• If Accounts with Inventory is set to Yes in F11: Features, it has stock/inventory

balance figures are updated from the inventory records, which in turn enables you to drill down
to the Stock Registers from the Balance Sheet.

• If the option Accounts with Inventory is set to No in F11: Features, the

inventory books figures are ignored and closing stock balances are entered manually.

Note: Stock records often contain compensating errors caused by wrong allocation
to items. This feature of Tally enables the finalization of financial books without waiting for
reconciliation of stock that might take time.

DISPLAY PROFIT & LOSS ACCOUNT

The Profit and Loss Account shows the operational results over a given period. It
lists out the Incomes and Expenditures based on the Primary Groups of Tally and the Profit &
Loss Account in Tally is updated instantly with every transaction voucher that is entered and
saved.

To view the Profit & Loss Account

Go to Gateway of Tally > Profit & Loss Account

Note: The Profit & Loss Account is displayed according to the configuration set
up for it in F12: Configure.

HORIZONTAL FORM OF PROFIT & LOSS ACCOUNT

The sample screen shown is in horizontal form which is the default display. You
can also set it up to display in vertical form.

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 Using options in the Button Bar

1. Select F1: Detailed/Condensed to display more information or condense.

2. Change the date of the Profit & Loss Account using F2: Period.

3. Add new columns to

1. Display a Profit & Loss Account for a diffe3rnet period to compare with
the current one

2. display the Profit & Loss Account in a different currency

3. Display a column with Budget figures and analyse variances

4. See the effect of different Stock Valuations on the Profit/Loss account.

5. Select and compare Profit & Loss of different companies.

INCOME/EXEPENSE STMT INSTEAD OF P&L?

Account statements for Non-Trading Organizations

For Non-Trading accounts (e.g. Accounts of Charitable Organizations), the

Trading and Profit & Loss Statement are inappropriate.

In such cases, you may use Income & Expenditure Account by setting
Income/Expense Stmt instead of P&L to Yes in F11: Features.

The Income & Expenditure Statement displays as shown.

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DISPLAY TRIAL BALANCE
Trial Balance is a report of all account balance for the company sorted by groups,
i.e., it is displayed in a grouped form, comprising main groups and their closing balances. You
can see that the debit and credit balance match.

In Tally, the matching of the Trial Balance is a foregone conclusion since all
voucher entries are in Debit – Credit format and must balance at the entry point

To view the Trial Balance

Go to Gateway of Tally > Display > Trial Balance

Note: As per accounting principles, the Trial Balance does not list Closing Stock.

• Select F1: Detailed to break down the grouped information or simply drill
down a Group of further detail.

The screen appears as shown

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• Select F5: Led-wise to list all ledgers and their closing balances.

The screen appears as shown

• Select New Column to bring up the closing balances for another date

The screen appears as shown

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DAY BOOK
To view Day Book

Go to Gateway of Tally > Display> Daybook

The Day Book lists all transactions made over a particular day and by default
displays the last voucher entry date of a regular voucher. It could also be set up to list all the
transactions made over a period.

Press F2: Period on the button bar or press the keys Alt+F2.

All the transactions include all financial vouchers, reversing and memorandum
journals as well as inventory vouchers.

Consider an example:

Day Book for current date

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 Day Book for a period

You can also filter the list so as to display the transactions of a particular voucher
type using F4: Chg Vch button from the button bar.

The screen appears as shown:

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BOOKS AND REGISTERS
The objective of having books and registers in Tally is to pile up similar entries
into a single entity so that they are meaningful, e.g., all cash entries in the Cash Book, all sales
entries in the Sales Day Book (called Sales Register).

The Tally transaction flow

A part from the subsidiary books, entries are also filed under each Voucher Type.
Therefore, there will be as many registers as there are voucher types.

JOURNALS, DAY BOOK AND REGISTERS

Journal, Sales Register, Purchase Register, Debit Note Register, Credit Note
Register, Payment Register, Receipts Register, etc. are the different kinds of Registers.

There are three ways to view various types of registers:

1. From the Display menu

2. By changing the type of voucher from within a register

3. From the Statistics page

Consider the Sales Register which includes most of the options.

SALES REGISTER (SALES DAY BOOK)

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 Go to Gateway of Tally > Display > Account books > Sales Register

The following screen displays.

By default, all registers display Monthly Summary with transactions and closing
balances. For Balance Sheet Accounts, opening balance is displayed at the top of the screen.

Select a month and press Enter to see the Sales Voucher Register.

A list of all sales vouchers pertaining to the month you selected displays. You can
use the options in the button bar to change the display according to your preferences. You can
change the period of the report as well as the depth of information.

Use F12: Configure to see the report with some or all of the following
information, namely Narrations, Bill –wise details, Cost Centre details and Inventory details.

Click on F1: Detailed to view the report in detailed format.

INVOICE PROFITABILITY
Display the Sales Voucher Register for a period by drilling down a month and
change the period if required.

Select F2: Show Profit or activate the option Show Gross Profit estimates to Yes
in F12: Configure.

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 The report now displays each invoice with

Transaction Value – Invoice value including taxes

Gross Revenue- Actual sale value minus taxes

Cost – Book cost of the product

Gross Profit – Amount of profit or loss on the sale

EXTRACT OF SALES REGISTER

When you are in the Sales Voucher Register, select F6: Extract from the button
bar.

The following screen displays.

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 The Extract gives a break-down of the sales vouchers and groups them to provide
totals for each group and ledger used in all sales vouchers for the period. The information is
useful, when you want to know how much each group of customers bought, what is the tax
component or what is the total value of each sales ledger.

Inventory- wise Extract of Sales Register

“ in the Sales Voucher Register select F6: Extract from the button bar

“ Go to F12: Configure.

“ Set Show Inventory-wise Extract to Yes to view the report of the details on
quantity and value.

The following screen display.

MONTHLY SUMMARY
When drilling down from a statement into any Group, Ledger, Stock item or Cost
center the screen displayed first is the Monthly summary. Monthly Summary can also be
accessed from a voucher level screen with the help of the button Monthly. The monthly
summary shows the opening balance for the year, and then lists cash month’s total transactions,
inclusive of both debit (inwards for stocks) and credit (outwards for stocks) and finally each
month’s closing balance. Below the monthly summary, is a bar chart showing the movement of
account.

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 Use F12: Configure to display the monthly summary accounting to your
requirements.

The options available on the button bar are very useful for configuring managerial
reports.

E. g. Use the New Column button to bring up the Monthly Summary of another
ledger or object or the same object in another company.

Press the button F5: Quarterly, to view the summarized quarterly figures.

Use the options in F12: Configure to view the details on percentages, averages and
so on.

Ledger Voucher Monthly Summary

The Ledger Voucher Monthly summary screen is displayed as shown.

COST CATEGORY MONTHY SUMMARY

The cost category monthly summary is displayed as shown. You can place the
cursor on any particular month, say October and drill down for more details.

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 Stock Item Monthly summary

The screen will be displays as follows. If you want to view the details for any
particular month you have to place the cursor on the month and drill down.

Cash and Funds Flow

Cash management is essential for any business. Many companies, as they go into
liquidation, continue to make profits because of insolvency. Businesses shut down because of
lack of cash despite being profitable. Cash and Fund Flow Statements aid in cash management
and are an important component of the management accounts.

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 Cash Flow

Cash Flow Statement is a chronological account of the movement of cash in and

out of the business and includes all cash transactions made with banks also. When used with
banks also. When used with the Balance Sheet and Profit & Loss Account, the Cash Flow
Statement helps to assess the reasons for the differences between net income and net cash flow
as well as the effect of cash/non-cash investing and financing transactions.

To access the Cash Flow:

1. Go to Gateway of Tally > Display > Cash/Funds Flow> Cash Flow

2. A Monthly Cash Flow Summary that shows the Cash Movement – inflow and
outflow for each month and the Nett Flow, displays.

3. Select a month and Press Enter to drill down. Select the button F1: Detailed
form the button bar to see the cash flow for that month.

For Quarterly Cash Flow:

• Change Period by pressing F2: Period and set the period, e.g., 1-4-05 to 1-12-
05.

• Select the option Auto Column from the button bar.

• You can also select Quarterly (or Monthly or any other period) form the list

Columnar Cash Flow Statement

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FUNDS FLOW
While Cash Flow Statement is concerned only with cash, Funds Flow takes into
account, the movement of the entire working capital. It includes rise4 and fall in inventories,
creditors and debtors apart from cash and bank. The statement reveals the Sources of Funds and
how they were applied.

To access the Funds Flow:

1. Go to Gateway of Tally > Display > Cash/Funds Flow > Funds Flow

2. A Monthly Funds Flow Summary with the movement of working capital for
each month displays. It shows the Opening and Closing Balances of each month with a column
for Funds Flow.

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 3. Select a month and press Enter to drill down.

4. Select F1: Detailed to see the funds flow for the selected month.

5. The Bottom of the screen displays the movement in Working Capital.

You can drill down any line for further detail.

For Quarterly Funds Flow:

1. Change the period by pressing F2: Period

2. Set the period e.g., 1.1.04 to 1.5.04.

3. Select the button Auto Column from the button bar.

4. Else Select Quarterly (or Monthly or any other period) from the list

Reconciliation of Bank accounts

Reconciling the company’s bank accounts with the banker’s statement is a regular
task of accounting. In Tally, Reconciliation of Bank Accounts facilitates the following:

Ability to ‘check back’ the correctness of reconciliation

Tally uses Bank Date to mark against the voucher.

Fro instance, if you issue a cheque on 8th April and your bank clears it on 19th
April; you would set the Bank Date for the voucher as 19th April. This means that when you

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need to ‘check back’ later, whether th entry made by you is correct, you will only need to verify
the bank statement of the 19th.

Recovering the reconciliation of any date

This is of crucial importance in Auditing. The Bank Reconciliation is one of the

per-requisites of auditing and verification of the correctness of accounts at the year end.
However, it is not a ‘real-time’ task, meaning auditors do not do it on the first day of the next
year.

For e.g., the reconciliation made on 31st March, should be ‘viewable’ even in
August, by when almost all the cheques would have subsequently been marked Reconciled.
Tally provides you with a facility of achieving this also.

Bank accounts may have a different Starting Date for reconciliation purpose.
When you create a bank account, you are prompted to give an Effective Date for Reconciliation.
Normally, this would be the Books Beginning from date itself. However, you could have
imported data from a pervious version of Tally or from any other system (where the
reconciliation process was not available or was different). In that case, you may not want to
reconcile the bank account with your bank statements from the very beginning. Give the date
from which you want the reconciliation facility to be active. Once you do this, pervious entries
would not appear for reconciliation, but would be taken as a reconciled Opening Balance.

A quick experiment with Reconciliation will show you what it all means. Here is
how you go about it:

1. Bring up the monthly summary of any bankbook.

(You can choose a bank book form any of the following: Balance Sheet, Trial
Balance, Display > Account Books > Cash/Bank Books).

2. Bring the cursor to the first month (typically April), and press Enter. This
brings up the vouchers for the month of April. Since this is a bank account, you can see an
additional button F5: Reconcile on the button bar to the right. Press F5.

3. The display goes to the Reconciliation mode, which can be edited. The primary
component of the current screen is the column for Bankers Date.

4. The Reconciliation found at the bottom of the screen shows:

1. Balance as per Company Books

2. Amounts not reflected in Bank

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 3. Balance as per Bank

The Balance as per Company Books reflects the balance as on the last date (in the
example, it is 30th April).

The Amounts not reflected in Bank are the debit and Credit sums of all those
vouchers, whose Bank Date is either BLANK, or LATER than 30-Apr (i.e. these vouchers have
not yet been reflected in the bank statement).

The Balance as per Bank is the net effect to the Book Balance offset by the
amounts not reflected in the Bank – which must equal the balance in the bank statement.

Note: Some discrepancies may persist due to entries made in the bank statement,
which you have not yet entered in your book. You would reconcile these manually, and print
your reconciliation.
As you mark the individual vouchers by setting the Bank Date, you will notice that
the Reconciliation at the bottom of the screen keeps updating the changes. Once this process is
complete, press Ctrl + A or Enter as many times as necessar4y to skip over the unmarked
vouchers and accept the screen.

The next time you opt for reconciliation; the screen displays only those vouchers
that remain unrecognized. You can also display vouchers that are already marked as reconciled,
in case you need to edit the marking, by using F12: Configure.

Set Show Reconciled Vouchers also to Yes to see the reconciled vouchers.

Note: It is not possible to reconcile opening balance and can be done only with
available physical transactions.

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 Set Allow back dated Reconciliation to Yes to enter bank dates which are lesser
than the Voucher date.

Press Alt + P or click on the Print button to print your reconciliation report.

Display Inventory Reports & Statements

Inventory in Tally operates in the same way as accounting with regard to

displaying, modifying and printing reports. Tally generates inventory report based on the
vouchers entered to date. You can use the customized reports to compare inventory data
between different companies, periods of the financial year, and so on.

Highlight the item and press Enter to step down to the next level of detail in a
report. Report this process till you reach an individual voucher. Similarly, step back to higher
levels by pressing Esc. The special features available for the currently displayed report are
indicated on the button bar and can be selected with a single click of the mouse.

This section highlights some special inventory screens and illustrates a basic level
of customization.

VIEWING STOCK SUMMARY

Stock Summary is a statement of stock-in-hand as on a particular date. It is
updated with every transaction in real time and provides the current stock position.

The statement can be drilled-down, as with all Tally reports, and configured to
enable you to view different details, for instance, the total flow of total flow of stock can be
viewed with a single report.

Tally treats Stock Summary as one of the Primary statements and makes it
accessible directly form the Gateway of Tally.

To view Stock Summary

1. Go to Gateway of Tally > Stock Summary

2. The default display is of Stock Group balances.

3. Select Detailed to show another level of detail.

The detailed report will include sub-groups or Stock Items (in cases where there
are no sub-groups), display as shown:

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 In the above illustration the stock groups Hardware and Software contain stock
items and have closing balances.

The Stock Groups displays total quantities, as the unit of measure is the same for
all the stock items added. A grand total is also available as there is a single unit of measure for
all ‘addable’ items. If there were different units of measure, then the grand total would not be
calculated and displayed.

STOCK FLOW (RECONCLIATION)

You can configure the Stock Summary Statement to display the flow of goods.

1. Select F12: Configure while on the Stock Summary screen.

2. Set the Configuration as shown.

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 The Stock Summary displays the flow of stock, i.e. Opening Stock, Goods
Inwards, Goods Outward and Closing Stock, as shown.

The report is quantitatively reconciled, i.e., Opening quantity + Inward Quantity -

Outward Quantity = Closing Stock Quantity. However, this is incorrect for the values as the
Outward value displays Sale Values, not Cost. The Closing Stock Value is, however, based on
Cost and the Cost Method adopted for each item. Value Reconciliation is possible if you are
using Consumption figures instead of Sales Value.

STOCK VALUCATION METHODS

The Stock Summary report with stock valuation methods can be used to view the
effects of different methods on the value of stock. Each stock item can be set up to have a
different stock valuation method. In some instances, a particular method of valuation may be
required, for example, to assess the replacement value or saleable value of stock. Tally displays
stocks in any or all th valuation methods dynamically and simultaneously, without any
complicated procedure.

Suppose you want to use Last Purchase Cost method to assess the replacement
value and the Last Sale Price method for realizable (saleable) value.

In the Stock Summary screen, select the New Column button on the button bar or
press Alt+C. The screen appears as shown below.

Select Last Sale Price from the Stock Valuation Methods list.

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 The Stock summary report with Last Sale Price column displays as shown:

VIEWING STOCK ITEMS

1. Go to Gateway of Tally > Display > Inventory Books> Stock Item

You can also use the Stock Summary to view Stock Items. Place the cursor on the
item and press Enter.

2. Select an item from the List of Items.

3. Select F12: Configure. Tab down the Configuration menu to Show with
Graph? Type y and press Enter

Select Bar and No. the particulars display with a graph of Goods Inwards and
Outwards (red for inwards, blue for outwards).

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STOCK QUERY
Stock Query report provides you all the information about a particular item.

To create Stock Query:

1. Go to Gateway of Tally > Display > Statements of Inventory > Stock Query

2. Select an Item from the List of Items. Tally uses the Stock Category to display
Items of the same Category. This feature helps you to ascertain the availability and location of
alternative products to offer your customer.

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 3. Select F4: Item to switch to another Item.

Additional Information:

1. Go to the Group Summary, select Software and press F12: Range to limit the
display to Stock Groups having Closing Balance greater than 3000.
2. Explore the Locations report. Select On-site, click F1: Detailed, change the
period: 1-5-05 to 31-7-05, and use Auto Column to bring up the month-by-month figures

3. Auto Column feature gives you the facility to check the stock status using
different periods.

4. Bring up the initial display of each report and use Enter and Esc to drill-down
through the levels of detail and back again.

ANALYSIS OF INVENTORY MOVEMENTS

The Analysis of Inventory Movements is generated for accounted transactions
only, unlike Stock Summaries and other statements, where Goods Received but Bills not
Received and Goods Dispatched but Bills not Raised are also considered. Thus Analysis
statements, are used generally for a comparative study, and not considered authentic for
Accounts or Inventory records.

Go to Gateway of Tally > Display > Inventory Books > Movement Analysis

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 Analyse stock movements by stock groups, categories, financial group or ledger.

MOVEMENT ANALYSIS (STOCK GROUP ANALYSIS)

Movement Analysis of a selected stock group displays the Total Inward and
Outward movement of all the items in a selected Stock Group. The quantities displayed are
Actual Quantities of movement (which, in some cases, may be different from the Billed Qty in
the transactions.) The ‘Inward’ detail displays the Effective Rate or Final Landed Cost of the
materials, after considering all overhead costs (see ‘Valuation of Purchases’). If the Effective
Rate varies from the Basic Invoice Rate of the materials, it is highlighted. The Outward detail
displays the Basic Invoice Rate and Value of goods sold/transferred out.

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ITEM MOVEMENT ANALYSIS
Gateway of Tally>Display >Inventory Books > Movement Analysis> Stock Item
Analysis.
Item Movement Analysis is the next level of information (press Enter on the Stock
Item or Display Inventory Books Stock Item Analysis). This brings up the Party-wise/Transfer-
wise detail of Movements. The Inward detail displays the Basic Invoice Rate and Effective Rate.

This report helps you compare Purchase Costs across different suppliers. For
example, supplier A may have a lower Basic Invoice Rate as Compared to Supplier B, though
the Effective Rate may be higher (perhaps due to differences in Taxes, Packing Costs, and
Freight Costs etc). Suppose a material is manufactured in-house as well as purchased, the
difference in Purchase Costs and In-house Costs can be checked. Select multiple columns for
different periods, to view the changes in the Effective Rate for purchases.

Press Enter on the Party Name or Stock Journal Name to display the transaction-
level details on Date of goods received/sold, Quantities, Basic Rates, Addl.Costs, and Effective
Rate for each transaction.

The default screen displays the Addl.Costs (if any), in a single column. To view
the spread of costs, press F12: Configure and select to view Show Addl.Costs. This brings up
the bifurcation of all Additional Costs.

ITEM VOUCHER ANALYSIS

This report gives the value details of all transactions for a selected stock item from
a particular supplier or to a particular customer. It is obtained from Movement Analysis Report
of a stock item.

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 1. Go to Gateway of Tally> Display> Inventory Books > Movement Analysis.

2. Select Item from List.

3. Select a Supplier (or Customer) from the item Movement Analysis.

The report displays every purchase from Tally Solutions. Bangalore during the
period specified with break-down of Basic Value and Additional Cost. To view full details of
Additional Cost, Press F12: Configure and set the option.

The Item Voucher Analysis considers only billed transactions, not ones for which
invoices have not been raised.

Use F12: Configure foe more details.

STOCK CATEGORY ANALYSIS – MOVEMENT ANALYSIS

1. Go to Gateway of Tally > Display > Inventory Books > Movement Analysis >
Category Analysis.

2. Select a category, for example, spreadsheets.

3. Change period, if necessary

The Stock Category Analysis statement displays the movement of Stock Items of a
selected Stock Category.

The Inward and Outward movement of these two items are summarized in the
Summary. Drill-down to bring up the Item Movement Analysis for the selected item.

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LEDGER ANALYSIS
Ledger Analysis is similar to Movement Analysis, except that you can view
movements of the items for the selected Ledger (Party). Thus, you get an ‘analyses of all
purchases made from a supplier, or all items sold to a customer. The next level of information
brings up the transaction level details.

TRANSFER ANALYSIS
When using different Stock Journals for each transaction, transfer Analysis gives
the movement details for each type of Stock Journal. This is a very useful costing and waster
analysis tool. In non-manufacturing set ups, which have Multiple Godowns, this report becomes
a quick check to verify that all transfer entries have entered correctly.

PRINTING REPORTS
Reports and documents generated through Tally’s extensive display capabilities
can also be printed.

Printing is possible in two ways:

1. Using the Print (Alt + P) button and

2. Multi-Account Printing

Using the Print (Alt + P) button

You can choose to print directly from the screen currently displayed by selecting
the button PRINT (top-most button on the right-hand side of the screen). This brings up the Print
Configuration screen for the report and new button options on the right-hand side of the screen.

You can change and alter the settings in the print configuration screen

Printer – Click Alt + S (Select Printer) to change printer settings. This also
displays the default paper size that you have set for the printer.

No. of Copies- Click Alt + C (Copies) to specify the number of copies to be

printed.

Print Language – Set Enable Multilingual Support to Yes in F12: Configure and
click Alt + L (Print Language) to print in the language of your choice.

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 Method – Click Alt + F (Print Format) to select the print format. A pop-up list
displaying the printing formats available in Tally. The formats provide are, dot-Matrix Format,
Near Format and Quick (Draft) Format. Here you can select either the per-printed or plain paper
to print out your reports.

Pre-Printed / Plain Paper:

By default, the Printing Configuration screen is set to print on plain paper. The
print-out displays as shown.

To print on a per-printed invoice/ report, select Pre-printed (Alt+ R) and the Print
Preview screen display as shown.

Tally enables you to print the company details on the invoice/ report. You can
toggle between the two options to print using either method.

Page Range – Click Alt + G (Page Nos) to select the starting page number
and the page number range.

Paper Type – The paper Type can be set after you select the printer.

Paper Size – By default, the paper size in Tally is set at 8.50 X 10.98 or 216mm X
279mm.
To alter the paper size to your requirements, select Alt+S (Select Printer).

A list of printers displays.

EXPORT OF DATA

Use Export option to export data (reports and statements) from Tally. The
exported data can be rearranged on a spreadsheet, published on the web or exported to another
company using Tally.

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 Go to a repot or a statement and click on the Export button or use ALT+E. The
export screen displays Export? Yes or No.

Press Backspace or No to navigate through the fields and alter the parameters

Language

This option enables you to export your report in English or any of the Indian
languages.

On selecting Default (All Languages) you can export your reports in any of the
Indian languages. However, the display language has to be set to the respective Indian language.

On Selecting Restricted (ASCII Only) you can export your reports in English.

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 Note: If you have used the option Restricted (ASCII Only) to export reports of a
company created in any of the Indian language, then the exported data will appear with question
marks.

Format

Tally has three formats for export of data from E-mail, Export and Upload options:

• ASCII
• HTML
• XML

By default, the exported file will be saved in the Tally folder on your computer.
To export to a different folder enter the path of the drive and folder in Output File Name.
Another program can be used to import the content from the exported file or used as it is.

EXPORT FORMATS
Tally has three formats for export of data from E-mail, Export and Upload options:

• ASCII (Comma-delimited)
• HTML (Web- publishing)
• XML (Data-interchange)

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 ASCII

American Standard code for Information Interchange (ASCII) is a plain-text

format, without any special formatting or fonts, in which data is separated using commas.
Commonly used for email and all email programs, ASCII data can also be easily worked upon
by other programs.

HTML

Reports in Hyper Text Markup Language (HTML) format retain their formatting
and fonts. They can be read using an HTML enabled program, or using browsers such as
Microsoft Internet Explorer.

Resolution (Only in HTML format)

Resolution is based on the pixels used to format the report. A higher resolution
gives a better quality of output. The Resolution option is available only in HTML format in
Tally.

XML

Extensible Markup Language (XML) is an extension of HTML, but the data can
be imported by other XML- aware systems. Using XML, Tally allows the user to exchange
information even with systems that do not run Tally. An XML file from Tally has as XML
envelope and is formatted with XML tags, to enable import into other systems. The destination
system requires reformatting of XML Style Sheets (XSLT), based on the inherent style used in
Tally before importing the data. When two systems are running different versions of Tally,
XML data can be directly imported using the import menu option, without any re-formatting.

Data from Tally in XML format can be imported by another system with ease in
lesser time.

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 XML is fast emerging as the de facto standard for information exchange all over
the world. This format helps the user to collaborate and share information with others.

By default, the exported file will be saved in the Tally folder on your computer.
To export to a different folder enter the path of the drive and folder in Output File Name.
Another program can be used to import the content form the exported file or used as it is.

IMPORT OF DATA

Data can be imported to Tally from other users of Tally. Tally can also be
programmed to import data from other systems to be used as an integrated system.

Fro example, a Customer Contact Management Program, with details such as

status of an order and last contact established, can be imported to Tally. This imported data can
be merged into a report containing outstanding balances. When data is changed in the other
system, the change is also reflected in Tally.

To import data, Go to Gateway of Tally > Import of Data

IMPORT FORMATS

Only the Tally XML format is supported for import of Data in Tally.

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 Tally (XML) Format

This option imports data in XML format. More on XML.

SYNCHORONIZATION

Synchronization is the replication of data between two or more locations that use
Tally. Data can be sent over the Internet, or in a private network system. Tally offers control
over the frequency of replication. Data can be replicated after each transaction or updated at
specific intervals.

Synchronization takes place in a Client-Server environment and can be initiated

only by the client. Data from the client is transferred to the server and from the server to the
client.

Replicating data is a single-click activity in Tally once Synchronization is set up

between a server and its clients.

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 Chapter
11
Introduction to Taxation

TEX DEDUCTED AT SOURCE (TDS)

Tax Deducted at Source (TDS) is one of the modes of collecting income tax. The
buyer (Deductor) deducts the tax from the payment made to the seller (Deductee) and remits the
tax to the Income Tax Department within the stipulated time.

The buyers (Corporate and Non-Corporate) make payment (such as Salary, Rent,
interest on securities, Dividends, Insurance Commission, Professional Fees, Commission on
Brokerage, Commission on Lottery Tickets, etc) to the sellers (Services) and deduct the requisite
amount form such payments towards tax.

The buyer files the TDS returns containing details of the seller and the bank,
where the TDS amount is deposited to the Income Tax Department (TDS).

The Income Tax Department has prescribed the formats for filling these returns
electronically, which the buyer does in a CD/floppy.

TDS IN TALLY

TDS (Tax Dedicated at Source) in Tally provides and easy-to-use and flexible
interface. It helps you to handle intricate cases and calculate the tax payable to the Income Tax
Department.

Tally calculates the tax of all parties/suppliers where TDS deduction is mandatory.
It calculates the TDS automatically and prints Form16A certificates, Forms 26Q, 26, 27 and
27A (Cover Note) for Quarterly / Annual Returns as per statutory requirement.

It allows the user to view and print various TDS reports, Challans and TDS
Outstanding statements.

FEATURES OF TES IN TALLY

The TDS functionality in Tally supports the following features:

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 1. Simple and user-friendly

2. Quick and easy to set up and use

3. Accounting for tax on partial/full payment of bills

4. Flexibility for auto and manual calculation of TDS

5. Complete tracking of each transaction from deduction to

Payment.

6. Challan management and printing for prompt and accurate filling of tax

7. The Auto allocation feature prevents error-prone data entry and helps track the
transactions faster.

8. From 16A management:

9. Can be printed for a transaction

10. Can be printed yearly

11. Allows multi-Party printing

12. Exporting of data in NSDL compliant TDS file format.

13. Electronic format (e-TDS return) with Form 26Q, Form 27 and Form 27A
which will be validated by the utility, provided by the government.

14. Generates Form 16A, TDS Challan, TDS Computation and TDS Payable
reports.

TDS REPORTS
TDS Reports in Tally display the tax amount of the concerned party/supplier.
Tally generates Form 16A and Form 27A and also provides the printing option to print this
form. You can export the e-TDS forms (Form 26/Form 27/Form 26Q/Form 27Q) from Tally.
The exported file will be saved in the defined path specified in the Output file name.

You can get the e-TDS file validated through NSDL freely downloadable utility,
File Validation Utility (FVU) to verify whether the e-TDS return file prepared by the deductors
conform to the prescribed format.

Go to Gateway of Tally> Display> Statutory Reports>TDS Reports.

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 Click on the TDS Reports option to display the following

MIS REPORTS
The MIS Reports provide you with the TDS Outstanding.

To view the TDS Outstandings,

Go to Gateway of Tally >Display> Statements of Accounts> TDS Outstandings

TDS COMPUTATION
To view the TDS Computation report,

Go to Gateway of Tally> Display > Statements of Accounts> TDS Outstandings>

TDS Computations

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 1. The Particulars column provides you with the Name of the Party and its TDS
ledger names.

2. Amount Paid/Payable Till Date column displays the total amount of the Bills
accounted or Payment made to the party

3. The Tax column provides the amount of TDS computed as per the rate
specified in the tax column, which is displayed below the TDS amount.

4. Surcharge is the total surcharge value computed as per the rate specified in this
column, which is displayed below the surcharge amount

5. Addl. Surcharge (Cess) column displays the amount of Education Cess

applicable as per the rate specified in this column, which is displayed below the Education Cess
amount

6. Addl. Education Cess column displays the amount of Additional Education

Cess @ 1% as computed

7. Total TDS column displays the total TDS amount including all additional taxes

8. Less: TDS Deducted Till Date column provides the TDS amount deducted till
date

9. Net TDS to Deduct column displays the TDS amount yet to be deducted form
the bills accounted or payment made. If TDS is deducted using TDS journal and if the complete
amount of TDS due is deducted. This column will not display any balance. Partial amount
deducted will display the balance amount of TDS to be deducted in this column

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 Press F12 or Click on the F12: Configure button.

In Show Party TDS PAN Number field enter yes, to display the party’s PAN
number in the report.

Click on the Print button or use ALT+P to Print the TDS Computation report. This
brings up the Printing TDS Computation configuration sub-form by which the user can
customize the appearance of the Ledger report.

Accept the TDS Computation configuration sub-form to view the TDS

Computations report in print preview mode.

If the TDS payment is made to the government then such payment will not be
displayed in TDS Computation drill down report

TCS INTRODUCTION
TCS is the Tax Collected at Source by the seller (collector) from the buyer/lessee
(collectee/payee). The goods are as specified under section 206C of the Income Tax Act, 1961.

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 If the purchase value of goods is , the amount payable by the buyer is X+Y, where
Y is the value of tax at source. The seller deposits Y (tax collected at source) at any designated
branch of banks authorised to receive the payment.

The seller, lessor or licensor, is responsible for the collection of tax from the
buyer, lessee or licensee. The tax is collected for sale of goods, on transactions, receipt of
amount from the buyer in cash or issue of cheque, draft or any other mode, whichever is earlier.

Classification of Seller for TCS

Under TCS, a seller is defined as any of the following:

• Central Government

• State Government

• Any Local Authority

• Any Statutory Corporation or Authority

• Any Company

• Any partnership Firm

• Any Co-operative Society

• Any individual/HUF whose total sales or gross receipts exceed the prescribed
monetary limits as specified under section 44AB during the previous year

Classification of Buyer for TCS

A buyer is classified as a person who obtains goods or the right to receive goods in
any sale, auction, tender or any other mode. The following are not included:
• Public Sector Companies
• Center Government
• State Government
• Embassy of High Commission, Consulate and other Trade Representation of a
Foreign State
• Any Club, such as social clubs, sports clubs and the like

INTRODUCTION TO VAT

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 VAT is a system of indirect taxation, which has been introduced in lieu of sales
tax. It is the tax paid by the producers, manufactures, retailers or any other de4aler who ad value
to the goods and that is ultimately passed on to the consumer. VAT has been introduced in India
to ensure a fair and uniform system of taxation. It is efficient, transparent, revenue-neutral,
globally acceptable and easy to administer taxation system. It benefits the common man
(consumer), businessman and the Government.

VAT enhances competitiveness by removing the cascading effect of taxes on

goods and makes the levy of tax simple and self-regulatory, ensuring flexibility to generate large
revenues.

The cascading effect is brought about by the existing structure of taxation where
inputs are taxed before a commodity is produced and the output is taxed after it is produced.
This causes an unfair double- taxation. However, in VAT, a set-off is given for input tax (tax
paid on purchases). This results in the overall tax burden being rationalized and a fall in prices
of goods.

VAT makes the tax structure simple, hassle-free and export-oriented. The
integration of VAT with Tally will help you in the smooth functioning of your business and
eliminate the complications that might otherwise arise in VAT.

CONCEPT OF VAT

The essence of VAT is in providing set-off for input tax and this is applied
through the concept of input credit/rebate.. This input credit in relation to any period means
setting off the amount of input tax by a registered dealer against the amount of his output tax.
Value Added Tax (VAT) is based on the value addition to the goods, and the related VAT
liability of the dealer is calculated by deducting the input credit from the tax collected on sales
during the payment period.
This concept is explained with an example, in the Computation of VAT section.

VAT works in two different ways:

1. If VAT-registered business receives more output tax than the taxes paid as
input, they will need to pay the difference to the Commissioner of Taxes (State).

2. If the input tax paid is more than the output tax collected,

• You can carry forward the Input credit and adjust it against the output tax in
the subsequent months.

• You can have the Input Credit refunded to you by the Government at her end
of the current or following year.

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 • You can receive refunds for Input Credit on exports within a period of three
months.

General terminologies used in VAT

Term Description

Input tax This is a tax paid on purchase

Output tax This is a tax charged on sales

Input Credit The amount of Input tax that is permitted to be set off against
Output tax.

Composite Dealers with annual gross turnover not exceeding a certain

Dealers threshold (threshold-decided by the respective State
Government) can opt for a composition scheme whereby they
will pay tax as a small percentage of their gross turnover.
However, retailers opting for this composition schema will not
be entitled to Input Credit.

The State Governments fix the periods and the procedures for
the payment of the lump sum.

JUSTIFICATION OF VAT
VAT was adopted because the Sales Tax system is complex and induces non-
compliance. It has been found to be a hindrance in the economic growth of Industry, State and
the Country. This causes a huge loss of revenue to the government.

VAT also helps in eliminating the dreaded cascading effect of Tax.

For instance, in the existing structure, inputs are taxed before a commodity is
produced and the output is taxed after it is produced. This causes an unfair double taxation with
cascading effects. However, in VAT, as a set-off is given for input tax as well as tax paid on
previous purchases, overall tax burden will be rationalized and prices in general will fall. VAT
thus makes the tax system simple and transparent.

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 Advantages of VAT over Sales Tax
• As VAT is a multi-point tax with set-off for tax paid on purchases, it prevents
repeated taxation of the same product.

• Simple and Transparent: In the Sales tax system the amount of tax levied on
the goods at all stages is not known. However, in VAT, the amount of tax would be known at
each and every stage of goods sale or purchase.

• VAT has the flexibility to generate large and buoyant revenues, as it levies tax
on value additions.

• Zero rating of tax on exports is possible in case of VAT

• Fair and Equitable: VAT introduces uniform tax rates across the state so that
unfair advantage cannot be taken while levying the tax.

• Procedure of simplification: Procedures related to filling of returns, payment of

tax, furnishing declaration and assessment are simplified under the VAT system so as to
minimize any interface between the tax payer and the tax collector.

• Ability to provide same revenue to the Government with lower rates of tax.

• Tax does not become a cost of doing business/.

VAT Rates

According to the White Paper, there are 550 categories of goods under the VAT
system. They are classified into the following four groups, depending on the VAT rate:

VAT @ 4%

The largest number of goods (270) comprising of basic necessity items such as
drugs and medicines, agricultural and industrial inputs, capital goods and declared goods are
under 4% VAT rate.

EXEMPTED FORM VAT

There are about 46 commodities under the exempted category. This includes a
maximum of 10 commodities that each stat would be allowed to select, from a broader approved
list for VAT exemption. The exempted commodities include natural and unprocessed products
in unorganized sector as well as items. Which are legally barred from taxation.

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 VAT @1%

This is for a specific category of goods like gold, silver etc.

VAT @12.5%

The remaining commodities are under the general VAT rate of 12.5%.

Note: The few goods that are outside VAT as a matter of policy would include
liquor lottery, tickets, petroleum products, as the prices of these items are not fully market-
determined. These items will continue to be taxed under the sales tax act of the respective states.

COMPUTATION OF VAT AND PROFIT

Raw Material
supplier
Price of Raw Materials =Rs.100
Input Tax Paid =Rs. 10

Setting Price =Rs.110

Supplier collects Rs.110 from the manufacture

and pays Rs.10 to the Government.

Manufacturer

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 A. Cost of gods =Rs.100
B. Input tax paid = Rs. 10
C. Total Purchase Cost =Rs.110

D. Product Price =Rs.120

E. Output Tax Charged =Rs. 12
F. Total Selling Price =Rs. 132

G. VAT payable (E-B) =Rs. 2

Profit (F-G-C) =Rs. 20

Retailer

A. Cost of gods =Rs.120

B. Input tax paid = Rs. 12
C. Total Purchase Cost =Rs.132

D. Product Price =Rs.150

E. Output Tax Charged =Rs. 15
F. Total Selling Price =Rs. 165

G. VAT payable (E-B) =Rs. 3

Profit (F-G-C) =Rs. 30

Consumer

The above diagram depicts computation of (10%) VAT at each stage of business.
Hence, it is not the manufactures and retailers but only the consumer who has paid 10% VAT to
the government. The profits for manufactures and retailers thus remain unaffected.

VAT IN TALLY

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 Features of VAT in Tally

VAT is completely integrated with Tally. The VAT functionality in Tally supports
the following features, making it easier for computation:

• Quick & easy setup

• Fast & error-free voucher entry

• Pre-defined list of sales & purchase classifications

• Complete tracking of each transaction till annual returns.

• Printing of Tax invoice

• VAT computation report

• Better VAT-returns management

• Monthly Return

ENABLING VAT
Go to Gateway of Tally >Accounts info.> F11: Features > Statutory & Taxation.
Set Enable Value Added Tax (VAT) and Set/Alter VAT Details to Ye

On enabling Set /Alter VAT Details to Yes, Tally will prompt with VAT Details
Screen.

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 VAT Details
• Select the State name.

• Set Type of Dealer? to Regular

• Enter the Regular VAT Application From date.

• Accept the screen to save.

Note: All Classification and Statutory forms shown here are based on the
Karnataka State Model.

CONFIGURING LEDGER FOR VAT REPORTING

VAT Classification

The VAT Classification is a list of VAT rates, which describes the nature of the
Business Activity and the type of transaction. There are in-built in the system and will e updated
if and when any statutory changes take place.

• Input VAT @ 4%

• Input VAT @ 1%

• Input VAT @ 12.5%

• Output VAT @ 1%

• Output VAT @ 4%

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 • Output VAT @ 12.5%

• Purchases-Capital Goods

• Purchases-Exempt

• Purchases from unregistered dealers

Depending on the type of the business, type of transaction, and the statutory
requirements of your State, you will need to select the appropriate classifications from the list
during Ledger creations, vouchers entries, etc.

The Sales and Purchase transactions are segregated based upon the classification
selected during voucher entry and shown in the VAT computation. In the VAT Computation
you can view the classification-wise VAT and Nett Values.
LEDGER MASTERS
The VAT Classification will be displayed as a drop down list in the Ledger
Masters. Tally gives the flexibility to the user, to either have the classification selected in the
Ledger Master tagged to all transactions. Or, select different classifications each time during
voucher entries. This in explained in detail in the Vouchers and Transactions section.

The Ledgers that are affected by VAT are:

• Purchase Ledger

• Sales Ledger

• Duties and Taxes Ledger

• Direct Expenses/Income

CREATING A PURCHASE LEDGER FOR VAT

The following additional fields pertaining to VAT can be seen in the Ledger entry
screen.

Go to Gateway of Tally > Accounts Info > Ledger> Create/Alter

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 Used in VAT Return

Set this to Yes if you wish to select VAT/Tax class for this Ledger.

Note: Tally gives the flexibility to he user to either have the classification selected
in the Ledger Master tagged to all transactions Or select different classification each time during
voucher entries. For more details refer Vouchers and Transactions.

The rest of the Ledger creation process is the same as in default Tally.

In the above example we have selected a VAT classification of 4%.

VAT CLASSIFICATION-PURCHASE-EXEMPT
Let us take an example of a VAT exempted transaction below.

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 Used in VAT Returns

Set this to Yes and select Purchases-Exempt form VAT/Tax class for this Ledger.

Accept the screen to save.

Creating a Supplier ledger

Create a ledger for the Supplier form whom you are buying the VAT exempted
item:

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 Note: The TIN or Sales Tax number of the creditor whichever applicable needs to
be entered in the Ledger.

If VAT is not enabled for your company, the TIN/Sales Tax No. field will be
replaced by Sales Tax No.

To learn about the actual transaction, refer to Creating Purchase Voucher (As
Invoice) for VAT section.

Creating a Sales Ledger for VAT

Like in the Purchase Ledger Screen, select the required VAT/Tax classification in
the Sales Ledger as well.

Go to Gateway of Tally > Accounts Info > Ledger > create/Alter.

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