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Module 3: TDS and GST in Tally Prime

Steps to Enable TDS in Tally Prime

1. Go to F11: Features: Press F11 to access the Features menu.

2. Enable TDS: In the Statutory & Taxation features section, set Enable TDS to Yes.

3. Set TDS Applicability: In the TDS Applicability section, select the type of TDS applicability (e.g., On Value,
On Quantity, etc.).

4. Configure TDS Rates: In the TDS Rates section, configure the TDS rates for different sections (e.g., Section
192, Section 194C, etc.).

5. Save Changes: Save the changes to enable TDS in Tally Prime.

Configuring TDS in Tally Prime

1. Create TDS Ledger: Create a TDS ledger account to track TDS deductions.

2. Configure TDS Deductor: Configure the TDS deductor details, including the TAN number and deductor
name.

3. Set TDS Threshold Limits: Set the TDS threshold limits for different sections.

4. Configure TDS Payment: Configure the TDS payment details, including the payment frequency and due date.

3.2 Recording TDS Transactions in Tally Prime,

Types of TDS Transactions

1. TDS on Payments: TDS deducted on payments made to suppliers, contractors, or employees.

2. TDS on Receipts: TDS deducted on receipts from customers or clients.

Steps to Record TDS Transactions

1. Enable TDS: Go to F11: Features > Statutory & Taxation > Enable TDS.

2. Create TDS Ledger: Create a ledger account for TDS under Duties & Taxes.

3. Create TDS Party Ledger: Create a ledger account for the party from whom TDS is deducted.

4. Record TDS Transaction: Go to Accounting Voucher > select the type of voucher (e.g., Payment, Receipt) >
enter the transaction details, including TDS amount.

5. Link TDS Ledger: Link the TDS ledger to the transaction.

1. TDS Rates: Configure TDS rates under F11: Features > Statutory & Taxation > TDS Rates.

2. TDS Sections: Configure TDS sections under F11: Features > Statutory & Taxation > TDS Sections.

TDS Reports

1. TDS Certificate: Generate TDS certificates for parties from whom TDS is deducted.

2. TDS Returns: Generate TDS returns (Form 26Q, Form 27Q) for filing with the tax authorities.

3. TDS Ledger Report: View the TDS ledger report to track TDS transactions

3.3 Accounting for Expenses and deducting

Accounting for Expenses

1. Record Expense Voucher: Create an expense voucher to record the expense incurred.

2. Select Expense Ledger: Select the expense ledger account (e.g., Rent, Electricity, etc.).

3. Enter Expense Amount: Enter the expense amount.

4. Save Voucher: Save the voucher to record the expense.

Deducting TDS

1. Enable TDS: Ensure TDS is enabled in Tally Prime (F11 > Statutory & Taxation > Enable TDS).

2. Configure TDS Rates: Configure TDS rates for the expense ledger (F11 > Statutory & Taxation > TDS
Rates).

3. Create TDS Ledger: Create a TDS ledger account to track TDS deductions.

4. Record TDS Voucher: Create a TDS voucher to deduct TDS from the expense amount.

5. Select TDS Ledger: Select the TDS ledger account.

6. Enter TDS Amount: Enter the TDS amount to be deducted.

7. Save Voucher: Save the voucher to deduct TDS.

Accounting for Expenses with TDS

1. Record Expense Voucher with TDS: Create an expense voucher with TDS deduction.

2. Select Expense Ledger: Select the expense ledger account.

3. Enter Expense Amount: Enter the expense amount.

5. Save Voucher: Save the voucher to record the expense with TDS deduction.

3.4 Reversal of with TDS in Tally Prime

Types of Reversals

1. Reversal of TDS Deducted: Reversal of TDS deducted on a payment made to a vendor.

2. Reversal of TDS Paid: Reversal of TDS paid to the government.

Steps to Reverse Entries with TDS in Tally Prime

1. Go to Gateway of Tally: Press F1 to access the Gateway of Tally.

2. Select Accounting Vouchers: Select Accounting Vouchers from the menu.

3. Select the Voucher Type: Select the voucher type (e.g., Payment, Journal) that needs to be reversed.

4. Enter the Reversal Date: Enter the date on which the reversal is being made.

5. Select the Original Voucher: Select the original voucher that needs to be reversed.

6. Reverse the Voucher: Click on Reverse to reverse the voucher.

Reversal of TDS Deducted

1. Create a Journal Voucher: Create a journal voucher to reverse the TDS deducted.

2. Debit the TDS Ledger: Debit the TDS ledger account to reverse the TDS deducted.

3. Credit the Vendor Ledger: Credit the vendor ledger account to reverse the payment made to the vendor.

Reversal of TDS Paid

1. Create a Journal Voucher: Create a journal voucher to reverse the TDS paid.

2. Debit the Bank Ledger: Debit the bank ledger account to reverse the TDS paid.

3. Credit the TDS Ledger: Credit the TDS ledger account to reverse the TDS paid.

3.5 TDS at Lower Rate and Zero Rate in Tally Prime

TDS at Lower Rate

1. Definition: TDS at lower rate is deducted when the deductee provides a certificate from the Assessing Officer
for deduction of tax at a lower rate.
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2. Configuration: Go to F11: Features > Statutory & Taxation > TDS Rates > Lower Rate.

3. Steps to Record:

1. Create a ledger account for the party with lower rate TDS.

2. Go to Accounting Voucher > select the type of voucher (e.g., Payment).

3. Enter the transaction details, including lower rate TDS amount.

4. Link the lower rate TDS ledger to the transaction.

TDS at Zero Rate

1. Definition: TDS at zero rate is not deducted when the deductee provides a certificate from the Assessing
Officer for non-deduction of tax.

2. Configuration: Go to F11: Features > Statutory & Taxation > TDS Rates > Zero Rate.

3. Steps to Record:

1. Create a ledger account for the party with zero rate TDS.

2. Go to Accounting Voucher > select the type of voucher (e.g., Payment).

3. Enter the transaction details, without deducting TDS.

4. Link the zero rate TDS ledger to the transaction.

3.6 TDS Deduction for Interest Payable

Steps to Deduct TDS on Interest Payable

1. Enable TDS: Ensure TDS is enabled in Tally Prime (F11 > Statutory & Taxation > Enable TDS).

2. Configure TDS Rates: Configure TDS rates for interest payable (F11 > Statutory & Taxation > TDS Rates).

3. Create TDS Ledger: Create a TDS ledger account to track TDS deductions.

4. Record Interest Payable Voucher: Create an interest payable voucher.

5. Select Interest Payable Ledger: Select the interest payable ledger account.

6. Enter Interest Amount: Enter the interest amount payable.

7. Deduct TDS: Tally Prime will automatically deduct TDS based on the configured rates.

8. Save Voucher: Save the voucher to record the interest payable with TDS deduction.

TDS Deduction for Interest Payable on Loans

1. Fixed Deposits: TDS is deducted on interest earned on fixed deposits.

2. Loans from Banks: TDS is deducted on interest payable on loans from banks.

3. Loans from Financial Institutions: TDS is deducted on interest payable on loans from financial institutions.

TDS Rates for Interest Payable

1. Resident Individuals: 10% TDS on interest payable.

2. Non-Resident Individuals: 20% TDS on interest payable.

3. Companies: 10% TDS on interest payable.

3.7 TDS on Advance Payment in Tally Prime

“1. Definition: TDS on advance payment is deducted when an advance payment is made to a vendor or supplier.

2. Configuration: Go to F11: Features > Statutory & Taxation > TDS Rates > Advance Payment.

Steps to Record TDS on Advance Payment

1. Create a Ledger Account: Create a ledger account for the vendor or supplier.

2. Go to Accounting Voucher: Go to Accounting Voucher > select the type of voucher (e.g., Payment).

3. Enter Advance Payment Details: Enter the advance payment details, including the amount and TDS rate.

4. Deduct TDS: Tally Prime will automatically deduct TDS based on the configured rate.

5. Link TDS Ledger: Link the TDS ledger to the transaction.

Reporting and Compliance

1. TDS Certificate: Generate a TDS certificate for the vendor or supplier.

2. TDS Returns: File TDS returns (Form 26Q) with the tax authorities.

3. Compliance Report: Generate a compliance report to ensure adherence to tax laws and regulations.

3.8 Goods and Services Tax (GST)

GST is a comprehensive indirect tax levy on goods and services consumed in India. It replaced multiple indirect
taxes, including Value Added Tax (VAT), Central Sales Tax (CST), and Service Tax.

GST Components

1. CGST (Central Goods and Services Tax): Collected by the Central Government.
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2. SGST (State Goods and Services Tax): Collected by the State Government.

3. IGST (Integrated Goods and Services Tax): Collected by the Central Government on interstate supplies.

4. UTGST (Union Territory Goods and Services Tax): Collected by the Union Territory Government.

GST Rates

GST rates vary from 0% to 28%, depending on the goods or services. Some common rates include:

- 0% (essential goods and services)

- 5% (merit goods and services)

- 12% (standard rate)

- 18% (standard rate)

- 28% (demerit goods and services)

GST Registration

Businesses with an annual turnover exceeding ₹40 lakhs (₹20 lakhs for special category states) must register
for GST.

GST Returns

Registered businesses must file GST returns, including:

1. GSTR-1: Details of outward supplies.

2. GSTR-2A: Details of inward supplies.

3. GSTR-3B: Summary of outward and inward supplies.

4. GSTR-9: Annual return.

GST in Tally Prime

Tally Prime supports GST compliance, including:

1. GST Registration: Create and manage GST registration details.

2. GST Returns: Generate and file GST returns (GSTR-1, GSTR-2A, GSTR-3B, and GSTR-9).

3. GST Invoicing: Create GST-compliant invoices.

4. GST Reports: Generate GST reports, including GST liability and GST paid.

3.9 Introduction to GST& its Terminology

GST (Goods and Services Tax) is a comprehensive indirect tax levy on goods and services consumed or sold in
India. It replaced multiple indirect taxes, including Value Added Tax (VAT), Central Sales Tax (CST), and
Service Tax.

Key Features of GST

1. Destination-based tax: GST is levied on the basis of destination, i.e., where the goods or services are
consumed.

2. Dual GST model: GST is a dual model, where both the Centre and States have the power to levy GST.

3. CGST, SGST, and IGST: GST is divided into three components: Central GST (CGST), State GST (SGST),
and Integrated GST (IGST).

4. Input Tax Credit (ITC): Businesses can claim ITC on the tax paid on inputs used in the production of goods
or services.

GST Terminology

1. GSTIN: Goods and Services Tax Identification Number, a unique 15-digit number assigned to each taxpayer.

2. GSTR: Goods and Services Tax Return, a periodic return filed by taxpayers to report their GST liability.

3. CGST: Central Goods and Services Tax, levied by the Central Government.

4. SGST: State Goods and Services Tax, levied by the State Government.

5. IGST: Integrated Goods and Services Tax, levied on inter-state supplies.

6. HSN: Harmonized System of Nomenclature, an international system for classifying goods.

7. SAC: Services Accounting Code, a system for classifying services.

8. Tax Invoice: A document issued by a supplier to a recipient, showing the details of the supply and the GST
charged.

Benefits of GST

1. Simplified tax structure: GST simplifies the tax structure by subsuming multiple indirect taxes.

2. Increased transparency: GST provides a transparent tax system, reducing corruption and tax evasion.

3. Improved compliance: GST encourages compliance through the use of technology and the provision of Input
Tax Credit.

4. Increased revenue: GST is expected to increase revenue for the government, as it broadens the tax base.

3.10 Tax Rate Structure & Setup in Tally Prime

1. Tax Rates: Define tax rates for different tax types, such as GST, VAT, CST, and Service Tax.

2. Tax Slabs: Create tax slabs to define the tax rate applicable to different ranges of taxable values.

3. Effective Dates: Specify the effective dates for tax rates and tax slabs.

Setting Up Tax Rates in Tally Prime

1. Go to F11: Features: Press F11 to access the Features menu.

2. Select Statutory & Taxation: Select Statutory & Taxation from the menu.

3. Select Tax Rates: Select Tax Rates from the menu.

4. Create Tax Rate: Create a new tax rate by specifying the tax type, tax rate, and effective date.

5. Save Tax Rate: Save the tax rate to apply it to transactions.

Setting Up Tax Slabs in Tally Prime

1. Go to F11: Features: Press F11 to access the Features menu.

2. Select Statutory & Taxation: Select Statutory & Taxation from the menu.

3. Select Tax Slabs: Select Tax Slabs from the menu.

4. Create Tax Slab: Create a new tax slab by specifying the tax type, taxable value range, and tax rate.

5. Save Tax Slab: Save the tax slab to apply it to transactions.

3.11 Invoicing in GST (Goods & Services)

GST Invoicing Requirements

1. Invoice Number: A unique invoice number.

2. Invoice Date: The date of issue of the invoice.

3. Supplier's Details: Name, address, and GSTIN of the supplier.

4. Recipient's Details: Name, address, and GSTIN of the recipient.

5. Description of Goods/Services: Description of the goods or services supplied.

6. Quantity and Unit Price: Quantity and unit price of the goods or services supplied.

7. Taxable Value: The taxable value of the goods or services supplied.

8. GST Rate: The GST rate applicable to the goods or services supplied.
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9. GST Amount: The GST amount payable.

10. Signature: Signature of the supplier or authorized representative.

Types of Invoices in GST

1. Tax Invoice: Issued by a registered supplier for taxable supplies.

2. Bill of Supply: Issued by a registered supplier for exempted supplies.

3. Debit Note: Issued by a supplier to a recipient for any increase in the taxable value.

4. Credit Note: Issued by a supplier to a recipient for any decrease in the taxable value.

Steps to Create GST Invoice in Tally Prime

1. Go to Gateway of Tally: Press F1 to access the Gateway of Tally.

2. Select Sales Voucher: Select Sales Voucher from the menu.

3. Enable GST: Enable GST in the voucher.

4. Enter Supplier's Details: Enter the supplier's details, including GSTIN.

5. Enter Recipient's Details: Enter the recipient's details, including GSTIN.

6. Enter Invoice Details: Enter the invoice details, including description of goods/services, quantity, unit price,
and GST rate.

7. Save Invoice: Save the invoice.

Benefits of GST Invoicing in Tally Prime

1. Accurate GST Calculations: Tally Prime accurately calculates GST based on the configured rates.

2. Compliance with GST Laws: GST invoicing in Tally Prime ensures compliance with GST laws and
regulations.

3. Easy GST Reporting: Tally Prime generates GST reports, making it easy to file returns and provide
certificates to parties.

3.12 Input Credit Mechanism, GST Adjustment

Input Credit Mechanism

1. Definition: Input Credit Mechanism allows businesses to claim credit for the GST paid on inputs (goods or
services) used in the production of goods or services.

2. Eligibility: Businesses must be registered under GST and have a valid GSTIN to claim input credit.

3. Input Credit: Input credit can be claimed on the following:

- Capital goods used in the production of goods or services.

- Input services used in the production of goods or services.

4. Input Credit Calculation: Input credit is calculated based on the GST paid on inputs.

GST Adjustment

1. Definition: GST adjustment refers to the process of adjusting the GST liability by claiming input credit or
reversing input credit.

2. Types of GST Adjustments:

- Input Credit Adjustment: Claiming input credit to reduce GST liability.

- Input Credit Reversal: Reversing input credit claimed earlier to increase GST liability.

- GST Payment Adjustment: Adjusting GST payment made earlier to reduce GST liability.

3. GST Adjustment in Tally Prime: Tally Prime allows users to make GST adjustments by claiming input credit
or reversing input credit.

Steps to Claim Input Credit in Tally Prime

1. Go to Gateway of Tally: Press F1 to access the Gateway of Tally.

2. Select Accounting Vouchers: Select Accounting Vouchers from the menu.

3. Select the Type of Voucher: Select the type of voucher (e.g., Purchase, Journal) that requires input credit.

4. Enter the Voucher Details: Enter the voucher details, including the GST amount paid on inputs.

5. Claim Input Credit: Claim input credit by selecting the input credit ledger account.

6. Save the Voucher: Save the voucher to claim input credit.

3.13 Return Filing using Tally Prime

GSTR-1 Return Filing using Tally Prime:

Steps to File GSTR-1 Return

1. Enable GST: Ensure GST is enabled in Tally Prime (F11 > Statutory & Taxation > Enable GST).

2. Configure GST Settings: Configure GST settings, including GSTIN, GST registration details, and tax rates.

3. Create Invoices: Create invoices for sales transactions, including B2B and B2C invoices.

4. Generate GSTR-1: Go to Gateway of Tally > Display > Statutory Reports > GST > GSTR-1.
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5. Select Reporting Period: Select the reporting period for which you want to file the GSTR-1 return.

6. Generate JSON File: Generate the JSON file for GSTR-1 return.

7. Upload JSON File: Upload the JSON file to the GST portal.

8. Verify and Submit: Verify the GSTR-1 return on the GST portal and submit it.

3.14 E-Way Bill in GST

What is an E-Way Bill?

An E-Way Bill is an electronic document required for the movement of goods worth more than ₹50,000 from
one place to another. It is generated on the GST portal and is a mandatory document for transportation of goods.

Key Features of E-Way Bill

1. Unique E-Way Bill Number: Each E-Way Bill has a unique number.

2. Validity: E-Way Bill is valid for a specific period, depending on the distance of transportation.

3. Part-A and Part-B: E-Way Bill has two parts - Part-A contains details of the goods, and Part-B contains
details of the transportation.

4. GSTIN: E-Way Bill requires the GSTIN of the supplier and the recipient.

Who Needs to Generate E-Way Bill?

1. Registered Suppliers: Registered suppliers need to generate E-Way Bill for movement of goods.

2. Unregistered Suppliers: Unregistered suppliers need to generate E-Way Bill if the value of goods exceeds
₹50,000.

3. Transporters: Transporters need to carry the E-Way Bill during transportation.

Steps to Generate E-Way Bill

1. Login to GST Portal: Login to the GST portal using valid credentials.

2. Select E-Way Bill Option: Select the E-Way Bill option from the dashboard.

3. Enter Details: Enter the required details, including Part-A and Part-B.

4. Generate E-Way Bill: Generate the E-Way Bill and download it.

Benefits of E-Way Bill

1. Reduced Compliance Burden: E-Way Bill reduces the compliance burden on businesses.

2. Improved Transparency: E-Way Bill provides real-time tracking of goods movement.

Penalties for Non-Compliance

1. Penalty for Non-Generation: Penalty for non-generation of E-Way Bill is ₹10,000 or tax amount, whichever
is higher.

2. Penalty for Non-Carrying: Penalty for non-carrying of E-Way Bill is ₹10,000 or tax amount, whichever is
higher.

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