

VAT (VALUE ADDED TAX)

VAT is a system of indirect expenses. It has been introduced in place of sales tax. It is the tax paid by the producers, manufactures, retailers, or any other dealer who add value to the goods and that is ultimately passed on to the consumer. Vat has been introduced in India to ensure a fair and uniform system of taxation. It is efficient, transparent, revenue neutral. Globally acceptable and easy to administer taxation system. It benefits the common man (Consumer) Businessman and the government.

VAT enhance completeness by removing the cascading effect of taxes on goods. Makes levy of tax simple and self-regulatory, ensuring to generate large revenues.

In existing structure of taxation input are taxed before goods are produced and the output is taxed after it is produced. This causes on unfair double taxation. However, in VAT. A set off is given for input tax. This results in the overall tax burden being rationalized and a fall in prices of goods.

VAT makes the tax structure simple and export oriented. VAT in tally will help you in the smooth functioning of your business and eliminate the complications.

VAT CONCEPTS

The essence of VAT is in providing set off for input tax and this is applied through the concept of input credit/rebate. This input credit in relation to any period means setting off the amount of input tax by a registered dealer against. The amount of his output tax, value added tax (VAT) is based on the value addition to the goods and the related is calculated by deducting the input credits from the tax collected on sales during the payment period.

VAT works in two different ways: -

1.     If VAT registered business receives more output tax than the taxes paid as input, they will need to pay the differences to the commissioner of taxes (State).

2.     If the input tax paid is more than the output tax collected. You can carry forward the input credit and adjust it against the output tax in the subsequent months you can have the input credit refunded to you by the government at the end of the current year. You can receive refunds for input credits on exports within a period of there month.

 

TERMINOLOGY

INPUT TAX

This is a tax paid on purchases.

OUTPUT TAX

This is a tax charged on sales.

INPUT CREDITS

The amount of unput tax that is permitted to be set off against output tax

COMPOSITE DEALERS

Dealers with annuals gross turnover not exceeding a certain threshold (It is decided by the respective state governments) can option for a composition scheme whereby they will pay tax as a small percentage of their gross turnover. However, retailers opting for this composition scheme will not be entitled to input credits. The state government fix the period. Ans the procedures for the payment for the lump sum.

WHY VAT IS USED?

VAT was adopted because the sales tax system is complex and includes no-compliance. Is has been found to be a hindrance in the economic growth of industry, state and the country. This causes a huge of revenue to the government VAT also helps in eliminating the dreaded cascading effect of tax.

VAT RATES

There are 550 categories of goods under the VAT system. They are classified into the following four groups. Depending on the VAT rate.

VAT @ 1%

This is for the specific category of goods like gold, silver etc.

VAT @ 4%

The largest number of goods (270) comprising of basic necessity items such as drugs and medicines, agriculture and industrial input, capital goods and declared goods are under 4% VAT rate.

VAT @12.5%

The remaining commodities are under the general VAT rate of 12.5%. The few goods that are outsides VAT include Liquor, Lottery Tickets, Petroleum products as the price of these item. Are not fully market determined. This item will continue to be taxed under tax act of the respective states.

FEATURES OF VAT IN TALLY

·        VAT is completely integrated with tally. The VAT functionally in tally supports the following features making it easier for computation.

·        Quick & easy setup.

·        Fast & error free voucher entry.

·        Predefined list of sales & purchase.

·        Complete tracking of each transaction till annual return.

·        Printing of tax invoice

·        Monthly return.

HOW TO ENABLE VAT IN TALLY?

You can enable tally VAT in the company creation / alteration screen. Shown below by setting use Indian VAT to yes. On setting the option use Indian VAT to yes in the company master. You have to enter the applicable from date VAT/TIN in and inter state sales Tax number.

APPLICABLE FROM

Mention the date from which VAT is applicable. Only if this date is greater than the company’s current date.

VAT-TIN

Enter your TIN or GST number as the case may be in the field. Tax payers Identification number (TIN) consist of 11 digits. The first two characters represent the state code as used by the union minister of home affairs. This setup of the next nine characters may however be different in different states.

VAT CLASSIFICATION

The VAT classification is a list of VAT rates, which describes the natures of the business activity and the type of transaction. These are inbuilt in the system and will be updated if and when any statutory changes take place.

Some of the VAT classification are

·        INPUT VAT @ 5%

·        INPUT VAT @ 1%

·        INPUT VAT @ 12.5%

·        OUTPUT VAT @ 5%

·        OUTPUT VAT @1%

·        OUTPUT VAT @ 12.5%

·        PURCHASE CAPITAL GOODS @ 4%

·        PURCHASE @ 12.5%

·        SALES @ 5%

·        SALES @ 12.5%

CLASSIFICATION OF LEDGER

Tally allows you to classifying all sales and purchases, based on how they are taxed under VAT act. You can define it is at time of ledger creation and voucher entry.

LEDGER AFFCTED BY VAT ARE

Purchase ledger, sales ledger, input VAT ledger, output VAT ledger.

PURCHASE LEDGER

Gateway of Tally - Account Info- Ledger Create

Enter the name of purchase ledger.

·        Set used in VAT return to yes.

·        VAT class selects from drop down list.

·        Select inventory value affected to yes.

·        Enter rest of self- explanatory field and accept the screen.

Sales ledger with following setting

Gateway of tally – Account Info – Ledger – create

·        Name: - sales @ 4%

·        Under in Vat return yes

·        VAT tax class sale @ 4%

·        Inventory value affected yes.

·        Accept yes.

Create input VAT ledger

Gateway of tally – Account Info – Ledger – create

·        Enter name input VAT @ 4%

·        Specify group duties & Taxes

·        Type of duty VAT

·        Selects VAT class input 4%

·        Set inventory value are affected No

·        Percentage of calculation display that you select from down list.

·        Select method of calculation on VAT rate if you select VAT under duties & Taxes

·        Accept Yes.

Create output VAT ledger

Gateway of tally – Account Info – Ledger – Create

·        Enter Name output VAT @ 4%

·        Specify group Duties & Taxes

·        Type of Duty VAT

·        Select VAT class output VAT @ 4%

·        Set inventory value are affected No

·        Percentage of calculation display that you select from down list

·        Select method of calculation on VAT rate if you select VAT under Duties & Taxes

·        Accept Yes.

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 ledger stock items, and transactions, and GST returns can be generated.

TO AVTIVATE GST

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

2.     Press F-11>F3.

1.     Enable goods and services tax (GST) Yes.

Set/ alter GST details Yes.

GST DETAILS

STATE

Displays the state you have selected for your company. Helps in identifying local and interstate transaction. If you change the state, it will be updated in the company details.

1.     Specify the GSTIN/UIN for the business. This can be printed in the invoices as required. You can specify this later.

2.     Specify applicable from date. GST will be applicable for your transactions from this date onwards.

You can record transactions using the ledgers with GST details, and print invoices with GSTIN.

SETTING UP GST RATES

Quickly set up GST rates for your company stock item-wise or stock group-wise, using the GST rate setup option. You must enable GST in your company to provide GST rates you can set up GST rates at the company level, stock group level, stock item level, ledger group level, and ledger level. You can also set the GST rates for a particular price range /slap for multiple stock items.

To set GST rates for stock group and stock items.

Go to Gateway of Tally – Display > Statutory Reports> GST> GST rate setup.