Accounting Entries for GST in Tally – Sales and Purchases

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In this post you are going to learn in detail step by step about how you can easily create Accounting Entries for GST in Tally.

Especially we are going to look at how you can create sales and purchases entries along with stock items in Tally.

In the previous post you have learnt how to enable and set GST details in Tally. In this post, I am going to explain the entire working of GST regarding Sales and Purchases entries in Tally.

If you are familiar with the previous taxation entries in Tally for VAT or Service Tax, then GST entries for sales and purchases in Tally will be a cup of cake for you. It is almost same as if you are passing entries for service tax but instead of service tax, you will be passing entries for GST. That is the difference.

Now, let us start with the main part. Creating Sales and Purchases entries for GST.

But before we can create Sales and Purchases Entries for GST i.e. GST Accounting Entries in Tally, we need to create certain ledgers and alter certain ledgers if you have not already created them.

Before creating GST Accounting Entries in Tally:

As I said, we need to create certain ledgers as well as alter certain ledgers.

We have to create taxation ledgers for recording the GST.

Now, GST includes majorly 3 types.

CGST – Central Goods and Services Tax
SGST – State Goods and Services Tax
IGST – Integrated Goods and Services Tax

There is another type of GST called UTGST – Union Territory GST which I will not be discussing here because it is not much in use.

So, coming back to the GST ledgers, we need to create the following GST ledgers in Tally. They are:

Output CGST Ledger – when you sell goods or services inside your state
Output SGST Ledger – when you sell goods or services inside your state
Output IGST Ledger – when you sell goods or services outside your state
Input CGST Ledger – when you buy goods or services inside your state
Input SGST Ledger – when you buy goods or services inside your state
Input IGST Ledger – when you buy goods or services outside your state

All the ledgers will be under Duties and Taxes as all of them are taxes.

Remember, when you sell goods or services, there will always be Output Tax and when you buy goods or services, there will always be Input Tax.

While creating GST taxation ledgers, you need to take extreme care of one thing and that is rate of tax.

If you have already enabled and set up GST in Tally, you must have set the GST rates in Statutory and Taxation in the Configuration menu.

That rate will be automatically taken up when you create a purchases or sales voucher in Tally.

Therefore, while creating GST ledgers, you need to put the tax rate to zero.

Let me show you how you can create 1 ledger from the above list because the rest of the ledgers have to be created in the same way.

How to create GST Taxation Ledgers in Tally

Creating GST taxation ledgers in Tally is as easy as creating ledgers in Tally. Let’s start.

From Gateway of Tally, go to Accounts Info.
Select Ledgers
Select Create under Single Ledger. Now the real fun starts.

Take a look at the picture above because that is exactly, how you will need to create the Input CGST Ledger in Tally.

The name will be Input CGST as it is input tax which we pay when we purchase goods or services attracting GST.
As I said, it will be under Duties and Taxes.
Now, in Type of Duty/tax option, select GST.
For Tax type, select Central Tax for now.
- You have to select State Tax for SGST and Integrated Tax for IGST and Cess for Cess.
The option Inventory Values are affected will be set to No because it has no use for this ledger.
Percentage of calculation should be set to 0%. It is because Tally takes the percentages from your configuration or the stock items or the classification.
This is crucial to know because if you set the percentage here you will not get the amount automatically calculated while creating an entry which includes GST.
Rounding method that I have selected is Normal Rounding. However, you can select the method as per your choice.
Rounding limit is set to zero. Again, it is my choice. You can select a different number.
Now, just press Enter till you save the ledger.
Congo! You have created a GST ledger, specifically an Input CGST ledger in Tally.

You can easily create all the GST Ledgers as in the list above by following this method.

Just change the name, the Tax Type and you are done with creating all the ledgers. Repeat the same method and in no time you will have all the six ledgers required for passing the GST accounting entries in Tally.

Now that you have created all the GST tax ledgers, we need to make sure that certain other ledgers are configured for GST applicability otherwise they won’t work as required.

Those ledgers are important for passing GST Accounting Entries in Tally. They are:

Sales and Purchases Ledger
Stock Items Ledger
Sundry Debtor and Sundry Creditors Ledger

We need to configure these ledgers so as to make them GST enabled in Tally. Here is how you can do it.

Follow me.

How to Set GST Details in Sales Ledgers in Tally

Let us start with altering Sales Ledger to enable it for GST. You can follow the steps even if you want to create a new GST Sales Ledger.

Please note that if you do not alter the Sales Ledger and do not enable GST in that ledger, GST will not be automatically calculated and will not get displayed while creating a Sales Voucher which includes GST.

I have already created a Sales Ledger in Tally named Domestic Sales. I will alter it right now in front of you.

Have a look at the Statutory Information section on the left hand side. That is what we have to alter to enable the sales ledger for GST.

First Option – Is GST Applicable? should be set to Applicable.
Second Option is Set/alter GST Details. Press Y and press Enter. You will see a GST Details menu which is exactly the same as was at the time we set the GST details for Tally in the previous post.
- Here is how it looks like:
- Enter the Description and the HSN Code which you can get from your GST registration.
- Nature of Transaction is important here. There are different natures of transaction. Have a look at in the picture below.
- When you select Nature of Transaction, you will see the Natures of Transaction on the right hand side of the screen as in the picture above.
- You will have to select the nature of transaction here according to your business.
  - For sales inside your state, select Sales Taxable, Exempt or Nil Rated.
  - For sales outside your state, select Interstate Sales Taxable, Exempt or Nil Rated.
  - Similarly select a particular transaction type as per your business.
- Finally, set the tax rates under the option Tax Type as show in the picture above and press Enter to save the details.
Now comes another important option i.e. Type of Supply. There can be either Goods or Services in your business. Select one of the options. I have selected Goods.
Next option is for Service Tax applicability. You can either put it to Undefined or Not Applicable. I have put it Undefined as it was default selection.
Now just press Enter few times and save the ledger with all the details that you have entered.

We have successfully created a Sales Ledger in Tally and have enabled GST details for the ledger too.

It is good to name your GST Sales or Purchase Ledger according to the GST percentage rates.

For example, for 28% GST on sales, the name of the ledger can be GST Sales 28%. This will differentiate all the sales according to the rates in Profit and Loss Account in Tally and it will be easy for you to see sales in different rates of GST.

This will help us pass GST accounting entries in Tally, be it sales or purchases with very much ease.

You have to create a Purchase Ledger. And guess what? You have to follow the exact same method which I have described above.

The only difference will be that it will be a Purchase Ledger instead of Sales Ledger.

So, go ahead and create a Purchase Ledger and simply follow the steps above. You will in no time have successfully created a GST Purchase Ledger in Tally.

From now on I am assuming that you have created the required GST Tax Ledgers and enabled GST in Purchase and Sales ledgers in Tally.

These ledgers are required for passing GST Accounting Entries in Tally so create or alter them with care for perfect entry at the end.

Now, comes Stock Items.

How to create GST Stock Items in Tally

Anything you sell or purchase can be recorded in Tally in stock items if you have created them.

Basically a stock item is a unit through which you can record the number of items sold or purchased. For example, if you sell a mobile, then stock item here is mobile.

We have to alter the stock items to enable them for GST so we can pass the entry for GST Sales or Purchases.

Again, creating a stock item in Tally is almost same as altering it.

I will be explaining you here, how you can alter it or enable GST in your stock item in Tally.

Here you go! Let’s start.

From Gateway of Tally, go to Inventory Info.
Select Stock Items
Select Alter under Single Stock Item. (or you can select create for creating a new stock item)
I have already created a stock item called Mobile under a group called Mobiles.
What you have to look here is the GST details under Statutory Information as shown in the picture below.

If you notice, the statutory information menu is almost same as was while we were creating a sales ledger.
Now, select Applicable against GST Applicable option.
Next option is Set/alter GST Details. Press Y and press Enter.
You will see the same GST Tax Rate Details menu which you saw when we were creating Sales Ledger and filling up the GST details in that ledger.
But, there is one single difference and that is Calculation type.

For this post, select On Value because On Item Rate is an advanced option and I want to explain GST in as simple manner as possible.
Set the rates, the same way you had set while creating the Sales Ledger above and press Enter to save the details.
Now, you will come back in the outer menu. Select Type of Supply as Goods or Services as per your requirement.
Press Enter till you save the ledger.
Congratulations! You have just created or altered a GST Stock Item in Tally.
Similarly, you can create as many as GST Stock Items in Tally as you want.

Now, let us go and alter the Sundry Debtor and a Sundry Creditor Ledger to make them GST supported in Tally.

This is necessary to pass GST Accounting Entries in Tally at the end.

How to create GST Sundry Debtor/Sundry Creditor Ledger in Tally

I already have a Sundry Debtor created in my Tally.

I will alter it here and will show you how to add the GST details in the Sundry Debtor ledger.

Even if you are creating Sundry Debtor Ledger for the first time, the procedure is simple and almost the same.

Here you go. Let’s start.

From Gateway of Tally, go to Accounts Info.
Select Ledgers from the menu.
Select Alter under Single Ledger or Create under Single Ledger if you want to create a new Sales Ledger.
There is a Sundry Debtor named Amit which I have created. I will be altering it.

In the picture above, go to Set/Alter GST Details under the Tax Registration Details option on the bottom right.
Press Y and press Enter.

Here, select the Registration type as per the details from your debtor. In most cases it will be Regular.
Enter the GSTIN or UIN
Select the Party Type. There will be 3 options which are
- Not Applicable – Most cases
- Deemed Export and
- SEZ (Special Economic Zone)
Last option is for E-Commerce Operator. E-commerce operators are sites like Amazon or Flipkart who allow other people to sell their goods on their sites. If you are selling your own goods from your site and no one else is selling goods except you on your own site than you are not an e-commerce operator.
Save the details and press Enter until you save the whole ledger.
Congratulations, you have successfully created or altered a GST Sundry Debtor Ledger.

The best thing is, you can similarly create or alter the GST Purchases Ledger in Tally. I have already created GST Sundry Creditor Ledgers in my Tally.

But, if you face any difficulty in creating GST Sundry Creditor Ledger, you can always comment below and I’ll be happy to help.

Now, let us quickly recap what we have done till now.

By the way, if you have followed this post till now and you have simultaneously created or altered all the ledgers in Tally, then hats off to you.

Only a few handful of people are able to do this.

Coming back to the recap, here is what we have completed till now.

Created/Altered GST Taxation Ledgers in Tally
Entered GST Details in Sales as well as Purchase Ledgers in Tally
Created/Altered Stock Items in Tally for GST in Tally
Created/Altered GST Sundry Debtors and Sundry Creditors Ledgers in Tally.

Now it is the time to create an actual sales and a purchase entry in Tally which will include GST.

This was what I was talking about till now. The real time to create GST Accounting Entries in Tally.

Creating GST Accounting Entries in Tally

For this post, we will be creating a sales entry as well as a purchases entry which will include GST in Tally.

I am assuming that you have created all the ledgers above and are ready to pass sales and purchases entry in Tally.

In short, everything is set and we are ready to go to pass the sales entry along with the GST in Tally or one of the GST accounting entries in Tally.

Creating GST Sales Entry in Tally

From Gateway of Tally, go to Accounting Vouchers under Transactions.
Press F8 to select Sales Voucher.
In Party A/c name, select the Sundry Debtor. In my case, I am selecting Amit.
In Sales Ledger, select the GST Sales Ledger that we have created above. Here it is Domestic Sales.
Now, you need to select a Stock Item you have created. Here, it is Mobile.
Enter the quantity and rate for the Stock Item which here is 1 Mobile for ₹20,000.
Press Enter 2 times after entering the Amount and you have to select the GST Tax Ledgers.
Select Output CGST as well as Output SGST. You will notice that the amount of GST will be calculated automatically.
Enter the Narration and press Enter to save the voucher.
Congratulations! You have successfully created a GST Sales Entry in Tally. Have a look at the picture below to see what I am talking about.

You can click on the image above to see it clearly.

Now, similarly, we will create a GST Purchases Voucher in Tally. The procedure is almost the same and the only difference is that it is a Purchase Voucher.

Basically both Purchases and Sales vouchers are a type of accounting entries and therefore you can also call them GST Accounting Entries in Tally.

Creating GST Purchases Entry in Tally

From Gateway of Tally, go to Accounting Vouchers under Transactions.
Press F9 to select Sales Voucher.
Enter the Supplier Invoice no, enter the Date and press Enter.
Select the Sundry Creditor with GST Details which in our case is Rohan.
Select a Purchase Ledger as we created/altered above with GST Details which in our case is Domestic Purchases.
Select a Stock Item from the List of Stock Items. In our case it is Mobile.
Enter the Quantity and Rate. The Amount column then will automatically get filled in.
Press Enter exactly 2 times when in Amount column.
Select Input CGST and Input SGST and the GST amount will be automatically calculated in Tally.
Enter the Narration and save the voucher.
Congratulations! You have created a GST Purchases Entry in Tally.

You have also created second of the most important GST accounting entries in Tally which is GST Purchases Entry in Tally.

At the End…

A huge congratulations to you because you have successfully, with flying colors learned how you can create GST Purchase Vouchers or Entries in Tally as well as GST Sales Vouchers or Entries in Tally.

In short, you have learned how to create Accounting Entries for GST in Tally.

If you remember, I asked you to create IGST ledgers also.

Well, they are used whenever you are selling outside the state or purchasing from the other state.

In Tally, just select IGST ledgers whenever you want to pass entry in Tally which involves sales or purchase outside the state instead of CGST and SGST ledgers.

That’s it.

I know this post is long, but I want you to fully know the working of GST in Tally, especially in Sales and Purchases.

Other than that, I am sure you have learnt a lot from this post so please share this post for everybody to learn GST in Tally for free.

Source: tallyschool