Recording GST-compliant Sales and Purchase Entries in Tally Prime

Goods and Services Tax (GST) is a tax system that businesses in India must comply with for all sales and purchases. Tally Prime simplifies recording GST-compliant transactions, ensuring accurate tax calculations. This article provides a step-by-step guide to recording GST-compliant sales and purchase entries in Tally Prime, using a real-world example.

1. Importance of GST-compliant Entries

GST-compliant entries ensure that the right amount of tax is recorded, making it easier to file returns and avoid any tax-related issues. Both sales and purchase transactions need to have the proper GST calculations (CGST, SGST, or IGST) based on the transaction type and the nature of the sale or purchase.

2. Setting up GST for Sales and Purchase

Before recording any GST-compliant transactions, ensure that you have enabled GST in Tally Prime. Additionally, you must have created the required GST tax ledgers such as CGST, SGST, and IGST (as described in the previous article).

Step 1: Enable GST in Tally Prime

Follow these steps to enable GST in Tally Prime:

• Go to Gateway of Tally → F11 (Features) → Statutory & Taxation → Enable Goods and Services Tax (GST)
• State: Select the state in which your business is registered.
• GSTIN: Enter the GSTIN of your business.

Press Ctrl + A to save the settings.

Step 2: Create GST Tax Ledgers

Create ledgers for CGST, SGST, and IGST under the "Duties and Taxes" group, as described in the previous article.

3. Recording GST-compliant Sales Entries

Sales transactions need to be recorded with the appropriate GST rate (CGST, SGST, or IGST) depending on whether the sale is intra-state or inter-state.

Step 1: Create Sales Ledger

Ensure that a sales ledger is created under the "Sales Accounts" group. For example, you can create a ledger called "Sales" to record all sales transactions.

Step 2: Record a Sale Transaction (Intra-state)

Let’s assume that your business sells goods worth ₹10,000 (exclusive of GST) to a customer located within the same state, with a GST rate of 18% (9% CGST and 9% SGST).

• Voucher Type: Choose "Sales" voucher.
• Party Name: Enter the customer’s name.
• Item: Select the item being sold (e.g., "Mobile Phones").
• Amount: Enter the sale amount (₹10,000).
• GST Details: Tally will automatically calculate CGST and SGST (₹900 each) and add them to the total amount. The total invoice amount will be ₹11,800.

Press Ctrl + A to save the entry.

Step 3: Recording Sale (Inter-state)

If the sale is to a customer in another state, IGST will be applicable instead of CGST and SGST. Let’s assume the sale amount is ₹10,000 with an IGST rate of 18%:

• Voucher Type: Choose "Sales" voucher.
• Party Name: Enter the customer's name.
• Item: Select the item (e.g., "Mobile Phones").
• Amount: Enter ₹10,000.
• GST Details: Tally will automatically calculate IGST as ₹1,800 (18% of ₹10,000), making the total sale amount ₹11,800.

Press Ctrl + A to save the entry.

4. Recording GST-compliant Purchase Entries

For purchases, the GST paid on goods or services is recorded in a similar manner. You can reclaim the GST paid through Input Tax Credit (ITC).

Step 1: Create Purchase Ledger

Create a "Purchase" ledger under "Purchase Accounts" to record all purchase transactions.

Step 2: Record a Purchase Transaction (Intra-state)

Let’s assume you are purchasing goods worth ₹8,000 (exclusive of GST) from a supplier within the same state, with a GST rate of 18% (9% CGST and 9% SGST).

• Voucher Type: Choose "Purchase" voucher.
• Party Name: Enter the supplier’s name.
• Item: Select the item being purchased (e.g., "Mobile Phones").
• Amount: Enter the purchase amount (₹8,000).
• GST Details: Tally will automatically calculate CGST and SGST (₹720 each), making the total purchase amount ₹9,440.

Press Ctrl + A to save the entry.

Step 3: Recording Purchase (Inter-state)

If the purchase is from another state, IGST will be applicable. Let’s assume you purchase goods worth ₹8,000 (exclusive of GST) with an IGST rate of 18%.

• Voucher Type: Choose "Purchase" voucher.
• Party Name: Enter the supplier’s name.
• Item: Select the item being purchased.
• Amount: Enter ₹8,000.
• GST Details: Tally will calculate IGST as ₹1,440 (18% of ₹8,000), making the total purchase amount ₹9,440.

Press Ctrl + A to save the entry.

5. Viewing GST Reports in Tally Prime

After recording sales and purchase transactions, you can view GST reports in Tally Prime.

Step 1: Open GST Reports

Navigate to:

• Gateway of Tally → Display More Reports → Statutory Reports → GST Reports

Step 2: Select a Report

Choose from the available GST reports, such as:

• GSTR-1: Outward Supplies (Sales)
• GSTR-3B: Monthly Summary (for tax filing)

6. Summary

To summarize:

• Sales and purchase entries should be recorded with accurate GST details (CGST, SGST, or IGST).
• GST will be automatically calculated by Tally Prime based on the transaction details.
• GST reports can be generated for tax filing and compliance purposes.

7. Conclusion

Recording GST-compliant sales and purchase entries in Tally Prime ensures accurate tax reporting and simplifies GST filing. By following the steps above, businesses can stay compliant with GST regulations and streamline their tax processes.