Chapter 1

What is Tally

  • Tally is an ERP accounting software package that is used to record day to day business data of a company. The latest version of Tally is Tally ERP 9.
  • Tally.ERP 9 is a perfect business management solution and GST software with an ideal combination of function, control and in-built customizability.
  • Tally.ERP 9 permits business owners and their associates to interact more in accounts related discussions and is a complete product which retains its original simplicity yet offers comprehensive business functionalities such as Accounting, Finance, Inventory, Sales, Purchase, Point of Sales, Manufacturing, Costing, Job Costing, Payroll and Branch Management along with compliance capabilities for Excise, TDS, TCS, and now GST too.
  • Tally ERP 9 Software is one of the most financial accounting systems used in India. For small and medium enterprises, it is complete enterprise software. It is a GST software with an ideal combination of function, control, and inbuilt customizability.
  • ERP 9is the best accounting software. This software can integrate with other business applications like Inventory, Finance, Sales, Payroll, Purchasing, etc.
  • Tally software is used for storing all the business transactions of each account in detail. Tally has made calculations simple. Tally has become part of all businesses.
  • Small scale enterprises believe that Tally software carries out efficient business transactions, provides accuracy, and saves a lot of time.
  • Manual calculations are time-consuming; that's why all the organizations use Tally.
  • Because of Tally, the chances of error are reduced to a great extent. The Tally software can learn at home or designated institutes. It is self-explanatory and easy to learn.
  • Tally is cost-effective and time-saving. It also ensures accuracy in business management. It enables the digitalization of bills and signatures, thus staying up-to-date with the latest technology.
  • Using the Tally ERP 9 Training, the owner of a small shop can also manage his store, keep records of customer bills, and manage financial transactions efficiently.

Versions of Tally:-

  • Tally 4.5 was the first version of Tally. It was released in 1990. This software is based on MS-Dos.
  • Tally 5.4 was the second version of Tally. It was released in 1996. It was a graphic interface version.
  • Tally 6.3 was the third version of Tally. It was released in 2001. This version was window based. It supports printing and implementing with VAT (Value Added Tax).
  • Tally 7.2 was the next version of Tally. It was released in 2005. It was added with new features of the Statutory complimentary version and VAT rules as par state wise.
  • Tally 8.1 was the next version of Tally. It was developed with a new data structure. It was added with new features of Point of Sale (POS) and Payroll.
  • The next version was Tally 9. It was released in 2006. This version was released due to bugs and errors. This version has maximum features such as TDS, FBT, Payroll, E-TDS filling, etc.
  • The latest version of Tally isERP 9 . It was released in 2009. Tally ERP 9 package is offering maximum features for small to large business industries. It also updates with new features of (Goods & Services Tax) GST.

What is Goods and Service Tax Act 2017?

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

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Types of taxes under GST

There are currently three types of GST

  • CGST – Central GST – Applies to sales within the state – goes to Central Government
  • SGST – State GST – Applies to sales within the state – goes to State Government
  • IGST – Integrated GST – Applies to sales outside the state – goes to Central Government
  • For example, if you sell something within the state, 50% of the GST will be CGST and 50% of the GST will be SGST. But when you sell something outside a state, 100% of it will be IGST which will go to the Central Government.

Now that you have a basic understanding of how GST works, we can go ahead to understand the working of GST in Tally along with its accounting and calculation.

How to begin Tally ERP 9?

In order to use Tally, following steps must be followed

  • To create a company in Tally
  • To enable GST Features
  • To create ledgers

Let’s discuss the above in detail

To create a company in Tally:-

Step 1 : -  Go to Gateway of Tally > Alt + F3 > Create Company

Step 2 : -  Enter the basic information, i.e., name, mailing name and address of the company, currency symbol etc.

Step 3 : - In the ‘maintain field’, select Accounts Only or Accounts with Inventory as per the company requirements.

Step 4 : - In the Financial Year from, the first day of the current financial year for e.g., 1-4-2018 will be displayed by default, which can be changed as per requirement.

Step 5 : - Enter the Tally Vault Password if required.

Step 6 : - Press Y or Enter to accept and save.


To enable GST features in Tally:-

Step 1 : - Go to Gateway of Tally > F11: Features > F3 : Statutory & Taxation.

 Step 2 : - In the screen you will find the following options.

Enable goods and service tax (GST): Yes

Set/alter GST Details: Yes.

This will display another screen where you can set GST details of the company such as the state in which the company is registered, registration type, GSTIN number etc.

Step 3 : - Press Y or Enter to accept and save.

To create ledgers:-

After creating a company and activating GST features, you need to create ledgers that will enable you to pass accounting entries in Tally ERP 9.

Step 1 : - Go to Gateway of Tally > Accounts Info > Ledgers > Create

Step 2 : - Create ledgers such as Purchase, Sales, State GST, Central, Integrated GST, Stock item names etc.

Step 3 : - Select the appropriate group to which such ledger belongs for example state tax under duties and taxes group.

Step 4 : -  Enter the other related information required and press Y or Enter to accept and save.

After creating ledgers we can proceed with preparing Accounting entries in Tally ERP 9. For that we have to follow: -

Gateway of Tally > Accounting Vouchers

There are many accounting vouchers in Tally such as Payment, Receipt, Contra, Sales, Purchase, etc. After choosing the relevant voucher we start passing the accounting entries.