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 dierent
taxes like VAT and CST and many more.
The main advantage of GST is a single taxa on system.
Currently every state has dierent VAT and CST acts and rules and
people are o en confused about the taxa on system.
Therefore, when GST will come, it will remove all the confusion about
dierent 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
1. SGST State GST Applies to sales within the state goes to
State Government
1. 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 accoun ng
and calcula on.
Before you can understand accoun ng of GST in Tally, you need to
understand the calcula on of GST in Tally.

GST in Tally.ERP 9
Enabling GST in F11: Features Go to Gateway of Tally > F11: Features >
F3: Statutory & Taxa on
1. Set Prepare & Follow Singapore Style GST Returns to Yes
2. Enter the GST Registra on Number and the Company Registra on
Number

3. Accept the Company Opera ons Altera on screen.

Calcula on 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 func onality of GST in Tally is almost same as VAT or CST or Service
Tax.
And therefore, even with the current func onality you can do
accoun ng entries of GST in Tally.
So, let us get started about the calcula on of GST in Tally.
Lets 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 a racted.
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.

Accoun ng of GST in Tally

Well, if you know basic accoun ng entries in Tally, it will be very much
easy for you to understand the accoun ng of GST in Tally.
As I have said before in this post that the calcula on part of the GST will
remain same as previous taxes which it will replace and therefore
accoun ng will also be almost similar.
So, let us take the above example and try to understand the accoun ng of
GST in Tally.
In the above example, Rohan sold Google Pixel to Amit for 57,000.
The accoun ng entry for the Rohan in his books will be as under. Rohan is
the seller here.
Cash or Amits 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 calcula on of GST.
The ledger of CGST and SGST can be created under Du es 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 Du es and Ledgers from List of
Groups.
In Type of Du es/Taxes, select others.
Select 9% in Percentage of Calcula on.
Select Method of Calcula on 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 crea ng 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

For your ease, I have created the entry in Tally for the above calcula on
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 calcula on and addi on of GST.

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 dierent
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
dierent state which is U ar Pradesh, the accoun ng 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 transac on.
Let me show you how that will appear in Tally if you try to pass the sales
entry.
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 Liabili es side because we have to pay that to
the Government.
And therefore, it is our liability. It amuses me because the accoun ng is
same as current taxa on system.
So currently if you create a ledger as I have told above and pass the entry,
you can do the accoun ng of GST in Tally.
Isnt it amazing that without any kind of add-on and before even the
commencement of GST in India, you can do the accoun ng of GST in
Tally.
This is because whatever you require for the accoun ng of GST in Tally is
already present in Tally except for one thing.
That is Returns and Repor ng.
The func onality in Tally is not available and therefore Returns and
Repor ng func onali es are not available in Tally which is currently
available for Service Tax, VAT and other taxes in Tally.