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VAT in Tally ERP9, How to configure? Complete Tutorial on VAT

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VAT stands for Value Added Tax, which is a state-wide tax mechanism in which multi point destination system follows .In VAT, tax is being levied on value addition at each stage of the transaction. In this guide I will share something about VAT in Tally ERP9.
VAT was implemented in the year of 2005 In India replacing existing General Sales Tax Rules, since then VAT becomes a major revenue source for the states.We had a practical session on VAT understanding with info-graphic in our last post.

Business man will have so many concerns when he comes under the tax regime. Business wants to make sure that they are submitting an error free returns and paying the right tax to the government in order to avoid Penalties and fines.Tally ERP9 help us to build a hassle free tax system in every organization.

How to enable VAT in Tally ERP9?

Tally ERP9 has been updated VAT taxation based on state specific,also added some module like,

  • Defining Tax Rate at Company Level.
  • Defining Tax Rates at group Level and,
  • Defining Tax Rate at Ledger or Item Level.

just because of the above reasons,the complexity in the learning of VAT in Tally ERP9 increased . We are following the third method ‘defining tax rate at ledger level or item level’ which is the traditional method.

Defining Tax Rate at Ledger or stock item Level.

The first step is to ensure that you have selected the right state; the state in which you are operating your business, In company creation screen.If you have already created company, we can alter it.

Gateway of Tally >>Alt+F3>> Company info >>Alter

As we are following Karnataka statute,select state ‘Karnataka’. Save after changes has been made.

state-selection

Enabling VAT in Tally ERP9

Gate way of Tally >> F11 >>Statutory & Taxation

Enable Value Added Tax ( VAT )

VAT in Tally ERP9

Also Enable Set/alter VAT Details,a new screen will displayed after striking Enter Key,where you can Enter Vat Details.

vat-details

Save main & sub screens.

Stock Item Creation

Create STOCK ITEM ‘Computer’.Tax rate is VAT @4%

Go to Gateway of Tally > Inventory Info. > Stock Items > Create.

stock-item-creation

Enter the stock details like name ,unit ,Under filed.

VAT Applicable : Applicable

set Alter Vat Details : Yes, You will have a new screen Tax/rate details.

Enter Vat Rate : 4%

Tax Type :Will set ‘Taxable’ automatically, Display ‘exempt’ if you enter no tax rate.

set vat rate details

Press enter and save the current screen, then item creation screen.

Creating Supplier Ledger

To create a supplier or sundry creditor ledger  Namely ‘Computer Solution’

Go to, Gateway of Tally > Accounts Info. > Ledgers > Create

Enter all creditors details as displayed below image.

party ledger -sundry creditor

Set/Alter VAT Details : Yes

Enter the VAT details of supplier as required in new window.

Type of Dealer : Regular

TIN: a valid TIN number.

vat details of supplier

Press enter ,then save the supplier Ledger.

Creating Customer Ledger

Create a party Ledger& name it “Computer Point”.If you don’t know refer our lesson  how to create a ledger.

Gateway of Tally>>Accounts Info>>Ledger>>Create

Enter all customer details

customer-ledger

 

Make Sure that the State is automatically Selected.

Set/Alter VAT details : Yes, In the new window enter the VAT details of the customer.

customer vat details

Enter , then save customer ledger creation screen.

Creating Purchase Ledger

To create a purchase Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

Enter all purchase ledger details

purchase-ledger

Set/Alter VAT Details : No

Creating sales Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

Create a separate ledger for posting 4% sale  as ‘Sales @4%’

sales ledger creation

 

Set Alter Vat Details : Yes,In new window enter Tax rate 4%,Tax type automatically become “Taxable”.

vat rate details in sales

You will be asked for an applicable date enter tax rate applicable date

Save the screen. save Sales Ledger.

Creating VAT Ledger

To create a VAT Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

Enter Name : VAT

Under: Duties & Taxes

Percentage of calculation :0

enter the rest of the details.

VAT Ledger creation

 

Save the VAT ledger.

Transaction for VAT calculation

Purchase Transaction.

Let’ Enter a Local Purchase Transaction

Purchased 10 Nos computer from computer solutions @ 25000/ pcs

To enter this transaction

Go to Gateway of Tally > Accounting Vouchers > F9: Purchases.

Provide the date of transaction,Supplier Invoice Number,Supplier name

Product Name,Quantity,Rate,

Then Enter vat ledger ,rate and tax amount will have automatically calculated.Refer below image.

Purchase Voucher

 

In the bottom of voucher ,provided VAT Details,Set Yes

You will have a new form where you have to enter Additional details of purchase tax

  • e-Sugam Number: On uploading the e-Sugam XML file generated from Tally.ERP 9 to Department website, a unique acknowledgement number gets generated. This number has to be entered here. If e-Sugam number is not entered here, cursor will skip the remaining fields of e-Sugam Details section.
  • Invoice Delivery Date: The invoice date is displayed here.

  • From Place: Enter the name of the place from where the goods are despatched.

  • To Place (Destination): Enter the name of the place where the goods are to be delivered.

  • Category of Transactions: The category of transactions listed for e-Sugam in the department website is displayed as list of VAT Category Type. Select the required category based on the nature of transaction.

  • Document Type: Select from the list of VAT Category Type. Based on the category of transaction selected, the Document Type gets populated. On selecting the following categories, two document types get displayed for selection. The required document needs to be selected here:

statutory details of purchase

Save.

Sales transaction

Lets enter a local sales transaction.

Sold 5 Nos computer @ Rs 27000/Pcs +VAT 4% to ‘Computer Point’.

To enter this sales transaction .

Go to Gateway of Tally > Accounting Vouchers > F8: Sales.

sales voucher

 

Provide VAT details : Yes

Enter vat details as per requirements.

statutory details in sales

Enter and save the transaction.

VAT Reports

We have entered sample purchase and sales transaction, Now lets view the VAT Reports.

Go to Gateway of Tally >Display>Statutory Reports>Form VAT 100

In this report you can see the Assessable Value ,Tax amount and tax payable amount.here is a report.

VAT Report

VAT payable should be paid in the subsequent month. In this example May 2015.You can take printout of VAT Computation by pressing  ALT+P using print button.you will get VAT computation report like this .

Vat-computation

To make payment ,you have to submit VAT returns in prescribed forms, every state has its own forms and rules for VAT computation,submitting Return, and payment.

Gateway of Tally > Accounting Vouchers> F5 -Payment.

payment-voucher

This will clear your VAT liability and the VAT Ledger becomes Zero.

Hope the post is useful & you got a clear idea about VAT in Tally ERP9, we have created a video tutorial in our YouTube channel about VAT set up.

In coming chapters we can study more about VAT, Like , VAT for unregistered  dealers, Composite dealers and set vat rates at company level, group level etc.

 

 

 

 

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