GST in Tally – Accounting and Calculation

GST in Tally - Accounting and Calculation

I have published a new post including the GST Functionality on GST Accounting Entries in Tally. That is the updated version. Please go there to learn GST Accounting Entries in Tally.

A TallySchool visitor named Maninder asked me about the role of GST in Tally. I told him that it is an interesting question and therefore I will be publishing a brand new post on it.

So, here is the post exactly explaining how to do GST in Tally.

In other words, I will be explaining how you can calculate GST in Tally and how its accounting can be done in Tally.

But before we start, let me point out a very important fact.

GST is NOT yet implemented in India and therefore you will not find any function of GST in Tally. I have tried to explain how it will work in Tally and how you can use it in Tally.

When it will finally be applicable and the required functionality will be available in Tally, you will be able to use it fully.

I have attempted to use my Creative Powers to calculate GST in Tally before it is made available in Tally. 🙂

So, be with me till the end of this post and you will truly enjoy it.

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 will be only one tax in the future which will be 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.

Likewise, same is also applicable to you too.

But once the GST comes, you will only 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, when GST will come, it will remove all the confusion about different kinds of taxes, because there will be one and only GST.

There are currently three types of GST:

  1. CGST – Central GST – Applies to sales within the state – goes to Central Government
  2. SGST – State GST – Applies to sales within the state – goes to State Government
  3. 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.

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.

Calculation of GST in Tally

As I have stated in the beginning of this post that GST in Tally is not yet available because it is not yet made applicable by the government.

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.

Let’s take an example.

Rohan sells Google Pixel to Amit for ₹57,000 in Gujarat.

Rohan has to collect GST and say it is 18%. Then GST will come at ₹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 ₹5,130 CGST and ₹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.

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 ₹10,000 then service tax would be 15% which comes to ₹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.

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 Rohan had sold the product to Amit from Gujarat to Uttar Pradesh 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.

Now we will jump off to the Accounting of GST in Tally.

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.

In the above example, Rohan sold Google Pixel to Amit for ₹57,000.

The accounting entry for the Rohan in his books will be as under. Rohan 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 ₹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.

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.

Here is what it looks like when I am creating CGST ledger in Tally.

CGST Ledger in Tally
CGST Ledger in Tally

Now, repeat the same process for SGST ledger as well as IGST ledger and for IGST ledger set the percentage to 18%.

This is how the IGST ledger will look like in Tally.

IGST ledger in Tally
IGST ledger in Tally

For your ease, I have created the entry in Tally for the above calculation so you can have a clear cut understanding of how it will be done in Tally.

It is a simple Sales entry along with the calculation and addition of GST.

CGST and SGST entry in Tally
CGST and SGST entry in Tally

From the above picture you can easily see that we have sold Google Pixel to Amit for ₹57,000 and GST of ₹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 Uttar Pradesh, 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.

Let me show you how that will appear in Tally if you try to pass the sales entry.

IGST entry in Tally
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.

That is Returns and Reporting.

The functionality in Tally is not available and therefore Returns and Reporting functionalities are not available in Tally which is currently available for Service Tax, VAT and other taxes in Tally.

But still I love Tally so much. It is amazing. It works universally.

At the End…

Please remember that GST is not yet applicable in India and therefore there are no new features of GST which are added in Tally.

But I have tried to use the current available features of Tally to calculate GST in Tally.

The rates of 9% and 18% are the current rates as per the GST bill. It may change in future.

As far as I think, I have done it correctly and if you find any mistakes, comment below and I will look into it.

This post is a great opportunity to learn the accounting and calculation of GST in Tally before GST becomes applicable and to be prepared.

Be prepared before everyone and get the most out of this opportunity.

Whenever a new thing comes – in our case it is new taxation system called GST, it is an opportunity for young people because they are more willing to learn new things in comparison to aged people.

This post is dedicated to all the young aspiring accountants and chartered accountants who want to make a mark and start their careers.

You can create or find almost anything if you really want to.

That is the reason I was able to create this post using the same old Tally but explaining a whole new tax.

And lastly, I want to thank Maninder once again about asking the question. Thanks, Maninder. This post would not have been possible without him.

If you liked the post and the idea behind it, please share this post.

It will help me and it will help your friends too.

P.S. – Have a look at how to Upgrade Tally.ERP 9 for New GST Ready Version 6.0.

Join TallySchool & Start learning Tally with GST for Free!





59 thoughts on “GST in Tally – Accounting and Calculation

  1. biplab swain says:

    Dear Ritesh Ji
    I am a big fan of Tally erp9.
    I want to know the implementation of GST in Tally in india.

    Can you help me out.

  2. siva says:

    Thanks for the insight.
    Q:
    When Tally will provide GST ready download, on their website? Please share info if you already have this information.

    • Rishit Shah says:

      Hi, Siva!
      I do not know when Tally will provide GST ready version.

      It will probably come after the law is properly finalized and implemented.
      I will let you know once I know the information.

  3. K N Subramanya says:

    Hello Sir

    We have Service provider ,my question is in service under GST applicable only CGST or Both (CGST & SGST) and what happen implement GST on 1st july . Service tax return would be quarterly / half yaerly ?.

  4. jyothikumar says:

    There are five different types of rates in gst. how to get it automatically done the gst calculations for different types of goods at different types of rates.

    • Rishit Shah says:

      Hi, Jyothikumar!

      GST in Tally will soon come out. I have just demonstrated how you can do it without it.
      For different rates, you can create different ledgers such as CGST @ 5% and so on.

  5. Nahin says:

    Dear Rishit
    Just as you have explained the above entry from the sales side can you pls explain the same from purchase side also….. Just to clear the doubts

    • Rishit Shah says:

      Hi, Nahin!

      It will be exactly same.
      That is why I have not explained from the purchase side.

      But I will make a video in which I will be explaining both the purchases and sales sides.

  6. souvik mondal says:

    I just ask this type of question becz I just complete my study at b.a general degree… After I just join a computer Corse of tally erp 9 for 8 mouth… So can I get some of job after the complete my Corse???

  7. Ravi says:

    Sir,
    if i made purchase from other states with IGST. then whats the sales gst igst? or cgst & sgst? if i sale the same goods in my own state.

    • Rishit Shah says:

      Hi, Ravi!

      I am making an entire tutorial on GST related concepts because now the new version of Tally is available.
      Please a wait a few days before I post it.

      Thanks. 🙂

  8. BHAWANI SINGH KHICHI says:

    Dear sir,
    I try this very much but I only receive CGST amount correct when I calculate SGST duty amount it will come wrong because it calculate on total sales including CGST amount in sales. Please SIR solve this this problem as soon as possible.

    • Rishit Shah says:

      Hi, Bhawani!

      This is because what I have shown here is before Tally Solutions have done changes in Tally.
      Now, the new version is released and I will soon post a tutorial on that.

  9. MANI says:

    RISHIT ,
    YOU ARE FAN OF TALLY, NOW I AM FAN OF YOURS ,
    VERY NICELY U HAVE EXPLAIN IT , LOOKING
    FORWARD FOR THE SAME RISHIT…
    ANY UPDATE PLZ POST IT

  10. Pranab Kumar Deb says:

    Hi, Rishit, can you help me to include GSTIN no. in tally (not the gst version) in place of VAT & CST no. in taxation part. Thanks in advance.

  11. Samrat says:

    Hi Mr. Rohit
    I think you can solve my problem
    In case of advance receipt of amount against future supplies
    For example I have received Rs. 100000 in current month and against that advance 75000 got sold in the current. As per gst law gst w.r.to the advance received has to be paid in the month of receival. What is the accounting treatment and how to show both the aspects in gstr-1 in tally. Am I wrongly interpreting the act. Please help me.

    • Rishit Shah says:

      Hi, Samrat!

      You need to show ₹75,000 sales in the month you sold and pay GST on it.
      Rest ₹25,000 will be sold and at that time, you will pay the GST.

      For ₹1,00,000, you need to pay the GST when you pay for the bill.

      I hope it clears your doubt.

  12. Sunanda says:

    Hi Rishit,
    I am working with service providing company , which started in 2012. Now we have decided to install tally erp with GST, Can you explain me how we can start or what is procedure? Do we need to enter data from beginning of the company or we can make entry from the day we install tally?

    • Rishit Shah says:

      Hi, Sunanda!

      You can definitely pass the entries from the day you install the upgraded the version.
      There is no need to enter the data from the beginning.

      I am preparing whole series of posts for GST. Just wait a bit.

  13. Sunanda says:

    Hi Rishit
    Thanks for reply.
    How can we enter different type of services in tally like goods we create stock item, stock group?

  14. Neela says:

    Hi,

    Thanks for your explanation.
    Request your help to create Control Account -“GST Payable” a/c in Tally along with its classifications.
    Would be glad, if you share a screen shot after creating the above ledger, so that we can also do the same in our Books of Accounts.

    Thanks & Regards,

    Neela

    • Rishit Shah says:

      Hi, Neela!

      When you create Input GST and Output GST ledgers, the balance in them automatically becomes the GST Control account so there is not real need to create a GST Control account.

  15. aisha says:

    i would like to have a few more questions or problems relating to gst in tally. As i am learning gst from an institution, and I’ve been asked to find out some of the problems.
    thank you

  16. Aditi says:

    Hello,

    I want to know suppose there are 3 taxes levied on same bill; For eg.
    28%
    12%
    18%
    And I want to calculate final amt. of GST for payment from sales & purchase bills. Pl.s explain how to do so.

  17. nimmi says:

    hi rishit …trust all is fine ??? rishit i m getting confused as i really dont know from where we hav to start this course kindly create a topic or videos set by step for freshers who wants to learn tally with gst . i shall b highly greatful to u .
    regards Nimmi

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