GST Composition accounting & create bill of supply in tally erp9

Composition scheme is the tax payment scheme introduced by GST council in order to reduce the tax burden for small business owners with the annual turnover of less than 1.5 crore. ( In north  eastern states and Himachal pradesh limit is less by 50 % and it is 75 lakhs) By implementing composition scheme government  expect minimal evasion of tax.  How ever there are lots of disadvantages for business choosing this scheme. The business cannot eligible to avail Input tax credit, cannot trade out of state,and he cannot sell exempt goods.Service providers are not eligible for this scheme. In this chapter we will learn

  • How to create composition company  in tally
  • GST composition ledger creation
  • GST composition entries

Tax rates for composition scheme

For manufacturer’s and traders of goods Total 1 %  Central tax 0.5 % and State tax 0.5%

For Restaurants not serving alcohol Total 5% Central tax 2.5% and state tax 2.5%

Return of Composition Scheme

GSTR-4 is the return to be submitted by the composition dealer.This is the quarterly return, The date of quarterly return submission is the next month 18th of ending the quarter. Also GSTR-9A is the annual return to be submitted by a composite dealer.The last date of filing annual return is the 31 decemebr of next financial year.

Invoice of Composition scheme or bill of supply

The composition dealers are not allowed to collect tax in the invoice. To identify the invoice of composite dealer.Department has given a separate name called ‘bill of supply’ Also mention ‘Composite Dealer Not Eligible to Collect Tax‘ as sub heading.

Use tally for composition dealer

Tally provides two options for GST Accounting .One is regular and the second one is composition.In earlier version you cannot find this. From release 6.4 you will find gst composition. You need to keep the track of total turnover you achieved during the year. Once you crossed the turnover 1.5 crore,The registration type automatically changed to Regular and you can charge tax in the invoice and can avail Input tax credit.

  How to record a journal voucher for adjustment against tax credit ?

Activate Composition scheme in tally erp 9

To activate composition scheme go to

F11 Features>F3 Statutory&taxation

Enable goods and service tax (GST): Yes

Set/alter GST details: Yes

In the GST details screen fill as shown below

Activate gst composition scheme

Press enter key and save all screens.

By enabling the option “Enable tax rate for purchase“: will help you to enter tax rate in the ledgers and stock items for calculating tax. Disabling will prompt you to calculate manually each time in the purchase voucher entry from regular dealers and composite dealers.

Creating Stock items and ledgers for GST composition

Stock item creation for composition scheme

Gateway of tally>Inventory info>stock item>Create

GST Composition scheme stock item creation

Set/alter GST Details to enter gst rates for purchase entry .

GST Details for composition stock item

The rate entered is only meant for auto calculating the tax in the purchase voucher, This rate will not be applicable when you are entering Composition sale entry.

Select the taxability as Taxable if it is taxable under GST or Exempt or Nil rated as applicable in GST Rule.

Sales ledger creation for composition dealer

To create sales ledger go to

Gateway of Tally>Accounts Info>Ledger Create

Do as in the screen shot below

Is GST Applicable: Yes

Set/alter GST Details:Yes

Taxability :Select taxable ,Exempt,Nil Rated.

Purchase Ledger creation for composition dealer

To creating Purchase ledger

Gateway of Tally>Accounts Info>Ledger Create

  1. The tax rate set in this ledger will be used for the auto calculation of purchase tax purchased from registered regular dealers ( accounted as expense in composition scheme) and
  2. Calculating tax for reverse charge purchase tax payable to government.

Create purchase ledger for composition scheme

Is GST Applicable: Applicable

Set/alter gst details: Yes

Select taxability

Enter integrated tax and save.

Create Party Ledger for Composition dealer

Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

 

Party ledger for composition dealer

In the Under filed Select sundry debtor for customers and sundry creditors for suppliers.

Set/alter GST details: Yes

GST details for composition party ledger

Select the registration type of party & enter GSTIN/UIN

Create GST Tax ledger for Composition

As in composition scheme you cannot collect tax in the invoice and at the same time you are not allowed to take input tax credit.Hence Tax paid at the time of purchase treated as expense. As it is an addition to purchase we can put this tax under Direct expense.

  How to create Income and Expense Ledgers in GST

To create GST tax ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

Create tax ledger for composition scheme

Make sure that you put the tax ledger under indirect expense

Appropriate tax values in purchase invoice: Yes

Enter Key and save

Similarly Create CGST & IGST ledgers.

Create expense or income ledger for GST composition

Some times we may need to add some expenses like transportation, packing charges in the invoices that forms the part of the item or service value.

To create Expense or income ledger 

Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

Expense ledger for gst

Type of ledger:  Not Applicable

Is GST Applicable: Not Applicable

Include in assessable value calculation for : GST.

 Appropriate to:

  • Goods, for additional expenses or incomes on goods.
  • Services, for additional expenses or incomes on services.

Press enter and save the screen.

Discount Ledgers for stock item and services for composition

Some times we may sell or buy goods or services with discount in invoice.The discount may given based on quantity or value or both. Let’s see how to create a discount ledger for goods.

Discount ledger creation  for stock item for composition accounting

Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

GST Composition stock item

In the under field select direct expense or indirect expense if you want to allow discount in the sales invoice and select direct income or indirect income if you want to enter discount in the purchase invoice.

Type: of ledger: Discount

Press enter key to save the screen.

Discount ledger creation of services for composition dealer

Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

Discount edger for service composition

select indirect expense or income in the under field

Make sure that TYPE OF LEDGER is selected Not Applicable.

Is GST applicable: Not applicable.

Include in assessable Value calculation for :GST

Appropriate to :Services.

Press enter and save the screen

How to Pass sales transactions under composition scheme

Composite dealers are allowed to sell within the state they are registered. Cannot make any interstate sale.Composite dealer is not allowed to collect the tax in the invoice.

To pass composite sale go to

Gateway of Tally>Accounting Vouchers>F8 Sales

Party A/c Name: Enter party name ( sundry debtor) or cash account here.

Sales Ledger: Select the ledger created for composition.

Select stock item,,enter quantity,rate.

For providing discount,enter twice ,select discount ledger created;and  in the amount column  type (-) amount for example -4500.

 

Composition sale entry

Press enter and save.

How to print bill of supply &change the title and sub title of invoice

After saving sales voucher

  1. Press Alt + P to open the print screen.
  2. print dialogue box
  3. Click F12: Configure.
  4. Bill of Supply will display automatically, and enter Composite Dealer Not Eligible to Collect Tax in the field Sub Title (if any), as shown below:
  Enter a journal voucher for input service distributor credit ISD) under GST in Tally ERP 9

bill of supply title changing

4.Change any other details if you want in the configuration screen and save the configuration by pressing enter or shortcut key Ctrl+A.

Now you will back to print dialogue box, press enter or click on Yes,The composition invoice will have started printed.

Bill of supply invoice for composition

Tax rate under composition scheme?

A taxpayer registered under the composition scheme has to pay tax at a certain percentage of the turnover. The rate is 5% for the restaurant sector and 1% for all other businesses including traders and manufacturers.

Type of Business

CGST (%)

SGST/UTGST (%)

Total (%)

Trader and Manufacturer

0.5%

0.5%

1%

Restaurant

2.5%

2.5%

5%

GSTR4 is available in the latest version of tally erp 9, now you can file GSTR-4 by exporting json files from tally erp 9.

GST Composition accounting & create bill of supply in tally erp9
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