TALLY ebook for Beginner Developed by: Ram Krishna Prasad BCA from IGNOU, New Delhi Email: [email protected]
& Deepak Prasad B.Com from IGNOU, New Delhi
Email: [email protected]
Lesson 1 Ledgers & Group All financial entries are made using ledger account heads. Every transactions of the same nature are classified under one group. A group is a collection of ledgers which have similar transaction.
Accounting Voucher Contra Voucher (F4) Payment Voucher (F5) Receipt Voucher (F6) Journal Voucher (F7) Sales Voucher (F8)
List of Function Key S. NO. 1. 2.
KEY F2 F4
To change the data. To select the contra voucher.
At almost all screen in Tally. At accounting voucher creation and alteration screen. At the trial balance, cash/bank summary, group summary and group voucher screen. At the ledger voucher screen.
To view the list of group.
To view the list of ledger. To change voucher type. 3.
To select the payment voucher.
To switch between grouped and ledger-wise display. To select the receipt voucher.
To select the journal voucher.
To view the monthly summary. To switch between group summary and group voucher. Navigate between accounting reports.
To select the features screen. To select the configure screen.
At the journal register and daybook screen. At accounting voucher creation and alteration screen. At the trial balance, cash/bank summary and group summary screen. At accounting voucher creation and alteration screen. At accounting creation and alteration screen. At the ledger voucher screen. At the group summary and group voucher screen. At the reports screen, Trial balance, account book and day book screen. At almost all screen in Tally. At almost all screen in Tally.
SPECIAL FUNCTION KEY COMBINATION. S. NO.
FUNCTIONALITY To close a company. To view a detailed report To explore a line into its details. To change period. To select the company info menu. To create /alter /shut a company. To create a ledger at a voucher screen
To add a new column to reports.
To add multiple columns to a report (Auto column).
To print reports. To quit a screen wherever you use this key combination, it quits that screen without making any changes. It does not ask for confirmation from the user before quitting.
AVAILABILITY At all menu screen. At almost all report screen. At almost all screen. At almost all screen. At gateway of Tally screen.
At accounting voucher and alteration screen, at a filed where you have to select a ledger from a list. If the required ledger account has not been created earlier, use the key combination to create the ledger without quitting from the accounting voucher screen. At all the reports, trial balance, cash/bank book(s), group summary and journal register screen. At all the reports, trial balance, cash/bank book(s), group summary and journal register screen. At all reports screen. At almost all screen.
KEY COMBINATION USED FOR NAVIGATION.
To accept anything you type into a field. To accept voucher of master . To get a report with further details of an item in a report. To remove what typed into a
You have to use this key in most areas in Tally.
At almost all screen.
field. To come out of a screen. To indicate that you do not want to accept voucher or ledger.
To view the next level of details and condense the next level or details.
At the balance sheet, P/L A/C, trial balance, cash/bank book(s), group summary, group voucher, register, day book and list of accounts screen.
1.4 RULES OF ACCOUNTING . Debit Credit
Real Account What comes in What Goes out
Personal Account The Receiver The Giver
Nominal Account Expenses and Losses Income and Gsind.
1.5 Mode of Accounting. 1.5.1 Journal and Ledgers. A Journal is a book in which business transaction are entered in chronological order. A record of a single business transaction is called a Journal entry. Every journal entry is supported by a voucher, evidencing the related transaction. A Voucher is a document containing the details of financial transaction. Examples include sales invoice, purchase invoice, pay slip, rent receipt and so on. In a journal, several entries are recorded, each of which are unrelated to the other. To know the total effect of all the transaction, each journal entry must be moved/transferred to the account it relates to. An Account is a statement of trans action affecting any particular asset, liability, expense or income. A ledger is the book in which all the accounts are maintained. A chart of accounts is a list of all account titles used by an organization. The chart of account of the business shows the categorization and grouping of its accounts.
1.5.2 Posting Posting is the process by which information about transaction is transferred or moved to an account.
1.5.3 Accounting period A regular period of time, such as a quarter or a year, for which a financial statement is generated is called an Accounting period.
1.5.4 Trial Balance A Trial Balance is a list of the balance of all ledger accounts. It is prepared after all the transactions are entered in the journal, journal entries posted to the ledger and the ledger accounts balanced. It is the sum of balance of all real, personal and nominal accounts of the organization. A detailed trial balance has columns. For
Account Name Debit balance Credit balance
1.6 Financial statements. A financial statements is a periodic report prepared from the accounting records of a company. Financial statements include the P/L statements (or income statements) the balance sheet, and the cash flow statements. Financial statements are usually compiled on a quarterly basis or on an annual basis. For reporting convenience, the P/L account is divided into. Trading account Profit and loss account The Profit and loss statements can be further classified into two levels. Gross profit - Gross profit is arrived at, after considering the cora activities It is expressed as Gross profit= Net sales – Cost of sales Net profit - Net profit is arrived at, after considering the other administrative costs incurred for the period. It is expressed as Net profit= (Gross profit + other income) – (Selling and Administrative Expenses + depreciation + Interest + Taxes + other expenses).
1.6.1 Trading Account. The Trading Account is prepared to arrive at the gross profit earned by the organization over a specified period. This helps the organization to arrive at the cost of its core activity and calculate the direct profit from its operations.
1.6.2 Profit and Loss Account.
The Profit and Loss Account gives the Net Profit earned by the company. After considering all other incomes and expenses incurred over a period. This helps the company monitor and control the costs incurred and improve its efficiency. In other words, profit and loss statement shows the performance of the company in terms of profit or losses over a specified period. A key element of the Profit and Loss Account, and one that distinguishes it from a balance sheet, is that the amounts shown on the statements represent transaction over a period of time, while the items represented on the balance sheet show information as on a specific date. All revenue and expenses account are closed once the profit and loss account is prepared. They will not have on opening balance for the next accounting cycle.
1.6.3 Balance Sheet The Balance sheet is a statement that summaries assets and liabilities of a business. The excess of assets over liabilities is the net worth of a business. The balance sheet provides information that helps in assessing a company’s. Long - term financial strength. Efficient day - to - day working capital management. Asset portfolio. Sustainable long - term performance. The balances of all the real, personal and nominal (capital in nature) accounts are transferred from trial balance to balance sheet and grouped under the major heads of assets and liabilities. The balance sheet is complete when the net profit/loss is transferred from the profit and loss account.
1.7 Points to Remember. Accounting is a comprehensive system to collect, analyses and communicate financial information. Double Entry accounting is a system of recording transactions in a way the maintains the equality of the accounting equation. The three types of account maintained for transactions are real accounts, personal accounts and nominal accounts. Entry is the organizational unit for which accountings records are maintained. Journal entry is a record of a singal business transaction. Voucher is a document evidencing the details of a financial transaction. Ledger is a book in which accounts are maintained. Trial balance is a list of the balance of all the ledger accounts. Profit and loss statements shows the performance of the company in terms of profits or losses made by it over a specified period. Balance sheet gives an overview of the financial position of a company as on a specific date.
Lesson 2 2.1 Service organization. Service is defined as work done for others in lieu of a payment or a price. Service do not have a physical from or substance. An organization providing service is called a service organisation .
2.1.1 Nature of a service organisation. Service organisation provide their service at the point of consumption by the customer. Thus such organizations could be severely hit on price if there is a demand dip at the time of production. Service are perishable. So, the pressure on the service organisation to provide services is more than that on a manufacturing organisation or a trading organisation. Customer interaction is greater in service organisation that in manufacturing or trading organisation. Employees help to create the “experience” which is vital to the success of a service organisation. In a service organisation, services are usually provided by people, not machines. So, service organisation are more labour intensive than manufacturing organisation. Customer goodwill is an intangible assets for service organisation, which can be destroyed quickly. There is often ho way to correct “bad” service.
2.1.2 Accounting in a service organisation. Customer Services
Payment of bills Service organisation.
Figure 2.1 Accounting in a service organisation.
The organisation maintains regular books of account. Most service organization does not deal in inventory and therefore, do not need to maintain inventory record. They do not follow a standard pricing policy for all customers at all times. Usually, performance is evaluated at the end of a market cycle. Thus, the input cost and revenue earned for a periodic cycle do not reflect on performance. Sometimes, the service may be rendered partially, but the billing is done only when the service is completed.
In a service organisation, the focus, in an environment, is on effective utilisation of human resources.
2.2 Trading organisation. An organisation involved in the process of buying and selling is called a trading organisation. Trading is a defined as an exch-ange of goods for a fixed market price or a perceived value. Traders act as channels that provide goods produced by the manufacturers at a convenient palace, price, pack (quantity) and time to the consumers.
2.2.1 Nature of a Trading organisation.
The actual market price is established and is valid for a short period based on the current supply and demand.
The value of the product is determined by The customer’s expectation of quality The customer’s expectation of convenience in relation to the actual amount paid for it.
The trader deals with goods. He repacks them, if necessary but does not process them. A trading organisation has to continually keep track of market demand and ensure that inventory planning is done to take advantage of demand whenever it arises. Different customers may be charged different prices by varying the percentage of discount on the price list.
2.2.2 Accounting in a Trading organisation. collections Custome r
Inventory based on customer demand Sales
Arrival of stock
Figure 2.2 Accounting in a Trading organisation. The trader must keep track of stock availability, customer requirement, cost of procurement and market changes. The accountant in a trading organisation has to maintain up dated inventory records a part from regular accounting.
2.3 Manufacturing organisation. The process of transforming raw materials (inputs) into finished goods (output) for consumers, or for further processing by others in the channel is called manufacturing. The success of a manufacturing organisation depends on its ability to carry out this process, effectively and profitable. Manufacturing organisation can be classified according to the production processes they undertake. These may range from extremely complex processes to simple ones. An accountant in any manufacturing organisation must understand the kind of organisation that he works for. Compared to service and trading organisation a manufacturing organisation must consider more factors to define its style of The questions that a manufacturing would want answers for are.
Should the product be a standard one or a customized one? If customization of product takes place, Will it be manufactured by just reassembling different sub – components ? Will changes be implemented at the process level to arrive at the customer acceptance level ?
What will be the number of orders and order volume based on the above combination ? What will be the time required by the production team from the receipt of order to, production considering available resources ?
What will be the requirement lifecycle (timeline from placement of the order to the receipt of goods.) as agreed by both the customer and manufacturer, considering the demand and competition for the product in the market ?
After finding suitable answers to these questions, the manufacturer, may decide to.
Product goods and stock them for sales. Product goods against customer orders. Keep sub - components at a strategic location, to assemble the final product and deliver it to the customer in time.
The above list is not exhaustive or mutually exclusive.
2.3.1 Nature of a manufacturing organisation.
The production cycle and the market cycle need net match. Usually, the entire cycle of procurement, production, distribution and realization is longer as compared to other types of organisation. A high level of standardisation is possible. Scientific methods can be used to reduce the production cost, which forms a major part of the total cost of the product.
2.3.2 Accounting in a manufacturing organisation. Manufacturing organisation
Inventory planning Demand Working capital management
Figure 2.3 Accounting in a manufacturing organisation.
A company needs to account for inventories like raw materials, work-in-process (W/P) and finished goods to arrive at the profit made for the period. Change in inventory valuation method change the profit made during the period. Accounting in manufacturing organisation requires more planning, preparation and scheduling as compared to accounting in trading and service organisation. Calculating cost of sales is relatively complex in manufacturing organisation as compared to that of trading organisation. Research and development costs in manufacturing organisation are relatively higher as compared to R&D costs in trading organisation.
4.1 Features of Tally. BASIC ACCOUNTING BASIC INVENTORY Complete book - keeping. Stock categories. Books, registers and statements of accounts. Stock query by stock group, or stock category. General ledgers. Multiple godowns. Accounts receivable and accounts payable. Stock transfers to godowns and branches. Flexible voucher numbering. Multiple stock valuation methods. Flexible classification of account heads. Batch-wise/lot-wise, including expiry date handling. Drill down display. Alternate units of measure and tail units. Database reporting. Tracking through receipt notes/delivery notes/rejections inwards/rejections outwards. Voucher and cheque printing. Additional costs in curred on purchase. Columnar reports. Movement/profitability analysis partywise/Item-wise/stock group-wise.
Customizable sales invoice using price lists with multiple prices. Sales and purchase order processing.
ADVANCED ACCOUNTING Multiple companies.
ADVANCED INVENTORY Stock items classified as raw materials, work - in – progress, finished goods. Bill of material with auto adjustment of stocks. Job – working concepts, including sub – contracting. Additional cost of manufacturing with national value and percentage. Excise / Vat analysis on invoices. Modvat support. Recorder levels. Stock ageing analysis. Batch related stock reports.
Multi – currency. Multiple financial years. Comparison of data using multi-columnar reporting. Memo voucher. Post –dated voucher. User – defined voucher types. Sales and purchase extracts. Cash flow statement. Daily balances and transaction value/ Interest calculations. Percentage – based reporting. Ratio analysis.
Vat introduction. Value Added Tax is a tax levied on the sale of tangible goods, which according to their nature and legal status, may be movable, immovable, or intangible assets. The Government appoints VAT collectors, who collect the VAT due from goods purchase or service received and forward the payments to the state treasury. VAT collectors include production sharing contractors (PSCS), Government treasurer companies, or Government institution appointed by the Minister of Finance.
Terminology used in VAT Taxpayer Identification Number Every tax payer should register at the office of Directorate of General of Taxes to obtain a Taxpayer Identification Number, which will be unique to him/her. Taxable Period Taxable period is equal to one calendar month or any other period that does not exceed three calendar months as stipulated in a decree by the minister of Finance.
Taxableyear year Taxable Taxable year is a calendar year unless the taxpayer adopts an accounting year. Which is different from the calendar year?
VAT in Tally Vat for Indonesia in Tally is simple and easy to use with in – built class – fications for easy voucher entry. It tracks all VAT enabled transactions and computer them automatically. Transaction can be recorded in foreign currency. Tally allows the generation of simple and standard invoices as well VAT return formsin Government prescribed formats.
Creating a Party Ledger To create a ledger for the supplier, 1) 2) 3) 4) 5) 6) 7)
Go to Gateway of Tally > Accounts info > Ledger > Create Enter the name of the ledger in the Name field In the Under field, select Sundry creditors from List of Groups Set Maintain Balance Bill by Bill to Yes By default Inventory Values are affected is set to No, which can be set to Yes, if applicable Enter the Mailing Details for the ledger Enter the 15 digit VAT Regn.No.
Creating a purchase Ledger To create a Purchase ledger for VAT, 1. 2. 3. 4. 5.
Go to Gateway of Tally > Accounts info > Ledger > Create/Alter Enter the name of the ledger in the Name field In the Under field, select the purchase Account from the List of Groups By default Inventory Values are affected is set to No, which can be set to Yes, if applicable set Used In VAT Returns to Yes and select the VAT/Tax Class as shown in the screen below
Creating a VAT Ledger Ledger for VAT has to be created following the procedure mentioned below, 1. Go to Gateway of Tally > Accounts info > Ledger > Create 2. Enter the name of the ledger in the Name field 3. In the Under field, select the Duties & Taxes from the List of Groups 4. select VAT in the field Type of Duty / Tax 5. In the VAT/Tax Class field, select the appropriate Classification Note: you can select the VAT/TAX Class during the voucher entry by selecting Not Applicable in the above field.
By default Inventory values are affected is set to No which can be set to Yes it applicable
Set Percentage of Calculation to the VAT rate that you selected in the VAT/Tax Class field or set is to 0%
Select the Method of Calculation on VAT Rate from Type of Duty menu.
Cost Categories Let us take an example. 1. Create three cost categories named Departments, Executives and Projects. 2. Create three cost centres named Marketing, Manufacturing and Finance under the Cost Category Departments, Create three Cost Centres Salesman A, Salesman B and Salesman C under the Cost Category Executives. Create three Cost Centres Airports, Roads and Buildings under the Cost Category Projects. The structure for creating Cost Categories and Cost Centres are shown below. Cost Categories Cost Centres
Departments Marketing Manufacturing Finance
Executives Salesman A Salesman B Salesman C
Projects Airports Roads Buildings
You can specify a cost category to allow allocation of only revenue items or items of both revenue and capital nature. In this example, allow allocation of items of both revenue and capital in nature for both Departments and Projects categories and items of only revenue in nature for Executives. Now, salesman A, incurs conveyance expenses. If he has incurred it for marketing, allocate this amount to the cost centres marketing and his own cost centre salesman A. (you would do it while entering a payment voucher debiting conveyance and crediting cash). If the salesman A now incurs expense for the project Buildings, you would allocate to the cost centres salesman A and Buildings. You may allocate an expense to one or more cost centres and it is not essential to always allocate to all cost centres. An expense can remain unallocated to other cost centres. In case cost categories are not enabled, you will be able to allocate the expense to either building cost centre under projects or salesman A under Executives and not to both. In such a case, you would not obtain the third dimension. You may not have cost categories activated if you do not need to without cost categories, you will allocate the ledger amount to only one set of cost centre, and not to parallel sets.
Hence, you would allocate the conveyance expense to salesman A only and not to both salesman A and project buildings. You can allocate the expense partly to salesman A and party to project building that adds up to the total amount. This information will not enable you to know now much salesman A spent for the project buildings. Note: you do not allocate transaction to cost categories y allocate them to cost centres only. The concept is like group / ledger account classification. Cost centre allocations have to be done in pop-up sub-screen in the main voucher entry screen. The sub-screen pops up after the amount field pertaining to the ledger for which cost centres have been activated. Hence, the following is the sub-screen for the ledger Conveyance amount in a payment voucher.
Cost Allocations for: Conveyance Upto: Rs. 1.000.00 Dr Cost category Name of cost centre Executives Salesman A Salesman B Project Buildings
600.00 400.00 1.000.00 1.000.00
Applying Cost centres to Ledger - Account Activate Cost centre for the ledger Account that are used in voucher entry. In this example, make a payment voucher for the amount Rs. 1,00,500. Hence, enable cost centres for the ledger conveyance. 1. 2. 3.
Go to Gateway of Tally select Accounts info > ledger > Alter Select the ledger Conveyance from the List of ledger. Set Cost centre are Applicable to Yes. If the ledger Conveyance is not available create a new one with Cost centres enabled.
Ledger Alteration Name : Conveyance (alias) :
Company (C+M) Total op. Bal.
Mailing Details Name : Address :
Under : Indirect Expenses
Inventory values are affected :? No Cost centres are applicable :? Yes
State : Pin code : Contact person : Telephone No : Fax : E - mail : Tax Information Pan/It No : Sales Tax No :
Position Index in Reports
Opening Balance (on 1-Apr-2006) :
Cost Centre Allocation in Voucher Entry The entire objective of creating cost centre is to allocate expenses and revenues to cost centres. Allocation is dynamic and done at one stage only, at the time of making voucher entries. For example, make a payment voucher for Conveyance Go to Gateway of Tally > Accounting voucher > F5 payment The voucher entry screen, appears. Debit the amount to the conveyance ledger. Cost centre allocations have to be done in pop-up sub-screens in the main voucher entry screen. A sub-screen pops up after the amount field pertaining to the ledger for which
cost centres have been activated. The sub-screen for the ledger conveyance and in a payment voucher appears as shown below.
Cost Allocations for: Conveyance Upto: Rs. 1,00,500,00 Dr Cost category Name of cost centre Executives Salesman A Salesman B Project Buildings
50,000.00 50,500.00 1,00,500,00 1,00,500,00
Price - List introduction Price Lists are useful for orders and invoice. An up-to-date price lists helps in decisions at even the lower levels of the organisation and quickens the sales process. Tally assists in creating guantity based pricing with complex discount structure. Price lists are available only for inventory items and hence the feature is available only if inventory and invoicing are activated for the company. You can have one or more price lists. More than one price list is required when you have different price structures or levels for different purposes, usually, different groups of customers requiring different discounts or dealing in different products.
Price Levels Customers can be assigned to specific price lists, called price levels in Tally. So that only the relevant price is used during entry of orders and invoices. Before you begin creating price lists, you should decide whether you want different price levels. In a running business, you will already know that. You might want different price levels for various reasons; e.g. different types of customers like wholesale customers,
export customers and so on. Each customers type could have a different discount structure. Write down on a piece of paper the price levels/bands that are reguired.
Enable and Create Price Lists Ensure that the company has been set up for Accounts with Inventory.
F 11: Company Features Allow Invoicing – set to Yes (without invoicing the option for Price Lists will not be available). Tab down to: Set/Modify other company features- set to Yes Use Multiple Price Levels for Invoicing-set to Yes Advanced Company Operations Company: Accounts with Inventory Use per-defined cost centre Allocations during Entry
Use Multiple Price Levels for Invoicing
Follow Excise rules for Invoicing
Enable cheque printing
Type out the price levels that you wrote on the paper earlier.
Company Price Levels 1. 2. 3.
Export Consumer Dealer
Accept through each screen of company Features by pressing the Enter key (do not press escape) and return to Gateway of Tally. Alter price levels names To alter the name of a price level, go through the same procedure as enable and create price levels.
Assigning Ledger Account to Price Levels. When the Price List feature is activated, it enables an option in party (debtor and creditor) ledger accounts where the account can be assigned or tagged to a specific Price Levels. An account can be assigned to only one Price Levels. If the ledger accounts already exist and you wish to assign them to a Price Levels, you have to alter the ledger account. If it is a new ledger account, the option to select a Price Level will be the same and therefore, we will take alteration of an account as an example. Gateway of Tally > Account info > Ledger > Alter(single) Select the ledger account, e.g. cp Limited
Name : CP Limited (alias) :
Under : Kenyan customers (Afrlcan customers) Price Levels Currency of Ledger
Pricing Level Applicable Maintain balance bill by bill Cost centre are applicable Inventory values are affected
: ? Yes ? No ? No
Not Applicable Consumer Dealer Export
Opening Balance (on 1-Apr-2006) : Tab down to Pricing Level Applicable and select Export Accept the rest of the options and return to Gateway of Tally. You may assign other ledger accounts in this way. It is not Mandatory to carry out the assigning activity before creating Price Lists. It can be done even alter Price Lists are created. The Pricing Level can be changed to reflect changed circumstances. For this, simply alter the ledger account and select a different Pricing Level option.
How to Create and Use Price Lists.
Gateway of Tally > Inventory Info > Price List If the Price List option does not appear, confirm the activation procedure given in the
Central Sales Tax Introduction Central Sales Tax (CST) is a tax on sales of goods levied by the central Government of India. CST is applicable only in the case of inter-state sales and not on sales made within the state or import / export of sales. Inter-state sales is when a sale or purchase constitutes movement of goods from one state to another, Accordingly, Consignments to agents or transfers of goods to branch or other offices is not a sale as per the CST Act. CST is payable in the state where the goods are sold and movement commences. The tax collected is retained by the state in which the tax is collected. CST is administered by sales tax authorities of each state. Thus, the state Government sales tax officer who assesses and collects total (state) sales tax also assesses and collects CST.
Inter – state sale An inter-state sale takes place when a sale or purchase. Leads to movement of goods from one state to another state. Is achieved by the transfer of documents of title while the goods are being moved from one state to another state. Example 1: “A” in Andhra Pradesh sells and delivers goods to “B” in Karnataka. Example 2: “A” in Maharashtra delivers goods to “B” in Gujarat. “B” sells it to “C” in Gujarat by transferring the document of title during the goods movement from Maharashtra to Gujarat. Note: Goods that are sold within a state but while transporting travel through state is not considered inter-state sales.
Rate of CST In an inter-state sale to a registered dealer against from C the rate of CST is 4% or local sales tax rate which ever is lower. If under the local sales tax law, sale or purchase is exempt from CST the CST is nil. In an inter-state sale to government against from D the rate of CST is 4% or local sales tax rate whichever is lower.
Rate of CST in case of inter-state sale of declared goods without form C or D is twice the rate of tax applicable to the local sale or purchase of such goods in that state. Rate of CST in case of other goods (i.e. non-declared goods) is 10% or the applicable local sales tax of that state which ever is higher.
CST Features in Tally State specific CST Return. Tracking of forms: o o o o o o
C forms – (Issuable/Issued/Receivable/Received). E1, E2 forms – Issued against sale of goods in transit by the buyer. F forms – For consignment sales and Branch Transfer. H forms- For sale in course of exports. D forms- For sales to Govt organisations. I forms- For sale to SEZ customers. Reminder Letters/Covering letters to customers. Auto Fill option.
Service Tax Information on service tax Currently the rate of service tax on all the taxable services is 12%. Presently, service tax 8*56*969ZV
A person/firm providing a service that comes under the service tax category has to pay service tax. Service tax is to be shown separately in the invoice and is payable based on the payment realized and not on the total amount shown in the invoice Similarly, when you buy a service that falls under service tax category, you avail service tax credit based on the payment made. So, you pay service tax on the services that you sell and get credit on the service tax payable when you buy a service. Adjust Credit ? While you pay service tax on sale of service that come under the service tax category. You can adjust service tax credit availed on purchase of service (Buyer). This deduction is called adjusting credit against service tax. The different between the service tax that you have to pay for selling service and the service tax credit on purchases that can be adjusted is the payable service tax. Service tax (sales) that is adjustable against service tax credit (purchases) is also called availing input credit. Let us look at an example.
ABC Courier Company buys telephone service from 123 Telephone Company ABC courier sells courier services
123 Telephone Company
ABC courier service ABC courier has to pay service tax of Rs.250 / for service provided
Customers Service tax paid on services provided (B) Service tax credit on payment to telephone company (A) Total service tax payable by ABC company courier (B-A)
= Rs. 250/= Rs. 145/= Rs. 105/-
Adjusting 100% credit & 20% credit If you input service (purchase) can be directly related to the output service. (sales) then you can use 100% credit adjustment on the service tax payable for example. If you are providing a consultancy service over the phone then you can use the input credit from the telephone charges to adjust against 100% of the service tax payable on your consultancy service. If the input service is not solely used for the output service, then 20% credit adjustment is applicable. Input service tax credit can be adjusted to both output service tax and output cess (surcharge on tax). But input cess credit can be adjusted only towards output cess. Assessable Value Service tax is calculated on the assessable value. The assessable value is the service charge value minus abatement and expenses. Abatement The government has given a deduction on the value to be considered for service tax on a few categories of services. For example, some categories of services include material value. A caterer has to procure material to prepare food products and sell services. Service tax is charged on the total amount for the service and does not include the rate of the materials procured. Hence a deduction’s provided. This deduction from the service charges to be considered for service tax is called abatement. Abatement is either percentage of the service charges or a lump sum value. Example:
a. b. c.
Charge on service If an abatement of 30% is applied, then abatement Here, the assessable value is (a-b) Therefore, service [email protected]
% on Rs. 7.000/-
Rs. 10.000/Rs. 3.000/Rs. 7.000/Rs. 700/-
Expenses Expenses can be deducted from the total service charge to get the taxable amount. E.g. a technical consultant might travel to different locations with respect to work. The invoice is prepared as consultant and the travel expenses are included in the total service charges. If supported by records, you can deduct the travel expense from the total service charges to drive the assessable value on which service tax is applicable.
Payment of Service Tax. Flow of Transaction in Service Tax Corporate / Non - Corporate
Buyer of Service
Sellor of Service
Credit in Service tax
Service tax payable
Commission rate of Service tax
Service Tax in Tally. Features of Service Tax in Tally Service tax integrated in Tally takes care of your service tax transaction. It eliminates error-prone information, incorrect remittance, penalties, interests, compliance issues, etc. Service tax in Tally needs a one-time configuration for service tax features to be activated. Tally tracks bill-wise (Bill-by-bill) detail and automatically calculates service tax payable and input credit with the flexibility to make adjustments later. Service tax is part of a regular transaction. Information on service tax is maintained and in service tax returns. Adjusts input credit towards service tax payable . Accounts for abatement and expenses. Provision for exemption notification details. Built-in assessable value feature on which service tax is calculated. Transfer earlier pending service tax payable and available service tax input credit in to Tally. Report are generated as per government suggested format. Print and file reports: TR6 challahs, Input credit form, ST3 Report and ST3-A Report. Management Information Service (mis) reports Service Tax payable Report and Input credit Form.
Enabling Service Tax in Tally. Go to Gateway of Tally > F11: Feature > Statutory & Taxation Set Enable Service Tax to Yes Set Set/Alter Service Tax Details to Yes to enter the Company Service Tax Details
Entering Service Tax Details Set Yes in the Set/Alter Service Tax Details option
Company Service Tax Details The Company Service Tax Details screen in where you will enter the Service Tax Details. The name of the company is disp. Layed at the top followed by different fields.
Company Service Tax Details
Service Tax Registration No : SRKAR043AAC069T
Date of Registration
Type of Organisation
Major Service Category Name: ADVERTISING AGENCY
Credit Adjustment (%)
: Robert Smith
Focal Bank Details Focal Bank Code
Focal Bank Name
: UNION BANK OF INDIA
Focal Bank Address: BURROW AVENUE,BRIGADE ROAD, BANGALORE
Display of Service Categories in Statutory Masters. Go to Gateway of Tally > Display > Statutory info > Service Categories. Service Category gjgjkjkllklklklkbhgndf.,dvhjdfyukghwuigtm,r.m,k,k
: Advertising Agency
Applicable to Country : India Code
Service Tax Details Applicable From 1-4-2005 18-4-2006
Abatement (%) 0% 0%
Notification No. 10% 12%
Service Tax Rate (%)
Creating Sales Ledgers for Service. Go to Gateway of Tally > Account info > Create 1. 2. 3. 4.
Enter the name of a Sales ledger Select the group Sales Account in the field Under Set Inventory Values are affect to yes Set Is Service Tax Applicable to yes
Create Output Service Tax ledger. To Create on Output Service Tax ledger: Go to Gateway of Tally > Account info > ledger cerate 1. 2. 3. 4. 5.
Enter the Name of ledger Select Duties & Taxes in the field Under Select the Type of Duty from the List of Types of Duty Tax Select the Category Name from the List of Service Categories Set Inventory Value are affected to No
Creating Customer Ledger To Create a Customer ledger: Go to Gateway of Tally > Account info > Ledger > Create. 1. 2. 3. 4. 5.
Enter the Name of the ledger. Select the group from the List of groups Set Maintain Balances Bill By Bill to Yes /No Set Inventory Value are affected to No Set Is Service Tax Applicable to Yes
Creating Ledgers for Indirect Expenses To Create a ledger of Indirect Expenses Go to Gateway of Tally > Account info > Ledger > Create
Cass Rate (%) 2% 2%
Enter the Name of ledger Select the group from the List of group
Creating Input Service Tax Ledgers To Create an Input Service Tax Ledger: Go to Gateway of Tally > Account info > Ledger > Create 1. 2. 3. 4. 5.
Enter the Name of the ledger. Select the group from the List of groups Select the Type of Duty from the Types of Duty/Tax Select the Category Name from the List of Categories Set Inventory Value are affected to No
Creating party Ledger for Service Tax To Create a Party Ledger for Service Tax. Go to Gateway of Tally > Account info > Ledger > Create 1. 2. 3. 4. 5.
Select the group from the List of group in the field Under Set Maintain Balance Bill by Bill to Yes Set Inventory Value are affected to No Set Is Service Tax Applicable to Yes Select the Type of Classification from the List of Classification
Creating Ledger for Excise To Create a Ledger for Excise. 1. 2. 3. 4. 5. 6.
Go to Gateway of Tally > Account info> Ledger > Create Select the Group Duties & Taxes from the List of Groups Select the Type of Duty/Tax from Type of Duty/Tax to Excise Set Inventory Values are affected to No Set the Percentage of calculation to 16% Select the Method of Calculation from the list of Type of Duty
Creating Sales Vouchers Let us Consider an example, a sales entry is made for an amount of 2,00,000.00 Go to Gateway of Tally > Accounting Voucher > F8: Sales 1.
Select Acct Invoice on the right hand side of the screen. Note: A sales Item Invoice can also be passed with Inventory allocations.
Enter the reference number in the Ref field if required.
Note: Set Use Common Ledger A/C for Item Allocation to No in the F12: Configure 3. Select the Party’s A/C Name from the List of Ledger Account 4. Select the Service ledger from the List of Ledger Account 5. Enter the Amount 6. Select the Service Tax ledger from the List of Accounts for the Service Tax Details sub from to appear.
Service Tax Details Service Ledger Service Amount
: Advertising Consultancy : 2,00,000.00
Abatement :@ Expenses : Assessable Value :
Service Tax :@ Cess :@ Total Service Tax :
2,00,000.00 24,000.00 480.00 24,480.00
Service Tax Bill Wise Details for: Output Service Tax - AD Type of Ref
Amount Dr/ Cr/
You can allocate the Expenses amount if any in above screen, else leave the field blank and tab down to accept the above screen. Tab down through the voucher entry screen for the Bill Wise Details Sub from to appear.
Tax 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 buyer (corporate and Non-corporate) make payments (Such as Salary, Rent, Interest on securities, Dividends, Insurance Commission, Professional Fees, Commission on
Brokerage, Commission on Lottery Tickets, etc.) to the sellers (Service) and deduct the requisite amount from such payments towards tax. The buyer files the TDS returns containing details of the seller and bank, where the TDS amount is deposited to the Income Tax Department (ITD). The Income Tax Department has prescribed the format for filling these returns electronically, which the buyer does in a CD/Floppy. For additional details you can visit the Income Tax Website at http://www.incometaxindia.gov.in.
TDS in Tally TDS (Tax Deducted at source) in Tally provides an 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 form 16A 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.
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. If the purchase value of goods is X 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 authorized 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 sales of goods, on transaction, 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 pervious year.
Classification of Buyer for TCS A buyer is classified as a person who obtains goods or the right to receive gods in any sale, auction, tender or any other mode. The following are not included. Public Sector Companies Central 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.
Goods and Transactions Classified under TCS Goods and transaction classified under TCS are listed below: Alcoholic liquor for human consumption including India Made Foreign Liquor (IMFL). Tendu leaves. Timber obtained under a forest lease. Timber obtained by any mode other than under a forest lease. Any other forest produce not being Timber or Tendu. Scrap (scrap means waste and scrap from the manufacture or mechanical working of materials which is usable as such because of breakage, cutting up, wear and tear and other reasons).
Licensing or leasing of parking lot, Tool Plaza. Mining and quarrying.
Enabling TCS in Tally To enable TCS in Tally: 1. 2. 3. 4. 5.
6. 7. 8. 9.
Go to Gateway of Tally. Press F11 or click F11 Feature > statutory &Taxation to display the Company operation Alteration screen. Enter Yes in Enable TCS and Set/Alter TCS Details. Enter the Company TCS Collector Details. Enter the Tax Assessment Number The Tax Assessment Number (TAN) is a 10digit alphanumeric number, issued by the Income Tax Department (ITD) to the collectors. Enter the Income Tax Circle/ward (TCS). This is issued by the Income Tax Department. Select the Collector Type from the List of Company Type. Enter the Name of Person responsible for filing the TCS returns. Enter the Designation of the person responsible to filing of the TCS returns
Creating Party Ledger for Sundry Debtors / Sundry Creditors. To Create Party Ledg7er for Sundry Debtors / Sundry Creditors. 1. 2. 3. 4.
5. 6. 7.
Go to Gateway of Tally > Account info > Ledger > Create. In the ledger creation screen, enter the Name of the buyer company in the Name field. In the Under field, Select S.D./S.C. option from the List of Group. If required, set Maintain balance bill by bill to Yes Enter details in the Default Credit Period, if applicable, by default, the Inventory Values are affected ? field is set to No. Set Yes for Is TCS Applicable. Select from the List of Collectee Types for Buyer / Lessee. Set Yes in Is Lower41/No Collection Applicable if lower or no collection is applicable, Press Enter to display the Lower/No Collection details screen.
Create Sales Ledger for TCS. To Create Ledger Under Sales Account group. 1. 2. 3. 4.
Go to Gateway of Tally > Account info > Ledger > Create Enter at name for the Sales account ledger in the Name field. In the Under field , Select Sales Account from the list of groups. Set the Inventory Value are affected to Yes if you are maintaining inventory.
Accept to save.
Creating Sales Voucher for TCS To Create Sales Voucher with TCS details: 1. 2. 3. 4. 5. 6. 7. 8.
Go to Gateway of Tally > Accounting Voucher In the Accounting Voucher Creation screen, Select F8. Sales to create a Sales Voucher Select As Invoice mode Enter the date and reference Select the Party to be Credited from the List of Ledger Account and enter Party’s A/C Name In the Party Details screen, Check/Modify details Select Sales Ledger from the List of Ledger Account Select the item from the List of Item in Name of Item
Note: To Create an item refer to the topic, Stock item 9. Enter the Quantity and the Rate to get the amount in the Amount field 10. Select the TCS Ledger (Under Duties & Taxes) for sales 11. By default, the gross amount is displayed in TCS Details in TCS Computations screen. The Gross amount can be changed if required 12. Enter new reference (New Ref) and Due Date, or Credit Days (By default, 7th of the following month).
Payment of TCS in Tally To Create a TCS Payment Voucher Manually 1. 2. 3. 4. 5. 6.
Go to Gateway of Tally > Accounting Voucher In the Accounting Voucher Creation screen. Select F5. Payment Enter the date Select and debit the TCS Ledger in Particulars from the List of Ledger Account and enter the amount In the Tax Details screen. Select from List of TCS Payable and enter the amount Select and Credit the Bank authorised to receive TCS in Particulars from the List of Ledger Accounts and enter the amount
Sold to Concord Packing Service on credit of 10 days. The following items. Interest is applicable at 10% P.a. after due date and 12% interest is further chargeable from 10/02/06 onwards. Item Quantity Rate Vat Value (Nos) (Rs) Computer P4 10 28000 4% 280000 // Athlon
Note: Set Active Interest Calculation and Use Advanced Parameters to Yes. 2. Received a Cheque from Concorde Packing Service with interest an full settlement of bill dated 20-01-06.
Features of Tally ERP 9. Payroll The key features of the Payroll functionality in Tally. ERP 9 are as follows. It is fully intergrated with accounts to give you the benefits of simplified Payroll Processing and accounting. It has user defined classifications and sub-classifications for comprehensive reporting. Employee groups, pay components, departments etc. It Provides the facility to create user defined earning and deductions pay heads. It allows flexible and User-definable criteria for simple or complex calculations. It allows the unlimited grouping of Payroll Masters. It supports user-defined production units i.e., attendance/production/ time based remuneration units. It provides a flexible payroll processing period. It provides comprehensive cost Centre as well as employee – wise costing reports. It ensures an accurate timely salary processing, Employee Statutory Deductions & Employer Statutory Contributions with the help of Predefined Processes. It Provides auto-fill facility to expedite the Attendance, payroll & employer Contributions Processes. It facilitates an accurate computation and deduction of ESI,EPE, Professional Tax, Gratuity etc. It helps in the generation of statutory Forms & Challans for EPF & ESI, as prescribed. It allows drill-down facility to voucher level for any kind of alteration. It facilitates computation of arrears pertaining to prior period (S). It helps in tracking employee loan details.
Enabling Payroll in Tally. To enable Payroll in Tally: Go to Gateway of Tally > F11: Feature > Accounting Feature Maintain Payroll Yes More than ONE Payroll/Cost Category Yes
Payroll Configuration Gateway of Tally > F12: Configure > Payroll Configuration All Statement are Yes
Pay Heads The Salary components constituting pay structures are called pay Heads. A pay Heads may be an earning, which is paid to an employee, or a deduction, which is recovered
from his/her Salary. The value of these pay Heads could be either fixed or variable, for each Payroll Period.
Pay Heads Type A Pay Heads is categorized as Allowances, Deductions or Reimbursements In Tally Payroll, Pay Head types are Provided in a natural language for ease of use, as follows: 1.
Earning for Employees
Deduction from Employees
Employees Statutory deduction
Employer’s Statutory Contribution
Loans and Advances
Reimbursement to Employees
Creating an Earning Pay Head To Create an Earning Pay Head, Basic Salary, under Indirect Expenses Go to Gateway of Tally > Payroll info > Pay Heads > Create Name: Basic Salary Pay Head info Pay Heads Type Under
: Earning for Employees : Indirect Expense
Affect Net Salary Name to Pear in Pay slip Use for Gratuity Calculation Type Attendance/Level with Pay Calculation Period Per Day Calculation Basic Level without Pay
: Yes : Basic Salary : No : on Attendance : Not Applicable : Months : As Per Calendar Period : Absent Rounding info : Not Applicable
Creating a Deduction Pay Head To create a deduction Pay Head, Professional Tax Under Employees Deductions. Go to Gateway of Tally > Payroll info > Pay Heads > Create Pay Heads Creation
Name : Professional Tax (alias) : Pay Heads info Pay Head Type: Employees statutory deductions Under: Current liabilities Affect Net Salary: Yes Name to pear in Pay slip: professional Tax Calculation Type: As Computed Value Calculation Period: Months
Computation info Compute: On Current Earnings Total Effective From Amount Slab From Amount up to Type
Rounding method: Not Applicable
Creating Salary Payable Ledger A Salary Payable account under the group Current liabilities is used to credit the total of Net Payable Salary of all employees. When Salary is disbursed, this account is debited and Cash or Bank account is credited.
Salary Payable Pay Heads Type: Not Applicable Under: Current liabilities
Creating Gratuity Pay Head To Create a Pay Head Gratuity, Under Current liabilities. Name: Gratuity
Pay Heads info Pay Head Type: Gratuity Under:
Creating an Employee Creating CreatingSingle SingleEmployee Employee To Create an Employee under the Employee group, Sales Go to Gateway of Tally > Payroll info > Employee > Create (Single Employee)
Creating an Employee Group To Create Sales as an Employee Group. Go to Gateway of Tally > Payroll info > Employee Groups > Create Category: Primary Cost Category Name: Sales Under: Primary
Creating Salary Details for an Employee Group. To create Salary details for an Employee Group, for example Sales. Go to Gateway of Tally > Payroll info > Salary details > Create > Select Sales from the List of Employee/Group. Name: Salary Under: Primary
Salary details Per Pay Head Type
Units (Work) Go to Gateway of Tally > Payroll info > Unit (work)
Creating Units (work) Type: Compound Unit with multiplier Factors (Example: Kgs of 1000 gms) Frist Unit Conversion: Second unit Hr. of 60 min.
Creating an Attendance/Production Type Creating an Attendance/ Production Type for Attendance/Leave with Pay Go to Gateway of Tally > Payroll info > Attendance/Production Type > Create Name: Paid Leave Under: Primary Attendance Type: Attendance/Leave with Pay Period Type: Days Creating an Attendance/Production Type for Production Name: Overtime Under: Primary Attendance Type: Production Unit: Hr of 60 min Similarly, you can create Box Production Attendance Type.
Attendance Voucher Attendance Voucher Entry – Manual Entry Go to Gateway of Tally > Payroll Voucher > F5: Attendance Attendance Voucher Entry – Auto Fill 1. 2.
Click F2: Date to enter the date Click A: Auto Fill
Employee Filters Cost category: Primary Cost Category Employee/Group: Sales Auto Fill Voucher Attendance/Production Type:
2. Hra Calculation Type – As computed Value
Employees premium cost category Krishna Mathur
1. Hra Earnings for Employees Indirect Expenses Yes Hra No As Computed Value Month Not Applicable 2. Salary Payable Not Applocable Current liabilities 3. Ta Earnings for Employees Indirect Expenses Yes Hra No As Computed Value Month Not Applicable
Salary details Krishna Mathur
Attendance/Production Types Overtime Primary Production Hra Paid Leave Primary Attendance/Leave with Pay Days
Salary details Pay heads Type Earning for Employees ” ” ” ”
Calculation Type On Attendance As Computed Values ” ” ” ”
6. Voucher Types Attendance Automatic No No No Yes No No
On Current Sub Total ” ” ” ”
Payroll Voucher Primary cost category (Payroll) Krishna Mathur Basic salary – 15000 Hra - 1500 Ta - 1600 Krishna Mathur Lalit Ranjana Mahajan Tanaya
Overtime Overtime Paid Leave Overtime
2hr. 5hr. 3days 6hr.
Informatics Pvt. Ltd. Ka Ledger Sundry debtors Yes No No No No No No F11 > F2 Allow Sale order Processing Yes Accounting Voucher Alt+F5 F11 > F2 Tracking Number Yes Accounting Voucher Alt+F8 Rejection Note
Sales Order Ledger Concored Packing Service Sundry debtors Yes No No Yes
F11 > F2 Use Rejection Inward/Out ward notes Yes Accounting Voucher Crt+F6 Rejections In Informatic Pvt. Ltd. Delivery Note Ka second entry me output vat 4% Debit Note Reliance info, Sunday debtors, Yes, 10, No, Active interest calculation Yes Interest Parameters Calculate Interest T by T – Yes Override Parameters for each T – Yes Override advanced Parameters – Yes
Rate: 10%, Per 365Days, on debit balance only Applicability: Past Due date, by 10 days, calculation due date of Nor applicable Invoice/Ref Rate: 12%, ” ” ” ” ” ” ” ” ” ” ” ” ” Applicability: Always calculate from: Date specified during Entry.