Lesson 14 of 20

GST set-up in TallyPrime

Set GST up properly once, in the company, the ledgers and the items, and every invoice after that calculates its own tax.

Rates here are assumed. The examples use GST at 18% (CGST 9% + SGST 9%, or IGST 18%) only to show the entries. Actual rates depend on the goods or service and change by notification. For rates and return rules see the official sites gst.gov.in and cbic-gst.gov.in, or ask your accountant.

The idea in one paragraph

Under GST a registered business charges tax on its sales (output tax) and pays tax on its purchases (input tax). It pays the government the difference. A sale within the state carries CGST and SGST, half the rate each; a sale to another state carries IGST at the full rate. For the accounting of this, see our neighbour site's page on GST journal entries. Tally needs four things to get it right: the company's GST details, tax ledgers, each party's details, and each item's rate.

Step 1: enable GST in the company

1. Press F11 (Company Features).
2. Set Enable Goods and Services Tax (GST) to Yes. A GST details screen opens.
3. Enter the State, Registration type (Regular, or Composition for composition dealers), the date GST applies from, and the GSTIN/UIN exactly as on the registration certificate.
4. Set the periodicity of the main return (monthly or quarterly) as the business has opted.
5. Other options, such as e-way bill and e-invoicing, are switched on here if they apply to the business.
6. Ctrl+A.

A GSTIN has 15 characters. Its first two digits are the state code and the next ten are the PAN. Tally checks the format and warns if it looks wrong.

Step 2: create the tax ledgers

Create > Ledger, each under Duties & Taxes, with "Type of duty/tax" set to GST and the tax type chosen:

Leave the percentage of calculation at 0 so that the ledger takes the rate from the item. Offices differ on whether to keep separate input and output ledgers or one of each tax; both give correct returns. Follow the practice where you work.

Step 3: sales and purchase ledgers

In Purchase A/c and Sales A/c, set GST applicability to Applicable. If the business deals in items of a single rate, the rate can be set here; usually it is left to the stock item. Some offices keep separate ledgers by nature of sale, such as "Sales - Local" and "Sales - Interstate", for easier reporting.

Step 4: party ledgers

In each customer and supplier ledger enter:

• State. This decides local or interstate tax.
• Registration type: Regular, Composition, Unregistered/Consumer, and so on.
• GSTIN/UIN for registered parties, copied from their invoice.

TallyPrime can validate a party's GSTIN online and fetch details from it, if the company is connected for that service. A wrong GSTIN on your invoice can cost your customer his input credit, so check each one when you create the ledger.

Step 5: stock items

In each stock item (or once in the stock group), set GST applicable and enter the HSN code, the description, taxability (Taxable, Exempt, Nil rated) and the rate. For services, the SAC code is entered in the service ledger. Take codes and rates from your accountant or the official rate notifications.

Step 6: test with one invoice

Enter one sales invoice to a customer in your own state and one to a customer in another state. The first should calculate CGST and SGST, the second IGST. Press Alt+A on the voucher to see the tax analysis: taxable value and tax by rate. If the figures are wrong, the usual causes are a missing state, a missing rate on the item, or a tax ledger with the wrong tax type.

GST reports in Tally

From Gateway of Tally > Display More Reports > GST Reports, TallyPrime prepares GSTR-1 (outward supplies) and GSTR-3B (summary return) from your vouchers, and can compare your purchases with GSTR-2A or 2B data. These reports also list vouchers with missing or mismatched details so that they can be corrected before filing.

The filing itself, the due dates, the set-off of credit and the payment of tax are governed by GST law and the portal, and are normally handled by the accountant. As the person entering vouchers, your part is clean data: correct party, state, GSTIN, item, rate and invoice number.

Composition dealers and unregistered businesses

A composition dealer does not charge tax on invoices and cannot claim input credit; tax paid on purchases becomes part of cost. With the registration type set to Composition, Tally changes the invoice and the reports accordingly. A business not registered under GST leaves the feature off.

Common mistakes

• Tax ledgers created under Indirect Expenses instead of Duties & Taxes.
• Typing a percentage in the tax ledger and also on the item, giving a wrong calculation.
• Parties with no state or with the wrong registration type.
• One stock item used for goods of different rates.
• Entering purchases without the supplier's invoice number and GSTIN, which makes matching input credit difficult.

Next: GST sales, purchase and payment entries.

Questions learners ask

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An independent learning site. Tally and TallyPrime are trademarks of Tally Solutions Private Limited. This site is not connected with, approved by or paid by Tally Solutions, and uses none of its logos, screens or course material. Keys and menu paths were checked against Tally's own help site on 12 November 2026; the software changes with each release, so if your screen differs, follow Tally's help (press Ctrl+F1). Tax treatment in the examples is for learning only: ask your accountant.