Tally.ERP 9 facilitates defining VAT details at different levels. This provides the convenience of applying tax rules at the highest level, which is the company level, as well as the flexibility to modify, override or define details at the lower levels, based on one's business requirement.
For example,
The business is dealing with different types of batteries and if all the items are attracting the same VAT rate, the tax rate can be defined at the company level.
If the business is dealing with batteries and leather goods, then the tax rates are different, then the tax rate can be defined in the stock group level.
The user can define the rules at the company level and override at the lower level. The rules can be inherited as follows:
● Company
● Stock Group
● Stock Item
● Ledger Group
● Ledger
● Transaction
● Transaction Entry
Note: The rules that are defined at the voucher type or voucher type class level will be used as 'template', thereby it will be used ONLY to fill the values in the transaction by default in create mode.
After migrating to release 5.0, you can start recording invoices. If these are transactions that have statutory implications, then the required masters have to be configured. In most scenarios the business can define the tax rules in few minutes and start recording transactions.
Choose the scenario most suitable for your business and know how VAT details can be configured at different levels.
● I am dealing with stock items which have the same VAT rate.
For a business with all stock items having the same VAT rate, the tax rates can be defined in the company level. The rates once defined, will be automatically applied to all the stock items.
To define VAT rates at the company level
1. Go to Gateway of Tally > F11: Features > Statutory & Taxation.
2. Set the option Enable Value Added Tax (VAT) to Yes.
3. Enable the option Set/Alter VAT Details.
4. Enter VAT Details.
1. Enable Set/alter tax/rate details.
2. Enter the Tax Rate and Tax Type.
5. Press Enter to save.
When a transaction is recorded, the defined rate will be applied automatically.
One of the following modes can be applied.
Mode 1: Define tax rate at the company level, and apply it for the stock items with common VAT rate. Define tax rates at the stock group level or stock item level for the items that different from the common VAT rate.
Mode 2: Define tax rates at the stock group level/stock item level.
Company Level |
To define VAT rates at the company level 1. Go to Gateway of Tally > F11: Features > Statutory & Taxation. 2. Set the option Enable Value Added Tax (VAT) to Yes. 3. Enable the option Set/Alter VAT Details. 4. Enter VAT Details. 1. Enable Set/alter tax/rate details. 2. Enter the Tax Rate and Tax Type. 5. Press Enter to save. |
Stock Group Level |
To define VAT rates at the stock item level 1. Go to Gateway
of Tally > Inventory
Info. > Stock Groups
> 2. Select the required Stock Group. 3. Enable Set/ Alter VAT Details. In the VAT Details screen, 1. Enter the VAT Rate. 2. Select the Tax Type. 4. Press Enter. 5. Press Ctrl+A. |
Stock Item Level |
To define VAT rates at the stock item level 1. Go to Gateway
of Tally > Inventory
Info. > Stock Items>
2. Select the required Stock Item. 3. Enable Set/ Alter statutory details. 4. Select Applicable in the field VAT Applicable. 5. Enable Set/ Alter VAT Details. In the VAT Details screen, 1. Enter the VAT Rate 2. Select the Tax Type 6. Press Enter. 7. Press Ctrl+A. |
The tax rate can be defined at the stock group level.
In this case, the tax rate can be defined at the stock group level. In case if any of the stock items have a different VAT rate from the stock group, then the tax rate can be defined at the stock item level. This will override the details specified in the stock group level.
Stock Group Level |
To define VAT rates at the stock group level 1. Go to Gateway of Tally > Inventory Info. > Stock Groups > Alter. 2. Select the required Stock Group. 3. Enable Set/ Alter VAT Details. 4. Press Enter. 5. Press Ctrl+A. |
Stock Item Level |
To define VAT rates at the stock item level 6. Go to Gateway
of Tally > Inventory
Info. > Stock Items>
7. Select the required Stock Item. 8. Enable Set/ Alter statutory details. 9. Select Applicable in the field VAT Applicable. 10. Enable Set/ Alter VAT Details. 11. Press Enter. 12. Press Ctrl+A. |
To use the custom commodity and tax details
● Enable VAT commodity and tax details as masters.
To enable VAT commodity and tax details as masters
Go to F11 (Features) > F3 (Statutory and Taxation).
Enable Set/ alter VAT Details.
Enable Define VAT commodity and tax details as masters.
Press Ctrl+A.
To create VAT Classifications
Go to Gateway of Tally > Accounts Info. > Statutory Info. > VAT Classifications > Create.
Enter the Classification Name.
Enter the applicability dates with the corresponding tax rates in Applicable From and Tax Rate columns respectively.
Press Enter.
The classification created, can be selected in a stock item or stock group to use the tax rate defined.
● Assign the VAT Commodity to Stock Groups/ Stock Items.
To assign the VAT Commodity to a stock group
Go to Gateway of Tally > Inventory Info. > Stock Items > Alter.
Enable Set/ alter VAT Details?.
Select the required Classification.
The classification created, will be available in the List of Classifications.
Press Ctrl+A.
To assign the VAT Commodity to a stock item
Go to Gateway of Tally > Inventory Info. > Stock Items > Alter.
Select Applicable in the field VAT Applicable.
Enable Set/ alter VAT Details?.
Select the required Classification.
The classification created, will be available in the List of Classifications.
Press Ctrl+A.
● I do not deal with inventory. I maintain only accounts in my company.
In this case, the tax rates can be configured either in the sales/purchase ledger.
To define tax rates at the ledger level
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Alter.
2. Select the required purchase/ sales ledger.
3. Enable Set/ Alter statutory details.
4. Select Applicable in the field VAT Applicable.
5. Enable Set/ Alter VAT Details.
In the VAT Details screen,
1. Enter the VAT Rate.
2. Select the Tax Type.
6. Press Enter.
7. Press Ctrl+A.
The party ledger used in the transaction should have the following details defined to generate VAT returns accurately.
Tally.ERP 9 identifies if the nature of the transaction (local/ interstate, or export/import) using the state or country name entered in the party's ledger master. If the party's location has not been defined, then the VAT amount will not be calculated in the transaction.
To set the party's location
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Alter.
2. Select the party ledger.
3. Select the Country.
4. Select the State.
5. Enter the Pin Code.
6. Press Ctrl+A.
The party's dealer type is mandatory information to be captured in the reports. Hence, has to be defined in the ledger master.
To set the party's dealer type
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Alter.
2. Select the party ledger.
3. Enable the option Set/ Alter VAT Details.
In the VAT Details screen,
1. Select the Type of Dealer.
2. Enter the TIN/Sales Tax No.
4. Press Ctrl+A.
If MRP is applicable for the stock item and the tax is calculated based on MRP, then MRP has to be configured in the stock item as MRP is enhanced to capture based on the period and state.
To configure MRP Details
1. Set the option Allow MRP/ Marginal for Stock Items to yes in the Stock Item Details Configuration screen.
2. Enter the Tax Rate.
3. Enable Calculate VAT on MRP in the VAT Details screen.
4. Press Enter.
The Tax Rate Setup tool to easily update VAT rates for all stock groups and stock items after migration is available in Tally.ERP 9 release 5.1 onwards. Click here to know more.
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