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erp9 VAT Notes Page1of7

Tally.erp9
Value Added Tax
Introduction to VAT
VAT is a system of indirect taxation, which has been introduced in lieu of sales tax. It is the tax paid
by the producers, manufactures, retailers or any other dealer who add value to the goods and that is
ultimately passed on to the consumer. VAT has been introduced in India to ensure a fair and uniform
system of taxation. It is an efficient, transparent, revenue-neutral, globally acceptable and easy to
administer taxation system. It benefits the common man (consumer), businessman and the
Government.

Enabling VAT in Tally

Gateway of Tally→ F11 Company Features→ Statutory and Taxation
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VAT Details
- Select the State Name
120, Rakesh Marg Nehru Nagar, Ghaziabad. Ph. 0120-422 25 25, 9910863033
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- Set Type of Dealer
- Enter the Regular VAT applicable from date
Composite Dealers
Dealer with annual gross turnover not exceeding a certain threshold (threshold-decided by the
respective State Government) can opt for a composition scheme whereby they will pay tax as small
percentage of their gross turnover. However, retailers option for this composition scheme will not be
entitled to input credit.
VAT Rates
Input VAT @ 4%
Purchase Exempted
Input VAT @ 1%
Input VAT @ 12.5%
Output VAT @ 4%
Sales Exempted
Output VAT @1%
Output VAT @12.5%

Ledger Masters
The VAT Classification will be displayed as a drop down list in the Ledger Masters. Tally gives the
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flexibility to the user, to either have the classification selected in the Ledger Master tagged to all
transactions, or, select different classifications each time during voucher entries. This is explained in
detail in the Vouchers and Transactions section.
The ledgers that are affected by VAT are:
Purchase Ledger
Sales Ledger
Duties and Taxes Ledger
Direct Expenses/Income

Create Purchase Ledger

Gateway of Tally→ Accounts Info→ Ledger→ Create/Alter.

120, Rakesh Marg Nehru Nagar, Ghaziabad. Ph. 0120-422 25 25, 9910863033
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VAT Classification – Purchase-Exempt

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120, Rakesh Marg Nehru Nagar, Ghaziabad. Ph. 0120-422 25 25, 9910863033
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Create Party Ledger

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Gateway of Tally→ Accounts Info→ Ledger→ Create/Alter.

120, Rakesh Marg Nehru Nagar, Ghaziabad. Ph. 0120-422 25 25, 9910863033
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Create Sales Ledger
Gateway of Tally→ Accounts Info→ Ledger→ Create/Alter.
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Duties and Taxes Ledger

The ledger fir Input VAT is shown below:

The ledger for Output VAT is shown below:

120, Rakesh Marg Nehru Nagar, Ghaziabad. Ph. 0120-422 25 25, 9910863033
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Voucher and Transactions

The entire Data entry and reporting architecture is based upon VAT Classifications selected during
Voucher Entry.

120, Rakesh Marg Nehru Nagar, Ghaziabad. Ph. 0120-422 25 25, 9910863033
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VAT Report
Gateway of Tally→ Display→ Statutory Report→ VAT Reports

Gateway of Tally→ Display→ Statutory Report→ VAT Reports→ VAT Forms

End…

120, Rakesh Marg Nehru Nagar, Ghaziabad. Ph. 0120-422 25 25, 9910863033