SESSION – 2023-24

SUBJECT – COMPUTERISED
ACCOUNTING
TOPIC – TALLY WITH TAXATION

SUBMITTED TO: - SUBMITTED BY:-

MR. SHAKSHI SAINI MAHIMA CHOUDHARY
TH
B.COM 5 (SEM)
 ACKNOWLEDGEMENT

I would like to express my profound gratitude to our head of the commerce department, Mr.
Bharat Arora, for their contributions to the completion of my project titled computerised
accounting conversion rate optimization.

I would also like to express my special thanks to our mentor Miss. Shakshi Saini for the time
and efforts she provided throughout the year. Your useful advice and suggestions were helpful
to me during the project’s completion. In this aspect, I am eternally grateful to you.

I would like to acknowledge that this project was completed entirely by me and not by someone
else.

(B-COM SEMESTER 5)
 Concept of Computerised Accounting System
A computerised accounting system is an accounting information system that processes the
financial transactions and events as per Generally Accepted Accounting Principles (GAAP) to
produce reports as per user requirements. Every accounting system, manual or computerised,
has two aspects. First, it has to work under a set of well-defined concepts called accounting
principles. Another, that there is a user -defined framework for maintenance of records and
generation of reports. In a computerised accounting system, the framework of storage and
processing of data is called operating environment that consists of hardware as well as software
in which the accounting system, works. The type of the accounting system used determines the
operating environment. Both hardware and software are interdependent. The type of software
determines the structure of the hardware. Further, the selection of hardware is dependent upon
various factors such as the number of users, level of secrecy and the nature of various activities
of functional departments in an Organisation.

Meaning of Computerized

Accounting A computerized accounting system saves a great deal of time and effort,
considerably reduces (if not eliminates) mathematical errors, and allows for much more
timely information than does a manual system. In a real-time environment, accounts are
accessed and updated immediately to reflect activity, thus combining steps 2 and 3 as
discussed in the
preceding section. The need to test for equality of debits and credits through trial balances is
usually not required in a computerized system accounting since most systems test for equality of
debit and credit amounts as they are entered. If someone were to attempt to input data containing
an inequality, the system would not accept the input. Since the computer is programmed to post
amounts to the various accounts and calculate the new balances as new entries are made, the
possibility of mathematical error is reduced.
Computers may also be programmed to record some adjustments automatically at the end of
the period. Most software programs are also able to prepare the financial statement once it has
been determined the account balances are correct. The closing process at the end of the period
can also be done automatically by the computer. Human judgment is still required to analyze
the
data for entry into the computer system correctly. Additionally, the accountant's knowledge and
judgment are frequently required to determine the adjustments that are needed at the end of the
reporting period. The mechanics of the system, however, can easily be handled by the
computer.

Need for Computerized Accounting:

The need for computerized accounting arises from advantages of speed, accuracy and lower cost
of handling the business transactions.

Numerous Transactions:
The computerized accounting system is capable of large number of transactions with speed
and accuracy.

Instant Reporting:
It is capable of offering quick and quality reporting because of its speed and accuracy.

Reduction in Paper Work:

Manual accounting system requires large storage space to keep accounting records/books, and
vouchers/documents. The requirement of books and stationery and books of accounts along with
vouchers and documents is directly dependent on the volume of transactions beyond certain
point.

There is a dire need to reduce the paper work and dispense with large volume of books of
account. This can be achieved with the help of computerized accounting system.

Flexible Reporting:
The reporting is flexible in computerized accounting system. It is capable of generating reports
of any balance as when required and for any duration which is within the accounting period.
Accounting Queries:
There are accounting queries, which are based on some external parameters. For example, a
query relating to overdue customers’ accounts can be easily answered by using the structured
query language [SQL] support of database technology in the computerized accounting system.
Such an exercise would be quite difficult and expensive in manual accounting system.

Online Facility:
Computerized accounting system offers online facility to store and process transaction data so as
to retrieve information to generate and view financial reports.

Accuracy:
The information and reports generated are accurate and quite reliable for decision-making. In
manual accounting system, as many people do the job, and the volume of transactions is quite
large, such information and reports are likely to be distorted and unreliable and inaccurate.

Security:
This system is highly secured, and the data and information can be kept confidential, when
compared to manual accounting system.

Scalability:
The system can cope easily with the increase in the volume of business. It requires only
additional data operators for storing additional vouchers.
Special Features of Computerized Accounting System:
1. It leads to quick preparation of accounts and makes available the accounting statements
and records on time.

2. It ensures control over accounting work and records.

3. Errors and mistakes would be at minimum in computerized accounting.

4. Maintenance of uniform accounting statements and records is possible.

5. Easy access and reference of accounting information is possible.

6. Flexibility in maintaining accounts is possible.

7. It involves less clerical work and is very neat and more accurate.

8. It adapts to the current and future needs of the business.

9. It generates real-time comprehensive MIS reports and ensures access to complete and
critical information instantly.

Advantages of Computerized Accounting:

1. Better Quality Work:

The accounts prepared with the use of computers are usually uniform, neat, accurate, and more
legible than manual job.

2. Lower Operating Costs:

Computer is a labor and time saving devise. Hence, the volume of job handled with the help of
computers results in economy and lower operating costs.
3. Improved Efficiency:
Computer brings speed and accuracy in preparing the records and accounts and thus, increases
the efficiency of employees.

4. Facilitates Better Control:

From the management point of view, greater control is possible, and more information may be
available with the use of computer in accounting. It ensures efficient performance in accounting
work.

5. Greater Accuracy:
Computerized accounting ensures accuracy in accounting records and statements. It prevents
clerical errors and omissions.

6. Relieve Monotony:
Computerized accounting reduces the monotony of doing repetitive accounting jobs, which are
tiresome and time consuming.

7. Facilitates Standardization:
Computerized accounting facilitates standardization of accounting routines and procedures.
Therefore, standardization in accounting is ensured.

8. Minimizing Mathematical Errors:

While doing mathematics with computers, errors are virtually eliminated unless the data is
entered improperly in the first instance.
Disadvantages of Computerized Accounting:

1. Reduction of Manpower:
The introduction of computers in accounting work reduces the number of employees in an
organization.
Thus, it leads to greater amount of unemployment.

2. High Cost:
A small firm cannot install a computer accounting system because of its high installation and
maintenance cost. To be more economical there should be large volume of work. If the
system is not used to its full capacity, then it would be highly uneconomical.

3. Require Special Skills:

Computer system calls for highly specialized operators. The availability of such skilled
personnel is very scarce and very costly.

4. Other Problems:
Frequent repair and power failure may affect the accounting work very much. Computers
are prone to viruses. Often time’s people will assume the computer is doing things correctly
and problems will go unchecked for long period of time.
Tally ERP9
Tally is an application software for accounting purpose. Tally handles different types of vouchers
and maintains all primary books of accounts and financial statements. Tally ERP9 is the latest
version of Tally software series. Tally ERP9 uses the latest technology and incorporates complex
features in simplified manner. It supports the ability to operate an enterprise business from any
where as required by the medium and large enterprises.
Features of Tally ERP 9:
The main features of Tally are:
• User friendly package
• It can create unlimited companies concurrently (up to 9999 Nos.) ⬧ Accounting features:
⚫ No accounting codes
⚫ Unified ledgers
⚫ Book keeping and comprehensive accounting
⚫ Multi currency accounting
⚫ Printing
⚫ Security control
⚫ Unlimited cost and profit centres ⬧ Inventory features:
⚫ Stock control for multi location
⚫ Warehouse management for multi location
⚫ Flexible units of measure
⚫ Recording of stock movement and stock aging
⚫ Multiple stock valuation
⚫ Fixing various material levels
• Automation of employees records (payroll)
• Profitability statement of every product/project or service can be easily generated
• Data can be synchronised and updated from multiple locations
• It is highly secured against data tampering
• It has very powerful audit facility
• Tally provides interactive online help
• Open data base connectivity facility is available
• VAT, Service Tax, TDS and TCS compliant
Versions of Tally
Tally was started with its first version Tally 4.5. It was a MS DOS operating system based
programme. The subsequent Tally versions are Tally 5.4, Tally 6.3, Tally 7.2, Tally
8.1,Tally 9 and Tally ERP 9. In ERP 9 version of tally in addition to silver edition, gold
edition and auditors edition are also available. ERP 9 provides all necessary payroll
compliances such as PF, ESI, Professional Tax computation and Income Tax on Salary
income. Remote access can also be done with identity ie, Tally.NET id authentication.
Requirements for installing Tally.
Processor : IBM PC with Intel 80586 or better
RAM : 256 MB or more
Disk Storage : At least 40 MB
Installation Drive : CD ROM drive
Operating system : Windows 98 or above
Steps for installing Tally.
Step1 : Insert Tally CD containing Tally programme
Step2 : Double click on 'INSTALL.EXE' .
Step3 : Click on 'NEXT' button to get license agreement screen
Step4 : Click on 'I AGREE' then get New Installation screen where
'application directory', 'data directory', 'configuration directory',
'language directory' etc can be altered.
Step5 : click on 'NEXT' button to select Country and Language
Step6 : After selection of Country and Language click on
'INSTALL'
button and
finally on 'FINISH'BUTTON Tally Licensing
The single user licensing or Multi user licensing may be available as per the requirements of
the user. Multi user facility is available only with Tally ERP 9 Gold version. To view
licensing, sequence is as under:
Gate way of tally > F12: Configure > Licensing Gate way of Tally -
Screen components
Opening screen of Tally ERP 9 is divided into 6 sections
1. Title Bar 2. Horizontal Button Bar
3. Bottom Pane 4. Main area of the screen
5. Button Panel 6. Calculator area Company Creation
Press Alt F3 or Click Cmpany Info > select 'Create Company' > Various fields may be
properly filled up, press 'enter' to accept the data given > Now the Company gets created.
Select, Shut, and Alt company
1. To select company : Gateway of Tally > F1 > Select the Company
from the list > Press enter
2. To shut a company : Gateway of Tally > Alt+F1 > Select the
Company from the list > Press enter
3. To Alter a company :
Gateway of Tally > Alt+F3>Alter> Press
Enter>
Give changes and save
Current Period and Current Date
Current period means financial period in which you are working. Tally refuses to accept the date
prior to or after the current period. So after creating a company you have to change the current
period so that the financial year falls within the current period. If you want to work with another
company not with the current period, but to an earlier period you have to change the earlier
period to current period to work with that company.
Current period can be changed by pressing 'Alt + F2' and entering into the new period.
Current date means the date you worked last during the current period. Vouchers will have
same date of current date. To change current date, press 'F2'.
Configuring Company
Configuration changes may affect all active companies created in tally. To configure a
created company, click on F12 Function key. Various options in configuration menu are:
1. General 2. Numeric symbols
3. Accts/inventory info 4. Voucher entry
5. Invoice/orders entry. 6. Pay Roll
Configuration
7. Banking Configuration 8. Printing
9. E-mailing 10. Data configuration
11. Advanced configuration 12. Product and Features
13. Licensing 14. Quit.
BASIC ACCOUNTING INFORMATION IN TALLY

Introduction

Once a Company is created in the Tally ERP9, the basic Accounting information in
Tally may be analyzed. It is possible to view various menu related to accounts and pre-
defined ledger groups. Also see how we can create, alter, delete and display single and
multiple
ledger groups and sub groups.

The Learner:
• Identifies the menu related to accounts
• Creates Accounting Info
• Creates Inventory Info
• Identifies the ledger groups
• Lists out the predefined ledger groups
• Manages ledger groups
• Creates groups
• Creates sub groups
• Displays groups
• Alters groups
• Deletes groups
• Creates multiple groups
• Displays multiple groups
• Alters multiple groups
• Explains the meaning of ledgers
• Identifies the fields in the ledger creation window
• Creates single ledgers
• Displays ledgers
• Alters ledgers
• Deletes ledger
•. Creates multiple ledgers
• Identifies the fields in multiple ledger creation window
• Displays multiple ledgers
• Alters multiple ledgers
• Uses short cut keys
Menu related to accounts,
Step 1.Select the company by clicking on F1, Select company from the list.
Step 2. Select the option Account Info. Accounts info option gives an overall information
ofgroups, ledgers, Voucher types and Quit and Inven tory Info consists of Stock
Group, Stock items, Unit of Measures, Voucher types etc.
Groups and Pre-defined Groups
Groups are helpful in classifying and identifying account heads based on their nature. In the
modern way of accounting all financial entries are performed using ledgers or account heads.
Tally follows 'single ledger concept of accounting'. It is advisable to group/classify ledger
Information based on their functions.
Tally provides facility to the user to create an own group. It also provides 28 predefined
groups. Out of these, 15 are primary group and 13 are sub groups.
Managing Groups
The Tally user can create own group/sub groups apart from predefined groups. The user can
display and alter groups. Inorder to work on groups the following sequence is to be
followed.
Gateway of Tally > Accounts Info > Groups Two types of groups
can be created by the user. They are,
(a) Single group : Work on one group at a time
(b) Multiple groups : Permits to work on many groups at a time
(c) Create Groups and Sub Groups
a. Creating a new group:
New primary groups can be created only in advanced mode. For advance mode click on
"F12" on the Accts/Inventory Info Configuration to have master configuration screen. Type
"Y" for the option "Allow Advanced Entries in Masters" The sequence is
Gateway of Tally > Accounts Info > Groups > Single > create
The user can create new sub groups under another new sub group. Suppose the user wish
to create a new sub group 'Interest paid' under sub group 'administrative expenses' which
is under the main group 'indirect expenses' Indirect Expense (main group)
Administrative Expense (sub group)
Interest paid (sub group)
Undertake the following steps.
Step 1 To create main group 'Indirect Expense '
Gateway of Tally > Accounts Info > Groups > Single create
Give the name 'Indirect Expense '.
 Step 2 To create sub group 'Administrative Expense' under the main group
'Indirect Expense'
Gateway of Tally> Accounts Info > Groups > Single create Give the name
'Administrative Expense'.
Type 'indirect expenses' in 'under' field and Save
Step 3 To create sub group 'Interest paid' under the sub
group 'Administrative Expense'
Gateway of Tally > Accounts Info > Groups > Single create
Give the name 'Interest Paid'.
Type 'Administrative Expenses' in 'under' field and Save
b. Deleting groups : Under take the following steps to delete groups.
Step 1 Gateway of Tally > Accounts Info > Groups > Single Alter
Step 2 Select the group to be deleted from the pop up list of groups.
Step 3 Then press "Alt+D" for deletion. Step 4 Press
"Yes" for confirm deletion.

Create , Display and Alter Multiple groups:

a. Create Multiple Groups:
It is useful to create a number of sub groups in a group having same properties as their
parent group.
Follow the given sequence:
Step 1: Gateway of Tally > Accounts Info >
Groups Step 2: From the multiple group option,
select 'Create'
Step 3: Select name of the parent group from the pop up list of groups under
which the sub groups are to be created.
b. Display Multiple Groups:
Undertake the following steps to display multiple groups
Step 1: Gateway of Tally > Accounts Info > Groups
Step 2: From the multiple group option, select 'Display'
Step 3: From this window, select the parent group whose sub groups are to
be displayed.
c. Altering Multiple Groups:
Undertake the following steps to alter multiple groups
 Step 1: Gateway of Tally > Accounts Info > Groups
Step 2: From the multiple group option , select 'Alter' option
Step 3: From this window, select the parent group whose sub groups are to be altered
Step 4: Make alterations if any and save changes.
Create, Display, Alter and Delete Single Ledger
To create a ledger press the highlighted alphabet 'C' or click on 'Create' option in 'Accounts
Info' menu. The sequence is:
Gateway of Tally > Accounts Info > ledgers > Create
The various fields available are:
Name, Alias (means alternative name of ledger account), Under (means name of a main
ledger account used for control the ledger), Inventory values are affected (applicable only
for purchase and sales ledgers), Mailing info, Tax info, Cost centres are applicable (this is to
maintain cost centres - to enable the cost centres press F11 and activate 'maintain cost
centre') and Opening Balance.

Single Ledger Display:

Gateway of Tally > Accounts Info > Ledgers > Single > Display
Single Ledger Altering:
Gateway of Tally > Accounts Info > Ledgers > Single > Alter Select ledger from
the pop up and press enter for alter.

To be noted that:
(a) Only the authorised user can alter the ledger account.
(b) One cannot alter the parent ledger
Single Ledger Deleting.
Step 1: Gateway of Tally > Accounts Info > Ledgers >
Single >
Alter
Step 2: Select the ledger to be deleted
Step 3: Press "Alt" and 'D' when the curser rests at 'Under' field.
Note : If there are transactions or ledger having balance, such ledger cannot be deleted.

Create, Display and Alter Multiple ledger

Multiple Ledger Creation:
Step1: Gateway of Tally > Accounts Info > Ledgers > Multiple > Create
 The screen contains 'Under group', 'Name of Ledger', 'Opening balance',
'Dr/Cr' fields.
Multiple Ledger Display:
Step1: Gateway of Tally > Accounts Info > Ledgers > Multiple > Display
Multiple Ledger Alter:
Step 1: Gateway of Tally > Accounts Info > Ledgers >
Multiple >
Alter
Step 2: Select the ledger to be altered from the pop up list of
ledgers
Step3: Press the 'Enter key' for alteration. Make the desired
changes and accept it.

1. .

ACCOUNTING VOUCHERS IN TALLY

Introduction

Recording Journal entry is the primary function of accounting. In Tally the user has to identify
debit and credit aspects of transactions and its recording is possible only through voucher entry.
To execute voucher entry, the user has to identify the nature of voucher to be selected then
configure the mode, content and style of vouchers. Let's discuss the flexibility in creating,
altering, deleting, duplicating and cancelling the vouchers in this chapter. For making easy
learning of voucher entry, company in 'Accounts only' mode may be adopted.

Learning outcomes

• Identifies the vouchers in Tally

• Configures vouchers
• Creates vouchers
• Displays vouchers
• Alters vouchers
• Duplicates vouchers
• Cancels vouchers
• Lists out predefined vouchers in tally
• Uses Short cut Keys
 PRACTICAL IN DETAIL
Qn.1: Enter the following Transactions in Payment Voucher.
a. Bought Furniture for Rs.60,000/-
b. Paid Rent for Rs.15,000/-
c. Paid Wages for Rs.50,000/-
d. Paid Cash to Anandu, a supplier for Rs.25,000/-
e. Paid Carriage outward for Rs.5,000/-
Answer:
Step1. Create a new company or select an existing company.
Step2. Create Ledger accounts Single/Multiple as shown below.
Accounts involved Under (Group)
Furniture Fixed Asset
Rent Indirect
Expenses
Wages Direct Expenses
Carriage outward Indirect
Expenses
(While creating the ledger accounts, need not enter the amount in the
'Opening Balance' Field)
Step 3 : Enter the voucher.
Gateway of Tally > Accounting Vouchers > F5 Payment
Step 4 : Select 'Cash' from the list, if it is a cash payment or select 'Bank' if the payment is
made through Bank
Step 5 : Select 'Furniture' and type the amount Rs.60,000/- and press enter to give
narration and finally press 'Y' to accept the screen.
Follow the same procedure to make voucher entries for Rent, Wages and Carriage
Outward.
Qn.2: Enter the following Transactions in Receipt Voucher.
a. Started business with cash for Rs.5,00,000/-
b. Commission Received for Rs.10,000/-
c. Dividend Received for Rs.15,000/-
Answer:
Step 1. Create a new Company or select an existing company.
Step 2. Create Ledger Accounts, single/Multiple as shown
below
 Accounts involved Under
(Group)
Capital Capital
Indirect
Commission Received
Income
Indirect
Dividend Income
(While creating the ledger accounts, need not enter the amount in the 'Opening
Balance' field)
Step 3 : Enter the voucher.
Gateway of Tally > Accounting Vouchers > F6 Receipt
Step 4 : Select 'Cash' from the list, if it is a cash receipt or select 'Bank' if the receipt is
made through Bank.
Step 5 : Select 'Capital' and type the amount Rs.5,00,000/- and press enter to give
narration and finally press 'Y' to accept the screen.
Follow the same procedure to make the voucher entries for Commission and Dividend.
Qn.3: Enter the following Transactions in Contra Voucher.
a. Deposited into SBI current account for Rs.75,000/-
b. Withdrew Cash from Bank for Rs.25,000/-
Answer:
Step1. Create a new Company or select an existing company.
Step2. Create Ledger Accounts, Single/Multiple as shown
below Accounts involved Under (Group)
SBI Bank Account
(While creating the ledger accounts, need not enter the amount in the 'Opening Balance'
Field.)
Step 3 : Enter the voucher.
Gateway of Tally > Accounting Vouchers > F4
Contra Step 4 : Select 'Cash' from the list
Step 5 : Select 'SBI' and type the amount Rs.75,000/- and press
enter to give narration and Press 'Y'to accept the
screen.
Step 6 : To make cash withdrawal voucher entry do the following:
Gateway of Tally > Accounting Vouchers > F4 Contra select SBI from the list
in the account field (Cr) select cash from the list and enter the amount, give
narration and press 'Y' to accept the screen
Qn.4: Enter the following Transactions in Purchase Voucher.
 a. Purchased goods from M/s. Anandu Trading Co. Ltd.for
Cash Rs.50,000/-
b. Purchased goods from M/s. Kalyani Traders for Cash Rs.75,000/-
Answer:
Step 1. Create a new Company or select an existing company
Step 2. Create Ledger accounts single/multiple as given below
Accounts involved Under (Group)
Purchase Purchase
Kalyani Sundry Creditors
Anandu Sundry Creditors
Step 3 : Enter the voucher.
Gateway of Tally > Accounting Vouchers > F9Purchase
Step 4 : Select Kalyani Traders as 'Party's A/c Name' from the
list and enter the amount Rs.50,000/- press enter
Step 5 : Select 'Purchase' and press enter to give narration
and finally press 'Y' to accept the screen.
Follow the same procedure to make the voucher entry of M/s. Anandu Traders.
Qn.5: Enter the following Transactions in Sales Voucher are:
a. Sold goods to Raj for Cash Rs.35,000/-
b. Sold goods to Amalkrishna for Cash Rs.25,000/-
Answer:
Step 1. Create a new Company or select an existing company.
Step 2. Create Ledger accounts single/Multiple as shown
below Accounts involved Under (Group)
Sales Sales
Raj Sundry Debtors
Amalkrishna Sundry Debtors
Step 3. Enter the voucher.
Gateway of Tally > Accounting Vouchers > F8 Sales
Step 4. Select Raj as 'Party's A/c Name' from the list and
enter the details if applicable and press enter
Step 5. Select 'Sales' and press enter to give narration and finally
press 'Y' to accept the screen.
TAX ACCOUNTING IN TALLY

Introduction
In most of the financial transactions we can see that there is some sort of Tax element. ie,
VAT, TDS, Service Tax etc in it. Tally ERP9 facilitates to incorporate the above said taxes
and statutory deductions by configuring taxes menu. This chapter deals with enabling VAT,
TDS and Service Tax in a user's business. For enabling VAT and making voucher entry for
VAT, the company in 'Accounts with inventory mode' may be adopted.

Learning outcomes
The Learner:
• Identifies VAT terminologies
• Enables VAT
• Lists out ledgers pertaining to VAT
• Makes voucher entry with VAT
• Computes VAT
• Enables TDS
• Lists ledgers pertaining to TDS
• Creates TDS voucher types
• Makes voucher entry with TDS
• Makes TDS reports
• Computes TDS
• Enables Service Tax in tally
• Identifies ledgers pertaining to service tax
• Creates service tax ledgers
• Makes voucher entry with Service Tax

Enabling VAT in tally

Step1. Gateway of Tally > F11 Features > Statutory & Taxation.
Step2. Activate the option 'Enable Value Added Tax' and 'Set/Alter VAT details' by
typing 'Yes' against these options. Then give the following details:
State: Give the name of State
Type of dealer: Select 'Regular'
Regular VAT applicable form: Type the relevant
date
Finally accept the screen
Ledger pertaining to VAT
The ledgers that are affected VAT are:
 Sales Ledger
 Purchase Ledger
 Party Ledger
 Input VAT Ledger
 Output VAT Ledger

Sales Ledger
Step.1. Gateway of Tally > Accounts info > Ledgers > Single Create Step.2. Fill in the
information in this screen to create sales@5% ledger.
Type 'Yes' against the field 'Inventory values are affected'
Type 'Yes' against the field 'Used in VAT return'
Select the required classification (sales@5%) Finally accept the screen.
Purchase Ledger
Step.1. Gateway of Tally > Accounts info > Ledgers >
Single Create
Step.2. Fill in the information in this screen to
create Purchase@5% ledger.
Type 'Yes' against the field 'Inventory values are affected'
Type 'Yes' against the field 'Used in VAT return'
Select the required classification (Purchase@5%) Finally accept the screen. Party
Ledger
Step.1. Gateway of Tally > Accounts info > Ledgers > Single Create Step.2. Fill in the
information in this screen and accept.

Input VAT Ledger

Step.1. Gateway of Tally > Accounts info > Ledgers >
Single Create
Step.2. Fill in the information in this screen to create 'Input
VAT@5%' ledger
Step.3. Select 'Duties and Taxes' in 'under group'
Step.4. Select the required classification (VAT) from the
drop down list.
Step.5. Select VAT sub type 'Input VAT'
 Step.6. Select VAT/Tax Class 'Input VAT@5%'
Step.7. Set the field 'inventory values are affected' as 'No'
Step.8.
Rounding Method is: 'Not applicable' and finally
accept the screen.
Output VAT Ledger
Step.1. Gateway of Tally > Accounts info > Ledgers >
Single Create
Step.2. Fill in the information in this screen to create
'Output VAT@5% ledger'
Step.3. Select 'Duties and Taxes' in 'under group'
Step.4. Select the required classification (VAT) from the
drop down list.
Step.5. Select VAT sub type 'Output VAT'
Step.6. Select VAT/Tax Class 'Output
VAT@5%'
Step.7. Set the field 'inventory values are affected' as 'No'
Step.8.
Rounding Method is: 'Not applicable' and finally
accept the screen
Meaning of TDS
TDS means the amount of tax required to be paid by the person who is liable to pay any
income to the other person. Thus the tax is deducted at the source of income itself. It is one
of the methods of collecting income tax, which ensure a regular flow of income to the
government.
Enabling TDS
Gate way of Tally > F11 Features > F3:Statutory& Taxation
Set 'YES' to Enable TDS
Set 'YES' to Set/Alter TDS Details.
Fill the appropriate columns 'in company TDS deductor details' and save it.
Ledgers Pertaining to TDS
TDS ledgers may be created depending upon the type of TDS expenses.
Ledger Group/Under
Tax Ledger Duties & Taxes
Party Ledger Sundry Debtors/ Creditors
Expenses Ledger All Direct/ Indirect Expenses
Creating Tax Ledger
Creating Tax Ledger namely 'TDS @ 10%'
 Undertake the following steps to get ledger creation screen
Gateway of Tally > Accounts info > Ledgers > Single Creating
Fill the fields in the screen as follows
 Name : It is the name of the Tax Ledger ie, TDS @10%
 Under : It is for grouping. Select Duties & Taxes from the drop down list  Type of

Duty/Tax: select TDS.

 Nature of Payment: From the drop down list select 'an item applicable for
TDS
 Finally accept the screen. Creating Party Ledger
Gateway of Tally > Accounts info > Ledgers > Single Creating
Fill the fields in the screen as follows:
 Name : It is the name of the supplier / party
 Under : Select sundry Creditor from the drop down list
 Maintain balance bill by bill : Select 'Yes'  Is TDS applicable: Set it to 'Yes'.

 Deductee type: select the Individual/HUF-Resident from the pop up list

 Fill the various columns and finally accept the screen. Creating Expenses
Ledger
Gateway of Tally > Accounts info > Ledgers > Single Creating
Fill the fields in the screen as follows:
 Name : It is the name of Expense Ledger
 Under : Select 'Indirect Expenses' from the drop down list
 Inventory values are affected : Select "No"
 Is TDS applicable: Set it to 'Yes'
 Default Nature of Payment : Select from the drop down list(Select the same item
selected as nature of payment at the time of tax ledger creation)
 Use for assessable value calculation : Select "No" and save it.
TDS Voucher Entry
Create new voucher types -'TDS Payment' and 'TDS Journal'
(a) TDS Payment voucher type: Perform the following sequence Gateway of Tally
> Accounts info > voucher type > Create.
Type the following against the name:
 Name : TDS
Payment
Type of voucher : Payment
Abbr : TDS Pymnt
Use advanced configuration: 'yes' and finally save it.
(b) TDS Journal Voucher type:
Gateway of Tally > Accounts info > voucher type >
Create. Type the following against the name:
Name : TDS Journal
Type of voucher : Journal
Abbr : TDS Jrnl
Use advanced configuration : 'Yes' and finally save it
TDS Reports
The following TDS reports are generated automatically by the system.
 Challan
 TDS computation
 TDS Payables
 Ledger Outstanding
Challan:
The TDS payment vouchers are printed as challan. It is a list of all transactions ie, payment
vouchers having Dr. amount to Tax ledgers for a particular period.
Gateway of Tally > Display > Day Book > Press Alt+F12: range button to have only the
TDS payment vouchers for a specified period.
TDS Computation:
This report gives a list of party and TDS ledger name for which the TDS bills are pending
till date.
Gateway of Tally > Display > Statements of accounts > TDS outstanding > TDS
computation.
TDS Payables:
This report gives a list of party and TDS pending amount for a particular TDS Ledger.
Gateway of Tally > Display > Statements of accounts > TDS outstanding > TDS Payables.
Ledger Outstanding:
This report is used to find the outstanding status of a particular ledger.
Gateway of Tally > Display > Statements of accounts > TDS outstanding > Ledger.
Service Tax in Tally Meaning:
 It is an indirect tax levied by the Govt. of India on certain category of services provided.
Current service tax rate on taxable services is 14.5% including Swatch Bharath Cess. From
June 1st 2016 onwards .5% Krishi Kalyan Cess will be added to this.
Enabling Service Tax in Tally
On company information menu click on 'F11:Features' > Statutory and Taxation option and
press 'enter' to have 'company operations alterations' screen.
Set "Yes" against the following options:
 Enable Service Tax? : Yes
 Set/Alter Service Tax details : Yes. Press enter
In 'company service tax details screen' need to fill the following details.  Service
Tax Registration Number : Type the Registration number allotted by the service tax
department.
 Date of Registration
 Assessee code: Enter the code given by the service tax department.
 Premises Code No.
 Type of organisation: Enter the type of organisation from the list  Enter the details of
Division, Range and Commissionerate.
 Finally accept the screen.
Ledgers pertaining to Service Tax
The ledgers affected by service tax are:
 Sales Ledger
 Purchase Ledger
 Party Ledger
 Duties and Taxes
Creating Sales Ledger
Step.1. Gateway of tally >Accounts info > Ledgers > Single
Create
Step.2. Fill in the information in the screen to create
sales ledger
Type the name of service in name field.
Select 'Sales Account' from pop up list in under field.
Type "Yes" against "is service taxes applicable"
Select the 'Default service category' name Finally accept the
screen.
Creating Purchase Ledger
Step.1. Gateway of tally >Accounts info > Ledgers >
Single Create
Step.2. Fill in the information in the screen to create Purchase
ledger
Type the name of service in name field.
Select 'Purchase account' from pop up list in under field.
Type "Yes" against "is service taxes applicable"
Select the 'Default service category' name
Finally accept the screen. Creating Party Ledger
Step.1. Gateway of tally >Accounts info > Ledgers > Single
Create Step.2.Fill in the information in the screen to create Party
ledger
Type the name of person or company provides the service in the name field
Select 'Sundry creditor' or 'Sundry debtor' whichever is applicable for sale or purchase from
pop up list in under field.
Type 'Yes' against 'is service taxes applicable'
Select the required category name
Type service tax number and service registration date.
Finally accept the screen.
Creating Duties and Taxes.
Step 1. Gateway of tally>Accounts info>Ledgers >Single Create Step 2. The ledgers to
be created for sale of service are:
1. Service Tax on sale
(Under- 'Duties and Taxes ', Type of Duty -'Service Tax' and Tax Head'Service tax')
2. Education Cess service tax on sales :
(Under- 'Duties and Taxes',
Type of Duty -'Service Tax', and Tax Head- 'Education cess Service tax')
(Under- 'Duties and Taxes', Type of Duty -'Service Tax', and Tax Head-
'Service tax')
3. Secondary Education Cess service tax on sales :
(Under- 'Duties and Taxes', Type of Duty -'Service Tax', and Tax Head'Secondary
Education cess Service tax') (Under- 'Duties and Taxes', Type of Duty - 'Service Tax', and
Tax Head- 'Service tax')
Step 3. The ledgers to be created for purchase of service are:
1. Service Tax on purchase
 (Under- 'Duties and Taxes ', Type of Duty - 'Service Tax', and Tax Head'Service tax')
2. Education Cess service tax on purchase :
(Under- 'Duties and Taxes', Type of Duty -' Service Tax', and Tax Head- ' Education cess
Service tax')
(Under- 'Duties and Taxes', Type of Duty -' Service Tax', and Tax Head'Service tax')
3. Secondary Education Cess service tax on purchases :
(Under- 'Duties and Taxes', Type of Duty -' Service Tax', and Tax Head- ' Secondary
Education cess Service tax')
Entering vouchers entry sale of service
Step.1. Gateway of tally >Accounting vouchers >
sales (F8)
Step 2. Give party name (to whom service is rendered)
Step 3. Select 'Sales' in particulars window
Step 4. Give description for sales of service:
Such as 'Ref no', 'Name', 'Type of Service', 'Category of service', 'Service Amount' etc.
Entering vouchers entry purchase of service
Step.1. Gateway of tally >Accounting vouchers > purchase
(F9)
Step 2. Give party name (from whom service is
received) Step 3. Select 'Purchase' in particulars window
Step 4. Give description for purchase of service:
Such as 'Ref no', 'Name', 'Type of Service', 'Category of service', 'Service Amount' etc.
Display service tax payable
Gate way of tally > Display > Statutory reports > Service tax payable > Bill date wise.
 PRACTICAL IN DETAIL
Qn.1. Enter the following transactions in appropriate vouchers and prepare VAT computation
report.
01/04/2016 Purchase from Royal Vegetables 10 Kg.
Tomato @Rs.30 per Kg.
02/04/2016 Sold 5 Kg Tomato to Anandu and Company @Rs.35
per Kg.
VAT Rate for Tomato is 5%.
Answer:
Step 1. Create a new company with your own details.
Step 2. Press F11: Features > Statutory & Taxation > Enable
VAT > finally accept the screen.
Step 3. Create the following Ledger Accounts.

Ledger Under Group

Purchase
Purchase Account ( Set 'Yes' to 'used in VAT returns'
in Statutory information, select Purchase@5% from the list)
Input VAT @5%
Duties and Taxes (Type of Duty/Tax is 'VAT',
VAT sub Type is 'Input VAT', VAT/Tax Class:
Select 'Input VAT@5%' from the list, finally Save
Sales the screen
Sales Account ( Set 'Yes' to 'used in VAT returns' in
Statutory information, select Sales @5% from the list)
Output VAT @5% Duties and Taxes (Type of Duty/Tax is 'VAT', VAT sub Type is 'Output
VAT', VAT/Tax Class: Select 'Input VAT@5%' from the list, finally
Save the screen
Royal Vegetables
Sundry Creditors
Anandu and Company
Sundry Debtors
Step 3. Enter Vouchers
(1) Purchase Voucher: Gateway of Tally > Accounting Vouchers > F9 > Party's A/c field :
Royal Vegetables> Enter > Purchase Ledger: Purchase > Select Purchase > Enter Amount
> Select Input VAT@5% (Amt automatically displayed) press 'Yes' to accept.
(2) Sales Voucher:Gateway of Tally > Accounting Vouchers > F8 > Party's A/c field :
Anandu Traders > Enter > Sales Ledger: Sales > Select Sales > Enter Amount > Select
Output VAT@5% (Amt automatically displayed) press 'Yes' to accept
Step 4. Display VAT computation Report
Gateway of Tally > Display > Statutory Report > VAT > VAT Computation.
Qn.2: On 1-4-2016 Abraham and Bros purchased two wheelers from JJ Motors. The following
details on purchase are given below:
Code No. Product Category VAT Qty. Rate Amt
001 Honda Activa Two wheeler 14.5% 10 58,000 5,80,000
002 Victor -do- 14.5% 23 62,000 14,26,000
003 Passion Plus -do- 14.5% 15 70,000 10,50,000
004 Duke -do- 14.5% 16 83,000 13,28,000

The following are the details of sales made during the month of April 2016.
Code No. Product Category VAT Qty. Rate
001 Honda Activa Two wheeler 14.5% 08 65,000
003 Passion Plus -do- 14.5% 12 80,000
004 Duke -do- 14.5% 13 95,000

Prepare VAT Computation Report for the month April 2016.

Qn.3: M/s. Facto Factors company Ltd. K.P Road Kollam, is a factory servicing agency,
paid Rs.35,000/- to Mr.Sabin Subhash (PAN- APJRT7369D) one of its agents on
2/4/2016, as 'Commission and Brokerage' for his service.
Generate TDS Computation report and TDS Payable.
Answer
Step 1. Create the company with the above details
Step 2. Enable TDS 'Yes' in F11: Features (Statutory
and Taxation)
Step 3. Create the following Ledger:
(a) Commission and Brokerage: Under Indirect
Expense, Enable TDS
(b) TDS on Commission and Brokerage : Under duties
and Taxes, Enable TDS
(c) Subin Subhash: Under Sundry Creditors, Enable
TDS, Give PAN in Tax Information
(if PAN is not given tally will automatically deduct
20% as service tax)
 Step 4. Create the following Voucher type:
(a) TDS Payment: Gateway of Tally > Accounting Info
> Voucher Type > Create
(b) TDS Journal: Gateway of Tally > Accounting Info
> Voucher Type > Create
Step 5. Voucher Entry: Gateway of Tally > Accounting Voucher
>
F7(Journal) > TDS Journal
Step 6. Gateway of Tally > Display > Statutory Report >
TDS Report > Computation.
Qn.4: Pathanjali Insurance Servicing Agencies of Ernakulam paid the following expenses to Mr.
Alex Joseph ( PAN - PNJRS3721Q)
Name of Expense Amount (Rs)
Insurance Commission 38,000
Fee for professional service 49,000
Generate TDS Computation report and TDS Payable
Answer: Follow the procedure explained in Qn3 above.
Qn5: You are requested to make the following voucher entries after enabling VAT and TDS in
TallyERP9 in your existing Company.
1/4/2016 - Opened a savings bank account with SBT for Rs 45,00,000/- a/c number
009876218762.
Bought on credit from M/s Ram Hardwares, invoice number 8775
500 packets of Ramco cement @ Rs 400/pack VAT 14.5%
100 tones steel pipes @Rs.4500/ per tone VAT
10% 2/4/2016 - Cash sales made Invoice number 101.
150 packets of Ramco cement@ Rs.450/packet VAT
14.5% 3/4/2016 - Received commission ( 10% TDS has been
deducted)
Rs.72,000 by cheque No.123045
4/4/2016 - Sold on credit to M/s Sree Ram Construction Company
Invoice number102.
250 packets of Ramco cement @ Rs 420/packet VAT 14.5% 30
tone steel @ Rs.5,000/tone. VAT 10%
5/4/2016 - Rent paid by cheque No.5464323 Rs 25,000/- .TDS 10%