Setting up GST in Tally: A step-by-step guide

The Goods and Services Tax (GST) has significantly changed India’s taxation system. Bringing most indirect taxes under one umbrella has simplified the way businesses calculate and pay taxes. Whether you are a business owner or an accountant, it is important to understand how to set up GST in Tally to maintain accurate records and comply with the law.

In this blog, we walk you through the process of setting up GST in Tally including enabling GST in Tally ERP 9, configuring GST rates and generating GST reports.

What is GST?

GST is a single tax on supply of goods and services. It has replaced many taxes like VAT, Service Tax, Excise Duty and many more. It operates under a multi-tiered tax structure in India, with tax rates classified into different tiers:

• CGST (Central GST): Collected by the Central Government.
• SGST (State GST): Collected by the State Government.
• IGST (Integrated GST): Collected by the Central Government for inter-state sales.
• UTGST (Union Territory GST): Levied by Union Territories.

Why setup GST in Tally?

Tally ERP 9 is a leading accounting software that helps businesses manage financial data, inventory, payroll and taxes effectively. Setting up GST in Tally will help you:

• Simplify Tax Calculation: Automatically calculate CGST, SGST and IGST based on transaction.
• Ensure compliance: Generate GST-compliant invoices and reports in compliance with tax laws.
• File GST Returns: Easily export data to file GST returns directly through Tally.

Now, let’s see the steps to setup GST in Tally ERP 9.

Step 1: Enabling GST in Tally ERP 9

Before configuring GST in Tally, you need to ensure that your Tally ERP 9 version is GST ready. Follow these steps:

1. Open Tally ERP 9: Start the software and open your company.
   
2. Go to Gateway of Tally: In Gateway of Tally, select the company for which you want to implement GST.
   
3. Enable GST:
   
   • Press F11 (Features) on your keyboard.
   • In the Features menu, under the Legal & Taxation section, select GST.
   • On the GST configuration screen, set Yes to enable Goods and Services Tax (GST).
   • Once you enable GST, Tally will ask you to enter your GST registration details.
4. Enter GST details:
   
   • Provide your GSTIN (GST Identification Number).
   • Set the GST status (state where your business is registered).
   • Select GST default nature of business based on your business type.
   • Select whether you are a regular or mixed tax payer.
5. Save Settings: After configuring the GST settings, press Enter to save the configuration.
   

Step 2: Setting GST Rates

After GST is enabled, GST rates need to be configured in Tally. This is important as Tally uses these rates to calculate GST for various transactions.

1. Go to Gateway of Dolly: Go to Gateway of Dolly.
   
2. Open GST Rate Structure:
   
   • Press F11, then select Tax.
   • Select GST rates.
3. Create GST Ledgers: You need to create ledgers for each GST component like CGST, SGST and IGST. Follow these steps for each tax type:
   
   • For CGST and SGST:
     • On the Create Ledger screen, enter the name of the ledger (eg, “CGST” or “SGST”).
     • Set the bottom field to indirect lines.
     • Select GST as the tax type.
     • Select the appropriate tax rate (generally 9% each for CGST and SGST).
   • For IGST:
     • On the ledger creation screen, enter “IGST”.
     • Set the bottom field to indirect lines.
     • Select GST as the tax type.
     • Set the tax rate (usually 18% for most goods and services).
4. Save Ledgers: After entering the required information, save each ledger.
   
5. Set default tax rates for your business: You can set default rates for CGST, SGST and IGST based on your business needs. Tally allows you to configure tax rates at the product level, which is ideal for businesses selling different goods and services with different GST rates.
   

Step 3: Generate GST-compliant invoices

After setting up GST in Tally, you can start generating GST-compliant invoices for your customers. Follow these steps:

1. Create a sales invoice:
   
   • Go to Gateway of Dolly and select Vouchers.
   • Select Sales and select the corresponding customer ledger.
   • On the Sales Entry screen, add the items to be sold.
   • Tally automatically calculates CGST, SGST or IGST based on the tax structure you set earlier.
2. Apply GST:
   
   • In the Tax Details section, select the relevant GST rates for each item. Tally applies tax as per the GST rates configured in your system.
3. Generate GST Invoice:
   
   • After the invoice is ready, save the entry.
   • You can print a GST-compliant invoice by going to View → Day Book → Print.

Step 4: Generating GST returns

Tally ERP 9 enables you to generate detailed GST reports required for filing GST returns. The most commonly used statements are:

1. GST Sales Record: This report shows all sales transactions with applicable GST rates, helping you track your sales and taxes collected.
   
2. GST Purchase Record: This report includes all purchase transactions and the GST paid on them. It helps to claim Input Tax Credit (ITC) while filing returns.
   
3. GST Return Summary: This is a detailed summary that compiles the data required for GST returns (GSTR-1, GSTR-2, etc.). This includes all sales, purchases and taxes paid/received.
   
4. GSTR-1 Report: This report is used to file details of external supplies which is an important part of GST filing.
   
5. GSTR-3B Statement: This statement summarizes your GST liabilities and taxes payable. This return can be filed online for payment of GST.
   

To view these reports, go to View → Statutory Reports → GST.

Step 5: Filing of GST returns

Once the GST returns are generated, the next step is to file your returns. Tally allows you to export GST data in the required format (such as Excel or JSON) and upload it to the GST portal.

To export GST returns:

1. Go to View → Statutory Reports → GST.
2. Select the relevant report (GSTR-1, GSTR-3B, etc.).
3. Click Export and select a format (Excel, JSON).
4. Upload the exported file to the GST portal to file your return.

Conclusion

Setting up GST in Tally ERP 9 ensures you are compliant with Indian tax laws, simplifying the process of generating invoices, maintaining records and filing returns. By following the steps mentioned in this guide, you can enable GST in Tally, configure tax rates and generate GST-compliant invoices and reports with ease.

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If you have any questions about GST in Tally, please write them in the comments below!

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