Interstate Sales and Purchases in Tally

In earlier accounting methods, on all purchases, payment was made in the form of Central Sales Tax (CST), but CST paid on purchase is neither set off against ‘Output VAT’ on sales within the state nor against ‘Output CST’ on inter-state sales.  Therefore, the CST paid on purchase is treated as part of procurement cost and thus, ‘CST on purchase’ ledger should be placed either under ‘Purchases’ or ‘Direct Expenses’ group.  The inter-state purchase is reported in the monthly return and thus it appears in the VAT computation.

However, in case of interstate sales, ‘Input VAT’ can be adjusted against ‘Output CST’.  Therefore, ‘Output CST’ ledger need to be placed under ‘Duties & Taxes’ group and classified as ‘CST’ for auto-computation.

Let us study this in details

Interstate Purchase

To understand this we will take an example.

Assuming that on 20.4.2004, 20 No's MSP 245 132 col DM Printers are purchased from Interstate Suppliers @7500 plus CST @ 4%.

Step 1: Create Ledgers

Create Ledger in the name of “Input CST” in the group of ‘Duties & Taxes”

Step 2: Create Purchase Invoice

Voucher Entry F12: configure

Voucher type: Sales/Purchase

Use common Ledger A/C for Item Allocation     No

Allow selection of VAT/Tax Class during entry   Yes

This is shown in the fig 6.41.

Steps

-          Select ‘Accounting Vouchers’ from the Gateway of Tally.

-          Press F9 for Purchase Invoice.

-          Press F2 and type ‘20/04/XXXX’ to change the date.

-          Select ‘Inter-state Supplier’ in Party’s A/c Name.

-          Select ‘Inter-state Purchases’ in ‘VAT/Tax Class

-          Select ‘MSP 245  132  cols DM Printers’ in Name of Item

-          Type ‘20’ in qty column, ‘7500’ in rate and the amount will appear automatically.

-          In Accounting details

-          Select ‘Inter-state Purchase’ ledger in Particulars column and ‘Inter-state purchase’ will be automatically selected in VAT/Tax class.

-          Press Enter Twice

-          Select ‘Input CST’ from the list of ledgers.

-          The rate of 4% and amount will appear automatically.

-          The completed Purchase invoice will be shown.