In this article, you will learn all about the latest GST updates and the process of using Tally Software for best results. But before we overload you with information, let’s start with a few basics.
What is GST?
GST, or Goods and Services Tax, is a unified tax applicable in the whole of India. This single uniform indirect tax effectively replaces all other indirect taxes, such as VAT, CENVAT, and many others. GST is touted to be one of the most uniform taxes of all times. It applies to all business, whether large, small or even micro-scaled.
Applicable on both Goods and Services, GST employs a dual system through which both State and Centre stay independent of each other. The Union Finance Minister heads the GST Council with various State Finance Ministers as members.
What are the tax slabs under GST?
GST follows a four-tiered system wherein goods and services will be taxed at 5%, 12%, 18%, and 28%, depending upon various categories. For essential goods, the tax is kept at a standard 0%. This includes what and rice among many others.
Who is taxable under GST?
A very simplistic answer for this is as follows - any person who carries out any business in any part of India is liable to pay GST.
Now that you’re familiar with the basics of GST, let’s move on to the Tally Software.
What is Tally?
A tally is an accounting software, used to manage accounts and inventories. With multiple uses and an easy-to-use interface, Tally is one of the most popular accounting software in India.
Some uses and features of Tally
- Account Management
- Daily accounting
- Finalization of Balance Sheet
- Inventory Maintenance
- Generation of reports for various uses, including tax filing.
Is Tally better than manual accounting?
To put it simply – YES!
In manual accounting, you would first have to pass entries. This is usually followed by making ledgers, trial balance, and profit and loss. Finally, a balance sheet is prepared. Often, balance sheet asset and liability don’t even tally. Not to mention that the entire process is painstaking and time-taking.
With Tally, all you need to do is make a ledger and pass entries. From balancing to profit and loss, it takes care of all other processes. The balance sheet is automatically tallied with each entry and the entire process is smooth and simple and takes almost no effort at all.
Can Tally be used for anything other than accounting?
A new and advanced version of Tally has recently been launched. This is called ERP or Enterprise Resource Planning. It is much more advanced and includes a wide variety of applications and processes. Tally is now capable of collating Employee information. If you’re a business with a few employees or even a company with a large number of employees, you can enter their names, profiles, groups, responsibilities, etc. and Tally will maintain it. If you have to maintain a single system for business (including businesses that are just starting out), Tally is a great choice for you.
I don’t have a business. Can I still use Tally?
YES! Even if you don’t have a business and just want to use Tally to maintain your tax profiles and do personal accounting, you can easily do that. You can pass entries for your salaries, for any investments – whether monthly or one-time.
Tally makes the entire process super easy since you don’t have to personally maintain balance sheets or profit and loss statement. Tally automatically creates these as you’re passing entries.
Any business, however big or small, can never operate in isolation. You need consumers which come from the society you’re active in. You need permits and licenses from the govt. of your state/country and finally, you need to pay taxes to the same governments since you’re operating a commercial activity.
The good thing is – Tally takes care of taxation!
In India, Income Tax, VAT, Excise, Customs and Services Tax were all taken care of by Tally. Now that those multiple taxation systems have been replaced by the unified Goods and Services Tax, Tally also takes care of it.
If your version of Tally does not have GST functionality yet, we suggest that you upgrade it to the latest version. This will it super easy for you to enter GST entries in Tally and you can even create GST returns without bothering to use any other software. If you’ve used Tally for taxation previously, you will find that there’s not much difference in the previous taxation process and the new one with GST.
If you find yourself covered under Income Tax Act, 1961, for Audit, don’t worry! Tally will take care of that as well. It includes different functions for this purpose, including, but not limited to, Form 3CA, Form 3CB, 44AB Audit, Form 3CD.
As you, as you keep making correct entries, Tally is capable of expertly calculating your tax payable at the end of the financial year.
How to calculate GST using Tally?
The first step is to download/sign up for Tally ERP 9. Once you have the software, just follow the steps mentioned below and you will find yourself calculating Goods and Services Tax on Tally in absolutely no time at all!
Step 1: CREATE A COMPANY
-For this, you need to go to Gateway of Tally. Then press Alt and F3 together. Click on ‘Create Company’.
-Tally will prompt you for some more information. Enter your name, mailing name and address of your company and the currency symbol you will be using.
-Now, the next step is to select what kind of accounts you want to maintain. Depending upon your company’s requirements, you can choose either the option of ‘Accounts Only’ or ‘Accounts with Inventory’ in the ‘Maintain’ Field.
-The Financial Year settings are the default and will automatically display the first day of the current financial year as the beginning. You can change it as per your requirement.
-If prompted, enter your Tally Vault Password.
-Finally, press Y or Enter and this will save the company details.
Step 2: ENABLE GST FEATURES IN TALLY
-For this, you need to go to the Gateway of Tally again. Once there, press F11 for features and then press F3 for Statutory and Taxation.
-You will then find the below mentioned options:
Enable Goods and Services Tax: Select YES
Set/Alter GST Details: Select YES again.
-You will now be taken to another window within Tally which will prompt you to enter various GST related details, including, but not limited to, registration state, registration type, GSTIN number, etc.
-Once you’ve entered all the details, press Y or Enter to successfully save the details.
This will enable GST settings in your Tally and it will automatically create the details as soon as you keep entering the required basic information, like making entries.
Step 3: LEDGER CREATION
Once you’ve created a company and activated the GST features, you will have to create ledgers and this will, in turn, enable to create and pass accounting entries in Tally. Just follow the below mentioned steps and you will be able to do that in a matter of minutes.
-Go to Gateway of Tally. From here, go to Accounts Info. Under Accounts Info, choose Ledgers and then hit ‘Create’
-Enter the Ledger Name. This could be any one of the following or something else altogether.
- State Tax
- Central Tax
- Integrated Tax
- Stock item Names
-Once you’re done with this, select the right group to which this ledger belongs. For example, state tax will fall under ‘Duties and Taxes’.
-Then enter any other related information and press Y or hit Enter to save the details.
Once you’ve taken care of these three basic steps, you can start entering accounting entries in Tally ERP
All you need to do for this is - go to Gateway of Tally and then head over to Accounting Vouchers. You can choose the relevant option from the existing options like Payment, Receipt, Purchase, Sales, etc. Then just enter the relevant details and start passing entries.
That’s all you need to do to generate GST-compatible entries in Tally. Tally ERP 9 will take care of the rest. The software makes it super easy to calculate your Goods and Service Tax liabilities. It doesn’t matter if you’re a small business or a large one or even an individual, anyone can use Tally to keep track of their GST liabilities. At the same time, you could be an expert in accounting or just someone who’s starting out, it doesn’t matter – Tally is such a simple software that absolutely anyone can use it to their advantage.
Now that you know all the basics of GST updation in Tally, you too can maintain GST records properly and without any hassle. So, what are you waiting for? Get started today! Just download Tally and get going!
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