Implementation Of CST - Tally ERP

IMPLEMENTATION OF CENTRAL
SALES TAX IN TALLY.ERP 9

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Version: Implementation of Central Sales Tax in Tally.ERP 9/1.0/July 2009

Contents
Introduction
Basics of Central Sales Tax (CST) .....................................................................................................................1
Registration and Rate of CST .............................................................................................................................2
Declaration Forms for CST Transactions .........................................................................................................3
Filing of CST Returns ..........................................................................................................................................5

Lesson 1: Enabling CST in Tally.ERP 9
1.1 Features of CST in Tally.ERP 9 ................................................................................................................6
1.2 Creating a Company ....................................................................................................................................7
1.3 Enabling CST in Tally.ERP 9 ....................................................................................................................8

Lesson 2: Processing of Purchases and Sales Transactions
2.1 Inter-State Purchases .................................................................................................................................11
2.2 Inter-State Sales ..........................................................................................................................................22
2.3 Inter-State Sales against ‘C’ Form ..........................................................................................................22
2.3.1 Accounting for Discount and Additional Ledgers Separately in Invoice ............................................. 30
2.4 Transit Sales against ‘E-I’ Form and ‘E-II’ Form ................................................................................32
2.4.1 Transit Sales against Form E1 ............................................................................................................. 32
2.4.2 Transit Sales against Form E2 ............................................................................................................. 37
2.5 Sales – Branch Transfers / Consignment Sales against Form – F .....................................................40
2.5.1 Sales – Consignment Transfers ............................................................................................................. 40
2.5.2 Sales – Branch Transfers ...................................................................................................................... 42
2.6 Exports .........................................................................................................................................................44
2.7 Sales against Form H – Deemed Exports ...............................................................................................48
2.8 Inter-State Sale of Exempt Goods ...........................................................................................................50
2.9 Sales in the Course of Import ...................................................................................................................52
2.10 Sales – Outside the State .........................................................................................................................56
2.11 Sales to SEZ Units against Form – I .....................................................................................................61
2.12 Sale of Special Category Goods ............................................................................................................63
2.13 Taxable Local Sales .................................................................................................................................67

Lesson 3: Accounting for CST Adjustments & Payment
3.1 Sales Returns ...............................................................................................................................................69
3.2 Adjustment Entries Pertaining to CST ...................................................................................................81
3.2.1 Adjustment Towards Advance Tax or Refund ....................................................................................... 81
3.2.2 Adjustment Towards Entry Tax Paid .................................................................................................... 83
3.2.3 Adjusting Excess Input Tax Credit against CST Dues .......................................................................... 85
3.3 Payment of CST .........................................................................................................................................87

i

Contents

Lesson 4: CST Reports
4.1 CST Details in VAT Computation ..........................................................................................................90
4.2 CST Reports ................................................................................................................................................94
4.3 Forms Receivables .....................................................................................................................................94
4.4 Forms Issuable ............................................................................................................................................97
4.5 Auto–Fill Option for CST .........................................................................................................................98
4.6 Viewing All Vouchers ...............................................................................................................................99
4.7 Reminder and Covering Letters .............................................................................................................100
4.7.1 Reminder Letters ................................................................................................................................. 100
4.7.2 Covering Letters ................................................................................................................................. 102
4.8 CST Return Form .....................................................................................................................................103
4.9 CST Annexure ..........................................................................................................................................105
4.9.1 Annexure – I ........................................................................................................................................ 106
4.9.2 Annexure – II ...................................................................................................................................... 108
4.9.3 Annexure – III ..................................................................................................................................... 109
4.9.4 Annexure – IV ..................................................................................................................................... 111

ii

Introduction

Central Sales Tax is a tax on Sale levied by Central Government under the provisions of Central
Sales Tax Act, 1957. As per the provisions of this Act, any movement of goods from one State to
another on account of sale/purchase or transfer of document of Title to goods between two
separate parties is considered as Interstate sale/purchase. All such transactions are liable to CST.
Any movement of goods otherwise than as sale, sent outside the state or country, is exempted
from levy of CST. Examples of such Transactions are Consignment and Branch Transfers outside
the sate, Exports etc.

Also some of the Interstate transactions are exempted if goods are supplied to Special Economic
Zones or to UN or Diplomatic missions etc. The exemptions are based on the Submission of
Statutory Forms as specified under the CST Act.

The Centralised system of Sales Tax was introduced to avoid the cascading effect of taxes as the
tax was levied by more than one state in case of inter-state transactions. Also to clear the
confusion relating to levy and collection of Sales Tax between the states involved in this interstate
transaction, certain provisions are introduced in the CST Act. The CST Act clearly specifies that
the CST is payable or levied in the State where the movement of goods commences as a result of
interstate sales/purchases.

Basics of Central Sales Tax (CST)
It is important to understand the meaning of certain terms used in the CST Act. Some of the termi-
nologies are as follows:

Inter-State Sale
A sale or purchase of goods shall be deemed to take place in the course of inter-state trade or
commerce if the sale or purchase
a) occasions the movement of goods from one state to another; or
b) is effected by a transfer of documents of title to the goods during their movement from one
state to another.

1

Introduction

Declared Goods
Declared Goods means goods declared under Section 14 of the CST Act, to be of special impor-
tance in inter-state trade or commerce. Some of the important items are cereals, coal including
coke in all forms excluding charcoal, cotton in un-manufactured form, cotton fabrics and cotton
yarn, crude oil, hides and skin, iron and steel, jute, oil seeds, pulses, man-made fabrics, sugar,
un-manufactured tobacco and woven fabrics of wool.

Registration under CST Act
Every dealer, liable to pay Central Sales Tax has to register himself with the Sales Tax Authority,
that is, dealers who effect inter-state sales are required to register under CST Act. Hence, inter-
mediaries like agents, transporters, who only facilitate sales are not required to be registered, as
they do not affect sales. However, a dealer may voluntarily apply for registration under CST Act
even if he is not liable to pay Central Sales Tax or if goods sold or purchased by him are exempt
under state sales tax law. Registration brings many advantages. For example, the dealer can
issue ‘C’ form and purchase goods at concessional rate.

Rate of Central Sales Tax
Different rates are prescribed depending upon the nature of inter-state sale such as
a. Sale to registered dealers.
b. Sale to unregistered dealers.
(i) Sale of declared goods to unregistered dealers.
(ii)Sale of goods other than declared goods to unregistered dealers.

Registration and Rate of CST
The Dealers are provided with an option to register themselves under the provisions of Central
Sales Tax Act, 1957. The Act provides special benefits to the Registered dealers like charging
lower or NIL rate of CST on submission of Statutory Forms as prescribed for various types of
Interstate Sales.
The unregistered dealers engaged in interstate transactions are required to pay CST at higher
rates than the rates applicable to the Registered dealers. Also the unregistered dealers cannot
claim any exemptions on the basis of Statutory Forms as specified by the CST Act.
The Basic Central Sales Tax Rate as applicable to the Interstate transactions made by the Regis-
tered Dealers is 2%. The interstate transactions are charged at this rate, if the purchasing dealer
issues the Statutory Form – Form C to the selling dealer. The selling dealer submits this Form C
with his sales tax authorities for payment of 2% and the forms are supplied by the Department on
an application by the Registered dealers. Also the interstate sales are exempted from CST, if such
sales are made to specified persons or organisations, on submission of Forms like Form H, I, J
etc.
In case of unregistered dealers, all the interstate purchases or sales made by them will attract the
local sales tax rates of the selling state. No concessions or exemptions can be given for sales in
the course of interstate trade made to any category of persons or organisations.

2

Introduction

Some of the points relating to CST rates are as follows:
1. For an inter-state sale to a registered dealer against form C, the rate of CST is 2% or local
sales tax rate whichever is lower.
2. Under the local sales tax law, if the sale or purchase is exempt or Nil, the rate of CST applica-
ble in case of sale to unregistered dealer or registered dealers, will also be exempt or Nil.
3. The Sales Tax rates applicable for sale of declared goods, with effect from 1-4-2007 is as fol-
lows:
The sale of declared goods made to registered dealer, will attract levy of CST at local sales
tax rate or 2%, whichever is lower.
The inter-state sale made to unregistered dealer, will be liable to CST at rates which is
equal to VAT/sales tax rates as applicable within the State.

Declaration Forms for CST Transactions
A Registered Dealer needs to issue/receive certain declarations in prescribed forms to buyers/
sellers. The types of declaration forms are C, E1, E2, F, H, I and J. These forms are printed and
supplied by the Registered Dealer’s respective Tax assessing authorities (generally the CST
assessments are done by VAT assessing authorities). These forms are to be prepared in tripli-
cate. All the Types of Statutory Forms and their usage is explained as below:

Form C
This is the Basic Form used by the Registered Dealers in the course of Interstate trade or
commerce. All the registered dealers will issue 'Form C' at the time of purchasing goods or
service from another Registered dealer. The issue of 'Form C' by the selling dealer will ensure that
the goods being purchased are covered under his registration certificate and the CST can be
charged at lower rates. The selling dealer, on the basis of this 'Form C', charges CST @ 2% or
lower rate as applicable and submits the same to his assessing authorities as a proof or cause for
lower collection of CST.
For example: Assume that the local sales tax rate is 4%. The sales made in the course of inter-
state trade, will attract levy of CST at the rates as applicable for local sales. But for any registered
dealer on submission of declaration in 'Form C', the CST will be charged at 2% (4% or 2% which
ever is lower). Even the registered dealer will be required to pay CST at local sales tax rates if
'Form C' is not issued.

Form E1
Form E1 is used for making subsequent sales in the course of interstate sale/purchase by the first
or original purchaser of goods. This Form should always be accompanied with 'Form C'. The
Form E1 is used for first subsequent sales by transfer of document of title to goods.
Form E1 is issued by the selling dealer to the dealer who is making subsequent sales for claiming
the exemption from payment of CST to the subsequent buyer. The first subsequent seller of
goods receives 'Form E1' and submits it to the department to claim exemption from CST for any
sale made to other interstate registered dealer.

3

Introduction

Form E2
Form E2 is used for claiming the exemption from payment of CST. In case where the registered
dealer purchases goods from one registered inter-state dealer and sells the same while in transit,
to another registered inter-state dealer, the sales will be exempted from CST on submission of
'Form E2' to the department. The 'Form E2' is used to claim exemption from payment of CST to
the seller who is a subsequent or last inter-state dealer of goods.

Form F
Form F is used for claiming exemptions on the interstate movement of goods as Stock/Branch
Transfers. The 'Form F' is issued by the Branch or Agent who is receiving goods from another
state to the Transferor of goods. The transferor of goods can claim exemption from CST on sub-
mitting the Form to the department.
This 'Form F' is compulsory for claiming the transfer as Stock/Branch Transfer and no CST will be
paid. In the absence of 'Form F', all such transfers will be treated as normal interstate sales and
CST will be levied. The Dealer has the option to submit one 'Form F' for all the interstate Stock/
Branch Transfer for a month with supporting annexure if required.

Form H
Form H is used by the seller for claiming the exemption on making penultimate sales (immediately
preceding sale to exports). Sales made during the course of export are exempt from CST. The
penultimate sale is also deemed to be in course of export and is exempt from CST. The dealer
exporting goods will have supporting documents like customs documents, bank certificate, airway
bill/bill of lading, shipping bill etc. However, the penultimate seller will not have any direct
evidence to prove that the sale made is exempt from tax. In such cases, the actual exporter has to
issue a certificate to the penultimate seller in form H.

Form I
Form I is used for claiming the exemption from CST on the sales made to any Special Economic
Zone (SEZ). The buying dealer issues 'Form I' to the selling dealer. The selling dealer needs to
submit the same (Form I) to the department to claim all the export benefits available to original
exporter.

Form J
Form J is used for claiming the exemption of CST in case of Interstate sales made to any United
Nations, Diplomatic Missions etc. The Form is issued by purchasing dealer to the selling dealer.
The selling dealer submits this Form to the department to claim the exemption.

4

Introduction

Filing of CST Returns
The Central Sales Tax Turnover made by the registered inter-state dealer should be submitted to
the Commercial Taxes Department of the state where the movement of goods had commenced.
The particulars regarding the Taxable and Exempted interstate sales along with the payable CST
amount should be submitted in the Return Form as required to be filed by the Central Sales Tax
Rules framed by each state government.
These CST Returns are to be filed as per the provisions made by the commercial taxes (VAT)
department of each state and in the prescribed time period. As per the provisions of these rules,
the Return can be filed as either Monthly or quarterly or half yearly periods.
The Return Forms are to be submitted to the department along with the proof of payment of CST
amounts within the prescribed due dates. If the payments are not made within the time lines, the
dealer has to pay interest, penalty etc.
Along with the returns, the dealer has to submit all the Declaration Forms like Form C, F etc. All
the Returns and the forms are to be submitted to the commercial taxes department. For adminis-
trative convenience the CST returns need to be submitted to the VAT assessing authority of the
dealer.

5

Lesson 1: Enabling CST in Tally.ERP 9

Lesson Objectives
On completion of this lesson, you will learn

The salient features of CST in Tally.ERP 9
The method of creating a company and enabling CST in Tally.ERP 9

The Central Sales Tax features integrated in Tally.ERP 9 takes care of transactions related to
inter-state trade or commerce. It eliminates possibilities of errors during data inputs. It also helps
in generation of CST reports displaying appropriate forms to be issued/ received at the end of the
month or a financial year or at any point of time. It takes a one-time configuration in Tally.ERP 9
for CST features to be activated.

1.1 Features of CST in Tally.ERP 9
The CST features in Tally.ERP 9 are simple and user friendly. It provides various reports as
required by the statute and also gives proper records for dealer’s reference. The following are
some of the main features of CST in Tally.ERP 9:
Quick, easy to setup and use.
Flexibility in selection of forms and form numbers during voucher entry or at the time of
report generation.
Party-wise and Form-wise report generation capability on Forms Issuable/ receivable.
Sorting by Name of the party in group wise Forms Issuable/receivable report
Auto-fill option in the Forms Receivables/ Issueables feature that prevents error-prone and
fast data entry.
Instant generation of State Specific CST Returns after completion of data entry for the
return period.

6

Enabling CST in Tally.ERP 9

1.2 Creating a Company
Consider the following example to enable CST in Tally.ERP 9.

Example :
M/s. National Traders of Tamil Nadu is engaged in the retailing business. It purchases and sells
different varieties of goods in the course of inter-state trade.

Step 1: Create Company
Go to Gateway of Tally > F3: Company Info. > Create Company
In the Company Creation screen,
1. Specify National traders as the Company Name
2. Enter the Address details
3. Select India in the Statutory Compliance for field
4. Select Tamil Nadu in the State field
5. Enter the Pin code, Telephone No., Mobile No. and E-Mail details
6. Select Accounts with Inventory in the Maintain field
7. Enter the other required information in the Company Creation screen
The completed Company Creation screen is displayed as shown:

Figure 1.1 Company Creation screen

8. Press Y or Enter to accept.

7


In this manual, the State is selected as Tamil Nadu and state-specific as well
as general information about CST has been provided.

1.3 Enabling CST in Tally.ERP 9
To enable the CST feature in Tally.ERP 9
Go to Gateway of Tally > F11: Features > F3: Statutory & Taxation
In the F3: Statutory & Taxation features,
1. Set Enable Value Added Tax (VAT) to Yes
2. Set the field – Set/Alter VAT Details to Yes
3. The Company VAT Details screen will be displayed.
4. In the Company VAT Details screen, select the State where the business of the dealer is regis-
tered. Here select the State as Tamil Nadu. Select the Type of Dealer as Regular and enter
the Date in Regular VAT Applicable From field.
5. Under Additional Information section, new fields have been introduced to specify the details
pertaining to Assessment Circle, Division, Area Code, Import Export Code, Authorised
by, Authorised person, Status/Designation and Place. The details entered in these fields
will be captured in the Report Generation screen of Return Form and Annexures as per
requirement.

Figure 1.2 VAT Details screen

8


The details entered/modified manually in the fields of Report Generation
screen of Return Form and Annexures will be captured in the forms as a one-
time measure. On exiting the screen, the temporarily modified details will not
be saved. Every time the report is generated, the information entered in the
Company VAT Details screen of F3: Statutory & Taxation Features will be
displayed.

6. Specify the details in VAT TIN (Regular), Inter-state Sales Tax Number and PAN / Income –
Tax Number.

Figure 1.3 F3: Statutory & Taxation Features – Completed

7. Press Enter to accept and save.

CST feature can be enabled only if Enable Value Added Tax is set to Yes.

9

Lesson 2: Processing of Purchases and Sales
Transactions

Lesson Objectives
On completion of this lesson, you will be able to account for

Interstate Purchase transactions
Interstate Sales against ‘C Form’
Transit Sales against 'E1 Form' and 'E2 Form'
Branch Transfers/ Consignment Sales against 'F Form'
Exports
Deemed Exports against 'H Form'
Inter-State Sales of Exempt Goods
Sale in the Course of Import
Sales to SEZ Units against 'I Form'
Sales outside the State

As discussed earlier, in the course of inter-state trade or commerce the dealers have to issue/
submit certain declarations in prescribed forms to buyers/ sellers in order to avail concessional
rates when
1. Sale or Purchase takes place outside a state.
2. Sale or Purchase takes place in the course of imports into India or exports from India.

10

Processing of Purchases and Sales Transactions

2.1 Inter-State Purchases
Example 1:
On 1-4-2009, M/s. National Traders purchased the following items from Universal Traders, karna-
taka, vide Invoice No. 01, by issuing C Form number 05412 dt: 1-4-2009.

Item Description Quantity (in Nos) Rate Amount Commodity Code
Air Conditioner 30 25,000 7,50,000 304
Refrigerator 50 8,500 4,25,000 304
Washing Machine 35 10,500 3,67,500 329
Water Purifier 40 5,500 2,20,000 329
Vacuum Cleaner 20 15,000 3,00,000 329
Periodicals 100 75 7,500 711
The above goods are subject to 2% CST.

Step 1:
Let us create the required Masters to record the above transaction.

Creating Ledgers
i. Inter-State Purchase Ledger
To create an Inter-state Purchase Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
1. Enter the Name as Inter-State Purchases
2. Select Purchase Accounts as the account group in the Under field
3. Set Inventory Values are affected to Yes

11


4. Set the option Used In VAT Returns to Yes to display the VAT/Tax Class sub screen

Figure 2.1 Inter-State Purchase Ledger – Used In VAT Returns

5. Select Inter-state Purchases as the VAT/Tax Class from the list of VAT/Tax Class

Figure 2.2 Inter-State Purchases – VAT/Tax Class Selection

12


6. Press Enter to return to the Inter-state Purchases ledger creation screen
7. Set the option Use for Assessable Value Calculation to No
8. Press Y or Enter to accept and save.
In the VAT/Tax class screen, the Activated From column will display the
date of activation of particular classification in the current financial year.
The Deactivated From column will show the date of deactivation irre-
spective of the financial year.
Inorder to use the same purchase ledger as additional ledger, the option
Use for Assessable Value Calculation needs to be set to Yes after dis-
abling Inventory values are affected to apportion the additional amount
towards assessable value and tax amount.

ii. CST on Purchase Ledger
To create a CST on Purchase ledger,
1. Enter the Name as CST on Purchases
2. Select Duties & Taxes as the group name in the Under field
3. Select CST from the Type of Duty/Tax list in the field Type of Duty/Tax
4. Select Not Applicable in the VAT/Tax Class field from the VAT/Tax Class list displayed.
5. The option Inventory values are affected is set to No by default
6. Set the CST rate as 2% in the Percentage of Calculation field
7. On setting the Percentage of Calculation, the field Method of Calculation appears
8. Select On Total Sales as the Method of Calculation

13


9. Select the required Rounding Method from the list displayed.

Figure 2.3 CST on Purchases


The CST paid on purchases when treated as cost and added to the purchase
value it needs to be grouped under Purchase Accounts and the CST paid on
purchase will not be captured in return or annexure. The CST on purchases
ledger when grouped under Duties & Taxes with type of Duty as CST, the
value will be shown separately in the annexures or returns.

iii. Creating a Sundry Creditor Ledger
To create a Sundry Creditor (Supplier) ledger,
Go to Gateway of Tally > Accounts Info. > Ledger > Create
Click on F12: Configure button and set the field Use ADDRESSES for Ledger Accounts to Yes.
In the Ledger creation screen,
1. Enter the Name as Universal Traders
2. Select Sundry Creditors in the Under field
3. Set Maintain balances bill-by-bill to Yes and enter the Default Credit Period if any
4. In the Mailing Details section
The Name will be displayed as Universal Traders
Enter the Address details

14


Select the State as Karnataka and enter the PIN Code
5. In the Tax Information section enter the PAN / IT number and enable Set/Alter VAT Details
field as shown:

Figure 2.4 Sundry Creditor Ledger

6. In the VAT Details screen, enter the TIN/Sales Tax Number as shown:

Figure 2.5 VAT Details – Sundry Creditor Ledger

7. Accept the VAT Details screen
8. Accept the Sundry Creditor Ledger Creation screen.

iv. Creating VAT Commodity
To create a VAT Commodity
Go to Gateway of Tally > Inventory Info. > VAT Commodity > Create
1. Enter the Name of VAT Commodity as Air Conditioner

15


2. In the Used for field, select VAT

Figure 2.6 VAT Commodity Creation – VAT

3. In the VAT section, enter the Commodity Code, Schedule Number and Schedule Serial
Number as shown:

Figure 2.7 VAT Commodity Creation screen

4. Enter the Notes if required and accept the VAT Commodity Creation screen.

In the Inventory Info. menu, the commodity code or tariff classification can
be created from:
VAT Commodity sub-menu for VAT enabled companies
Tariff/VAT Commodity sub-menu for companies in which both VAT and
Excise feature/excise rules for invoicing is enabled.
In Commodity Creation screen, the HSN code can be entered only when the
Used for option is selected as Both or Excise only. If VAT is selected, the
cursor will skip the HSN Code and prompt for information under VAT details
section.

16


Similarly, create the following VAT Commodities:
VAT
Sl. Used
Name
No. For Commodity Schedule Number Schedule
Code Serial Number
1 Refrigerators VAT 304 First Schedule – Part C 3
2 Electrical Appliances VAT 329 First Schedule – Part C 28
5 Periodicals VAT 711 Fourth Schedule – Part B 11

v. Stock Items
To create a stock item,
Go to Gateway of Tally > Inventory Info. > Stock Items > Create
1. Enter the Name as Air conditioner
2. Select the group as Primary in the Under field
3. Select the unit of measurement as Nos in the Units field. (The Unit of Measure can be cre-
ated by using the key combination Alt+C in the Units field)
4. In the Commodity field, select the VAT Commodity as Air Conditioner.
The VAT Commodity Code will also be displayed along with the Commodity Name in the List of
VAT Commodities as shown:

Figure 2.8 Stock Item Creation – Selection of VAT Commodity

17


5. Enter the Rate of VAT as 12.5%. The completed stock item creation screen displays as shown:

Figure 2.9 Stock Item Creation screen

Similarly, create the other stock items as per the details given below:
VAT Details
Sl. No Name Under Units
Commodity Rate of VAT
1 Refrigerators Primary Nos Refrigerators 12.5%
2 Washing Machines Primary Nos Electrical Appliances 12.5%
3 Vacuum Cleaners Primary Nos Electrical Appliances 12.5%
4 Water Purifier Primary Nos Electrical Appliances 12.5%
5 Periodicals Primary Nos Periodicals 0%

In the Stock Item master of a company enabled only for VAT, the cursor will
skip the Tariff Classification field and prompt for entering the Rate of Duty
and selection of Commodity under VAT Details section.
The commodity code will be captured in the VAT Annexures based on the
selection made from the:
List of Tariff Classifications (on enabling Excise and VAT) of Tariff/VAT
Commodity screen
List of VAT Commodities of VAT Commodity screen
The HSN code will not be captured in the Annexures.

18


Step 2:
To create an inter-state Purchase Voucher,
Go to Gateway of Tally > Accounting Vouchers > F9: Purchase
1. Select As Invoice mode (use key combination Ctrl+V if the screen is displayed in voucher
mode. The invoice mode will be displayed)
2. Enter the reference number in the Ref. field
3. Select Universal Traders in the Party’s A/c Name field from the List of Ledger Accounts
4. In the Party Details screen, enter/modify the required details
5. Select Inter-state Purchase ledger in the Purchase Ledger field from the List of Ledger
Accounts
6. On selecting the Inter-state Purchase ledger, the VAT/Tax Class appears as Inter – State
Purchases
7. Select the Name of Item as Air Conditioner from the List of Items
8. Enter the Quantity as 30 and Rate as 25,000. The value is automatically displayed in the
Amount field
9. Similarly, select the other stock items and enter the quantity along with applicable rate
10.Select CST on Purchase ledger from the List of Ledger Accounts and enter the rate as 2%.
On entering the percentage, the amount of CST will get calculated automatically. The CST
amount will form part of the purchase cost.
11.Select Form C as Form to Issue. Enter the Form number and Date
12.Set the field Show Statutory Details as Yes

Figure 2.10 Purchase Invoice with C Form

19


13.The Statutory Details screen will be displayed. Press F1: Detailed button to view the CST
amount added to each of the stock item

Figure 2.11 Purchase Invoice – Show Statutory Details screen

14.Enter the Bill-wise details

20


15.Enter Narration if required

Figure 2.12 Purchase Invoice – Completed

16.Press Y or Enter to accept and save the purchase invoice.

The Form No. can be entered during Voucher Entry, if the forms are issued at
the time of purchase. These forms are generally submitted at the end of the
year covering all the transactions from a particular dealer during the year.

21


2.2 Inter-State Sales
In this section, let us consider the following Interstate Sales transactions:
Interstate Sales against ‘C Form’
Transit Sales against 'E1 Form' and 'E2 Form'
Branch Transfers/ Consignment Sales against 'F Form'
Exports
Deemed Exports against 'H Form'
Inter-State Sales of Exempt Goods
Sale in the Course of Import
Sales outside the State
Sales to SEZ Units against 'I Form'
Sale of Special Category Goods

2.3 Inter-State Sales against ‘C’ Form
Example 2:
On 2-4-2009, National Traders sold the following items to Mc Millan Techsys, Andhra Pradesh,
vide invoice number 01 against ‘C’ form number 12452 dt: 2-4-2009. The packing charges of Rs.
6,000 was charged on the sale value.

Item Description Quantity (in Nos) Rate Amount
Air Conditioner 5 28,000 1,40,000
Refrigerator 10 10,500 1,05,000

The above goods are subject to 2% CST.

Step 1:

Creating Ledgers
i. Inter-State Sales Ledger
To create an Inter-state Sales Ledger:
Click on F12: Configure button and set the field Use ADDRESSES for Ledger Accounts to No.
1. Enter the Name as Inter-State Sales
2. Select Sales Accounts as the account group in the Under field
3. Set Inventory values are affected to Yes

22



Figure 2.13 Inter-State Sales Ledger

5. Select Inter-state Sales from the list of VAT/Tax Class

Figure 2.14 Inter-State Sales – VAT/ Tax Class Selection

23


6. Press Enter to return to the Inter-state Sales ledger creation screen.
8. Accept to save the ledger.

ii. CST on Sales Ledger
To create a CST on Sales Ledger,
1. Enter the Name as CST @ 2%
2. Select Duties & Taxes as the group name in the Under field
3. Select CST from the Type of Duty/Tax list in the field Type of Duty/Tax
4. Select Inter-State Sales in the VAT/Tax Class field from the VAT/Tax Class list displayed.
6. Set the CST rate as 2% in the Percentage of Calculation field
7. On setting the Percentage of Calculation, the field Method of Calculation appears
8. Select On Total Sales as the Method of Calculation
9. Select the required Rounding Method from the list displayed.

Figure 2.15 CST on Sales Ledger


24


iii. Packing Charges
To create a ledger for packing charges,
1. Enter the Name as Packing Charges
2. Select Indirect Incomes as the group name in the Under field
4. Set the option Use for Assessable Value Calculation to Yes
5. In the Apportion for field, select VAT
6. Select the Method of Apportion as Based on Quantity

Figure 2.16 Packing Charges Ledger


25


In the ledgers grouped under Direct/Indirect Expenses, Direct/Indirect
Incomes, Purchase Accounts and Sales Accounts, the fields Use for
Assessable Value Calculation will be displayed. On enabling this field, the
options Apportion for and Method of Apportion will be displayed. In the
Apportion for field:
The option VAT will be displayed when only VAT feature is enabled.
Excise & VAT and VAT will be displayed on enabling both Excise and
VAT features.
On selecting the Method of Apportion as VAT, the value of these ledgers
apportioned towards assessable value will be considered for VAT calculation.
On selecting the Method of Apportion as Excise & VAT, the value of these
ledgers apportioned towards assessable value will be used for Excise and
VAT calculation.

iv. Sundry Debtor Ledger
To create a Sundry Debtor (Customer) ledger,
Click on F12: Configure button and set the field Use ADDRESSES for Ledger Accounts to Yes.
In the Ledger creation screen,
1. Enter the Name as Mc Millan Techsys
2. Select Sundry Debtors in the Under field
3. Set Maintain balances bill-by-bill to Yes and enter the Default Credit Period if any
4. In the Mailing Details section,
The Name will be automatically displayed as Mc Millan Techsys
Enter the Address details

26


5. In the Tax Information section enter the PAN number and enable Set/Alter VAT Details

Figure 2.17 Sundry Debtor – Mc Millan Techsys

6. Enter the TIN/Sales Tax Number

Figure 2.18 Sundry Debtor – Mc Millan Techsys

7. Accept the VAT Details screen
8. Accept the Sundry Debtor ledger.

Step 2:
Let us now enter the sales transaction in Tally.ERP 9
To create an Interstate Sale Voucher,
Go to Gateway of Tally > Accounting Vouchers > F8: Sales
1. Enter the reference in the Ref. field
2. Select Mc Millan Techsys in the Party’s A/c Name field from the List of Ledger Accounts

27


3. In the Party Details screen, enter the details as shown:

Figure 2.19 Party Details – Mc Millan Techsys

4. Select Inter-state Sales ledger in the Sales Ledger field from the List of Ledger Accounts
5. On selecting the Inter-state Sales, the VAT/Tax Class appears as Inter – State Sales
7. Enter the Quantity as 5 and Rate as 28,000. The amount is automatically displayed in the
Amount field.
8. Similarly, select Refrigerator from the List of Items
Amount field.
10.Select Packing Charges from the List of Ledger Accounts and enter the amount as 5,000
11.Select CST @ 2% and the amount is automatically calculated
12.Set the option Is Declared Goods Sales to No

The option Is Declared Goods Sales can be set to Yes, if the goods are
specified as declared goods u/s 14 of the CST Act. Else it needs to be set to
No. Based on the option set, the values of sales will be captured in respective
boxes of the Form and annexure.

28


13.Select Form C as Form to Receive

Figure 2.20 Sales Invoice – Inter-State Sales

14.The Form number and Date fields will be displayed on selecting the Form to Receive from
the Form Types list
15.Enter the Form number – 12452 and Date as 2-4-2009
16.Set Show Statutory Details field to Yes

29


The Statutory Details screen displays as shown:

Figure 2.21 Sales Invoice – Statutory Details screen

17. Accept the Statutory Details screen
18. Accept the default Bill allocations in the Bill-wise Details screen
19. Enter Narration if required
20. Accept the sales invoice.

You can also fill the Form No. during Voucher Entry, if the forms are issued at
the time of purchase. But usually, they are submitted at the end of the year
covering all the transactions from that dealer during the year.

2.3.1 Accounting for Discount and Additional Ledgers Separately in Invoice
Example 3:
On 3-4-2009, M/s National Traders sold 2 Air Conditioners for Rs. 28,000 each to Mc Millan
Techsys vide invoice number 02 against Form ‘C’. An amount of Rs. 13,500 was levied as instal-
lation charged and Rs. 2,000 was allowed as discount. These values were not considered as a
part of the assessable value.

30


Step 1:
Creating Ledgers
i. Installation Charges
To create a ledger for installation charges,
Name Under Inventory values Use for Assessable Value
are affected Calculation
Installation Charges Indirect Incomes No No

ii. Discount Allowed
To create a ledger for discount allowed,
Name Under Inventory values are Use for Assessable Value
affected Calculation
Discount Allowed Indirect Expenses No No

Step 2:
Let us now record in the entry in Tally.ERP 9. To create an Interstate Sale Voucher,
3. Enter the Despatch Details in the Party Details screen
4. Select Inter-state Sales ledger in the Sales Ledger field from the List of Ledger Accounts
5. On selecting the Inter-state Sales ledger, the VAT/Tax Class appears as Inter – State Sales
Amount field.
8. Select CST @ 2% and the amount is automatically calculated
9. Select Installation Charges from the List of Ledger Accounts and enter the amount as
13,500
10.Select Discount Allowed ledger and enter amount as Rs. -2,000
12.Select Form C as Form to Receive
the Form Types list
14.Set Show Statutory Details field to No
15.Accept the default Bill allocations in the Bill-wise Details screen

31



Figure 2.22 Sales Invoice – Sales Against C Form


2.4 Transit Sales against ‘E–I’ Form and ‘E–II’ Form
As discussed earlier, according to Section 6(2) of CST Act, the first inter-state sale is taxable and
subsequent sale during movement of goods by transfer of documents of title to goods is exempt
from tax, if the subsequent sale is to a registered dealer on submission of respective forms.

2.4.1 Transit Sales against Form E1
Example 4:
On 7-4-2009 National Traders despatched the following goods to Manasa Traders, Karnataka and
raised an Invoice on Rishita Traders in Madhya Pradesh against Form C vide invoice number 03.
Packing charges of Rs. 5,500 was charged additionally.

Voltage Stabilizer 8 6,500 52,000
Washing Machine 10 12,000 1,20,000
National Traders received ‘C’ form from Rishita Traders and issued ‘E–1’ form.

32


Step 1:

Creating Ledgers
i. Inter-state Sales against Form E1
To create an Inter-state Sales Ledger to account Sales against Form E1:
1. Enter the Name as Inter-State Sales – Form E1
2. Select Sales Accounts as the account group in the Under field
3. Set Inventory values are affected to Yes
5. Select Inter-state Sales from the list of VAT/Tax Class

Figure 2.23 Inter-State Sales against Form E1 – VAT/Tax Class Selection

6. Press Enter to return to the Inter-state Sales ledger creation screen
8. Accept to save the ledger.

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ii. Sundry Debtor (Customer) Ledger
Follow the steps given in example 2 to create sundry debtor ledger. The completed sundry debtor
ledger is displayed as shown:

Figure 2.24 Sundry Debtor – Rishita Traders

Step 2:
To create an Interstate Sale Voucher against Form C with Form E1,
In the F12: Voucher Configuration screen, set the options Allow Separate Buyer and
Consignee Names and Activate ‘E1’ or ‘E2’ Transaction (VAT) to Yes
2. Select Rishita Traders in the Party’s A/c Name field from the List of Ledger Accounts

34


3. In the Party Details screen enter the details as shown:

Figure 2.25 Party Details screen

4. Select Inter-state Sales – Form E1 ledger in the Sales Ledger field from the List of Ledger
Accounts
5. On selecting the Sales Ledger, the VAT/Tax Class appears as Inter State Sales Against
Form–E1
6. Select the Name of Item as Water Purifiers from the List of Items
Amount field.
8. In the Annexure II – Transit Details, select the Seller’s Name and Address as Universal
Traders and enter the Purchase Value as 44,000

Figure 2.26 Annexure II – Transit Sales

9. Similarly, select Washing Machine from the List of Items
10.Enter the Quantity as 10 and Rate as 12,000. The amount is automatically displayed in the
Amount field.
11.In the Annexure II – Transit Details, select the Seller’s Name and Address as Universal
Traders and enter the Purchase Value as 1,05,000
12.Select Packing Charges from the List of Ledger Accounts and enter the amount as 5,500
14.Select Form C as Form to Receive, and Form E1 as the Form to Issue.
the Form Types list.

35


The Statutory Details screen displays as shown:

Figure 2.27 Sales Invoice for E1 Sales – Statutory Details screen

17.Accept the Statutory Details screen
18. Accept the default Bill allocations in the Bill-wise Details screen

36


19. Enter Narration if required

Figure 2.28 Sales Invoice for Transit Sales against Form E1


You can also press Enter and skip Form No. and Date field if the prescribed
forms are not received at the time of transaction. Generally, blank forms are
received at the beginning of the year or on commencement of inter-state
transaction with the respective dealer. However, Tally.ERP 9 gives you the
flexibility to update Form Nos. and Date in the Reports Menu, which will be
discussed later in this lesson.

2.4.2 Transit Sales against Form E2
Example 5:
On 9-4-2009, M/s National Traders had purchased 5 Air Conditioners for Rs. 25,000 each from
Universal Traders which had to be despatched to the consignee Logic Electronics of Orissa.
During movement of goods, National Traders sold the same air conditioners at Rs. 28,000 each to
Logic Electronics, vide invoice number 04.
National Traders received ‘C’ form from Logic Electronics and issued ‘E–2’ form.

37


Step 1:

Creating Ledgers
i. Inter-state Sales against Form E2
To create an Inter-state Sales Ledger to account Sales against Form E2:
Create the ledger with the following details:
Name Under Inventory Use in VAT/Tax Class Use for
values are VAT Assessable Value
affected Returns Calculation
Inter-State Sales Sales Yes Yes Inter State Sales No
– Form E2 Accounts Against Form – E2

ii. Sundry Debtor (Customer) Ledger
Follow the steps given in example 2 to create sundry debtor ledger.

Step 2:
To create an Interstate Sale Voucher against Form C with Form E2,
Ensure that in F12: Voucher Configuration screen, the options Allow Separate Buyer and
Consignee Names and Activate ‘E1’ or ‘E2’ Transaction (VAT) are set to Yes
2. Select Logic Electronics in the Party’s A/c Name from the List of Ledger Accounts
3. In the Party Details screen enter the details as shown:

Figure 2.29 Party Details screen

38


4. Select Inter-state Sales – Form E2 ledger in the Sales Ledger field from the List of Ledger
Accounts
5. On selecting the Sales Ledger, the VAT/Tax Class appears as Inter State Sales Against
Form–E2
Amount field.
8. In the Annexure II – Transit Sales Details screen select Universal Traders from the List of
Ledger Accounts and enter the Purchase Value as Rs. 1,25,000

Figure 2.30 Annexure II – Transit Sale Details

9. Set the option Is Declared Goods Sales to No
10.Select Form C as Form to Receive and Form E2 as the Form to Issue

Figure 2.31 Sales Invoice for Transit Sales against Form E2

13.Press Y or Enter to accept and save.

39


2.5 Sales – Branch Transfers / Consignment Sales against Form – F
The dealer may have a Branch office outside the state and the goods transferred to that branch
may be considered as Branch transfers and not termed as sales. In such case, the bifurcation
needs to be made for the goods sent on principal account (branch transfer) and on Consignment
Basis (transferred to agent). This bifurcation can be identified by selecting the YES or NO option
against the field Is Sales against Principle A/c. This field is set to YES when the transfer is con-
sidered as Branch Transfers and NO in case of consignment transfers.

2.5.1 Sales – Consignment Transfers
Example 6:
On 13-4-2009, M/s National Traders despatched the following goods as consignment sales to
National Enterprises, Mumbai vide invoice number 05 against Form F

Vacuum Cleaners 10 15,000 1,50,000
Washing Machine 8 10,500 84,000

Step 1:

Creating Ledgers
i. Consignment Transfer Outwards
To create a ledger for consignment/branch transfer outward,
values are VAT Assessable
affected Returns Value Calculation
Branch Sales Yes Yes Consignment/ No
Transfer Accounts Branch Transfer
Outwards Outwards

40


ii. Consignee Ledger
The completed ledger creation screen displays as shown:

Figure 2.32 Consignee Ledger – National Enterprises

Press Y or Enter to accept and save.

Step 2:
To record the Consignment transfer of goods,
In F12: Voucher Configuration, set Allow Separate Buyer and Consignee Names to No
2. Select National Enterprises in the Party’s A/c Name field from the List of Ledger Accounts
4. Select the Branch Transfer Outward ledger in the Sales Ledger field from the List of Ledger
Accounts
5. On selecting the Branch Transfer Outward, the VAT/Tax Class appears as Consignment /
Branch Transfer Outward from the VAT/Tax Class list
6. Select the Name of Item as Vacuum Cleaners from the List of Items
Amount field
8. Similarly, select Washing Machine as the second stock item.

41


Amount field
10.Set the option Is Sale in Principal’s A/c to No as the transfer of goods is being considered as
consignment transfer
11.Select the Form to Receive as F Form
12.The option Show Statutory Details will be set to No by default
14.Enter the details in the field Narration, if required

Figure 2.33 Sales Invoice – Consignment Transfer Outwards


2.5.2 Sales – Branch Transfers
Example 7:
On 16-4-2009, M/s National Traders despatched the following goods to its branch office – Parijata
Enterprises, Karnataka against Form F vide invoice number 06.

Water Purifiers 12 5,500 66,000
Refrigerator 10 8,500 85,000

42


Step 1:
Follow the steps given in example 6 to create the branch ledger.

Step 2:
Let us enter the sales transaction in Tally.ERP 9. To record the Branch transfer of goods,
2. Select Parijata Enterprises in the Party’s A/c Name field from the List of Ledger Accounts
3. Select the Branch Transfer Outward ledger in the Sales Ledger field from the List of Ledger
Accounts
5. On selecting the Sales Ledger, the VAT/Tax Class appears as Consignment / Branch Trans-
fer Outward from the VAT/Tax Class list
Amount field
8. Similarly, select Refrigerator as the second stock item
Amount field
10.Set the option Is Sale in Principal’s A/c to Yes as the transfer of goods is being considered as
branch transfer
11.Select the Form to Receive as F Form
12.The field Show Statutory Details will be set to No by default

43



Figure 2.34 Sales – Branch Transfer of Goods


2.6 Exports
The goods exported directly by the dealer will be considered as Direct Exports and will not be con-
sidered for levy of Central Sales Tax (CST).

Example 8:
On 20-4-2009, M/s National Traders sold the following items to Zeta Electronics, New York vide
invoice number 07.

Item Description Quantity (in Nos) Rate (in ‘$’) Amount (in ‘$’)
Air Conditioners 12 850 10,200
Refrigerator 15 350 5,250
Packing Charges of $250 was charged on the invoice value. The conversion factor per $ is “1 $ =
Rs. 48”

44


Step 1:
Let us create the necessary ledgers to account for export sales.

Creating Ledgers
i. Exports Ledger
Name Under Inventory values Use in VAT/Tax Use for Assessable
are affected VAT Class Value Calculation
Returns
Exports Sales Accounts Yes Yes Exports No

i. Creating Sundry Debtor Ledger
The Sundry Debtor ledger displays as shown:

Figure 2.35 Sundry Debtor – Zeta Electronics


45


iii. Creating Foreign Currency
In the F11: Features > F1: Accounting Features > Set Allow Multi-Currency to Yes
Go to Gateway of Tally > Accounts Info. > Currencies > Create
1. Enter the currency symbol as $ in Symbol field.
2. Enter the name of the currency as US Dollars in Formal Name field.
3. Enter the number of decimal places as 2.
4. Set Show Amount in Millions to No
5. Set Is Symbol SUFFIXED to Amounts to Yes for the symbol to appear after the amount.
6. Set Put a SPACE between Amounts and symbol to Yes

Figure 2.36 Currency Creation screen

7. Accept the Currency Creation screen

Step 2:
Let us enter the sales transaction in Tally.ERP 9. To create the Sales voucher on Export of goods,
2. Select Zeta Electronics in the Party’s A/c Name field from the List of Ledger Accounts
4. Select the Exports ledger in the Sales Ledger field from the List of Ledger Accounts
5. On selecting the Sales Ledger, the VAT/Tax Class appears as Exports from the VAT/Tax
Class list
7. Enter the Quantity as 12 and Rate as $850. The Forex Rate of Exchange screen will be dis-
played for entering the conversion factor. Enter the details as shown:

Figure 2.37 Forex Rate of Exchange screen

8. The value is automatically displayed in the Amount field.
9. Press Enter key to view the Input Tax Details sub-screen

46


10.Select the Supplier as Universal Traders from the List of Ledger Accounts, enter the Pur-
chase value
11.Select the Rate of Tax from the Rate of Tax list
12.Enter the amount of Input Tax Paid and the Eligible Tax Credit

Figure 2.38 Exports – Input Tax Details sub-screen for Air Conditioners

13.Similarly, select the stock item Refrigerator from the List of Items
14.Enter the Quantity as 15 and Rate as $350. Accept the exchange rate as Rs. 48 per $
15.The value is automatically displayed in the Amount field.
16.Press Enter key to view the Input Tax Details sub-screen and enter the details as shown:

Figure 2.39 Exports – Input Tax Details sub-screen for Refrigerators

17.Select the Packing Charges ledger and enter the amount as $250
19.Accept the Statutory Details screen

47



Figure 2.40 Sales – Exports

22.Accept the sales invoice.

2.7 Sales against Form H – Deemed Exports
The goods may be sold to an exporter for the purpose of exporting the same. In such a case, the
immediate penultimate sales will be exempted from tax. As a result CST will not be levied. Such
sales are termed as Deemed Exports and are required to be supported with Form H.

Example 9:
On 20-4-2009, M/s National Traders raised an invoice on Excel Traders for deemed exports made
against Form – H vide invoice number 08. The details of goods sold are as follows:

Water Purifiers 10 6,500 65,000
Vacuum Cleaners 5 17,000 85,000

Additionally Packing charges of Rs. 3,800 was also included.

48


Step 1:
Let us create the required masters to account for sales made against Form – H.

Creating Ledgers
i. Deemed Exports Ledger
To create a ledger for exports:
Sales Against Sales Yes Yes Sales (Against Form– No
Form – H Accounts H Deemed Export)

ii. Creating Sundry Debtor Ledger
Follow the steps given in example 2 to create sundry debtor ledger.

Step 2:
Let us enter the sales transaction in Tally.ERP 9. To create the Sales voucher for deemed exports,
2. Select Excel Traders in the Party’s A/c Name field from the List of Ledger Accounts
4. Select the Sales against Form – H ledger in the Sales Ledger field from the List of Ledger
Accounts
5. On selecting the Sales Ledger, the VAT/Tax Class appears as Sales (Against Form–H
Deemed Export)
Amount field
8. Similarly, select another item Vacuum Cleaners from the List of Items.
Amount field

49


10.Select the Form to Receive as H Form

Figure 2.41 Sales Invoice – Sales against Form H

13.Enter the details in the field Narration, if required and accept the sales invoice.

2.8 Inter-State Sale of Exempt Goods
As per the CST Act and under special notifications issued either by State Government or Central
Government, some goods are exempted from levy of CST. Such entries can be accounted for
using the VAT/Tax Class – Inter-State Sales – Exempted.

Example 10:
On 21-4-2009, M/s National Traders sold 60 periodicals for Rs. 85 each to Mc Millan Techsys,
vide invoice number 09. Periodicals are exempt from tax.

Step 1:
Inter-state Sales Exempted ledger
To create an inter-state exempt sales ledger,

50


Inter-State Sales Yes Yes Inter-State Sales No
Sales – Accounts – Exempted
Exempted

Step 2:
Let us enter the sales transaction in Tally.ERP 9. To create an Exempted Interstate – Sales
Voucher,
4. Select the Inter-State Sales – Exempted ledger in the Sales Ledger field from the List of
Ledger Accounts
5. On selecting the Sales Ledger, the VAT/Tax Class appears as Inter-State Sales – Exempted
6. Select the Name of Item as Periodicals from the List of Items
7. Enter the Quantity as 60 and Rate as 85. The value is automatically displayed in the Amount
field
8. Set the option Is Declared Goods Sales to No
9. The field Show Statutory Details will be set to No by default

51


11.Enter the details in the Narration field, if required.

Figure 2.42 Sales Invoice – Inter-state Sales Exempted


2.9 Sales in the Course of Import
In the process of importing goods from another country, there could be sale of same goods made
as per the Rules and Regulations prescribed, even before the completion of import. Such sale are
considered as Sale in the Course of Import and is exempted from CST liability.
Example 11:
On 23-4-2009, M/s National Traders imported the following items from Glamour Appliances, New
York vide invoice number 02.

Item Description Quantity Rate Amount VAT Commodity Commodity
(in Nos) Code
Fax Machines 25 13,000 3,25,000 Fax Machines 333
Vending Machine 20 15,000 2,00,000 Electrical Appliances 329
Photo Copying 12 40,000 4,80,000 Photo 327
Machines Copying Machines

52


On the same day, in the course of import, the following items were sold to Home Electronics,
Punjab vide invoice number 010.

Item Description Quantity Rate Amount VAT Commodity Commodity
(in Nos) Code
Fax Machines 10 15,000 1,50,000 Fax Machines 333
Vending Machine 8 17,000 1,36,000 Electrical Appliances 329

Step 1:
Let us create the required masters to record sales in the course of imports.
i. Creating Ledgers
Create the Sales ledgers with the following details:
Sl. Name Under Inventory Use in VAT/Tax Class Use for
No. values are VAT Assessable Value
1 Sales in Sales Yes Yes Sales in the No
the Course Accounts Course of
of Import Import into India
2 Imports Purchase Yes Yes Imports No
Accounts

Create the sundry debtor – Home Electronics and Sundry Creditor – Glamour Appliances
ledger.

iii. Stock Items
Create the stock items with the following details:
VAT Details
Sl. No. Name Under Units
Commodity Rate of VAT
1 Fax Machines Primary Nos Fax Machine 12.5%
2 Vending Machine Primary Nos Electrical Appliances 12.5%
3 Photo Copying Machine Primary Nos Photo Copying Machine 12.5%

Step 2:
Let us enter the transactions in Tally.ERP 9.
Go to Gateway of Tally > Accounting Vouchers > F9: Purchase
1. Enter the Supplier Invoice No. and Date
2. Select Glamour Appliances in the Party’s A/c Name field from the List of Ledger Accounts

53


3. In the Party Details screen, enter/modify the required details
4. Select Imports ledger in the Purchase Ledger field from the List of Ledger Accounts
5. On selecting the Imports ledger, the VAT/Tax Class appears as Inter – State Purchases
6. Select the Name of Item as Fax Machine from the List of Items
Amount field
8. Similarly, select the other stock items and enter the quantity along with applicable rate
9. Set the field Show Statutory Details as No
10.Enter the details in the Narration field if required

Figure 2.43 Purchase Invoice – Imports


To create a voucher for sales in the course of import of goods,
1. Enter the reference number in the Ref. field.
2. Select Home Electronics in the Party’s A/c Name field from the List of Ledger Accounts.

54


3. In the Party Details screen, enter the details as shown:

Figure 2.44 Sales Invoice – Party Details screen

The Despatch Details entered in the Party Details screen while recording
the sales made in the course of import will be captured in the respective fields
of Annexure I. The following details will be captured from Party Details
screen in Annexure I:
i. The Bill of lading number from the Bill of Lading/LR-RR No & Dt field
ii. Name and address of the ship/agent from Despatched through field.
iii. Date of endorsement of bill of lading from Endorsement Date field
iv. Bill number along with date from Despatch Doc No. field.

4. Select the Sales in the Course of Import ledger in the Sales Ledger field from the List of
Ledger Accounts.
5. On selecting the Sales in the Course of Import Ledger, the VAT/Tax Class appears as Sales
in the Course of Import into India
Amount field.
8. Press Enter key to view the Annexure I – Import Details screen.
9. Select Glamour Appliances List of Ledger Accounts in the Foreign seller's Name and
Address field
10.Enter the Purchase Value as 1,30,000

Figure 2.45 Sales in the Course of Import – Import Details

11.Similarly, select Vending Machine as another stock item from the List of Items
12.Enter the Quantity as 8 and Rate as 17,000. The amount will be automatically calculated and
displayed in the Amount field

55


13.Press Enter key to view the Annexure I – Import Details screen.
14.Select Glamour Appliances List of Ledger Accounts in the Foreign seller's Name and
Address field
15.Enter the Purchase Value as 1,20,000

Figure 2.46 Sales Invoice – Sales In the Course of Import

17.Enter the details in the Narration field if required and press Y or Enter to accept and save.

2.10 Sales – Outside the State
Any goods transferred outside the state in the course of interstate trade and subsequently sold as
inter-state sales, will be considered as sale outside the state. At the first instance if such sales are
considered as interstate sales and later identified as Sale outside the state, a journal entry needs
to be recorded for accounting the actual sale. On the other hand, if any CST is on the first sale,
then the same needs to be reverted. The reversal entry has to be made in a journal using the VAT
Adjustment –Others.

Example 12:
On 27-4-2009, M/s National Traders received a sales order from Excel Traders, Mumbai for 8
photo copying machines priced at Rs. 43,000 each. M/s National Traders raised a sales invoice
for the said item vide invoice number 011, despatched 4 nos and requested the branch office –
National Enterprises to despatch remaining quantity. CST @ 2% was charged while invoicing
against C Form.

56


Step 1:
Let us create the necessary masters to record sale outside the state.

Creating Masters
i. Ledgers
To create a ledger for inter-state Sales – Tax Free classification:
Inter-State Sales Yes Yes Inter-State No
Sales - Tax Free Accounts Sales - Tax Free

ii. Enabling VAT Adjustments in Journal Voucher Type
To create a VAT Adjustment class for journal vouchers,
Go to Gateway of Tally > Accounts Info. > Voucher Types > Alter > Journal
1. In the Voucher Type Alteration screen, enter the Name of Class as VAT Adjustment Class

Figure 2.47 Journal Voucher Type – Voucher Class

2. Press Enter to view the Voucher Type Class screen

57


3. Set Use Class for VAT Adjustments to Yes

Figure 2.48 Voucher Type Class screen

4. The value of foreign exchange gain/loss on account of imports/exports can be adjusted on cre-
ating another voucher class and enabling the option Use Class for Forex Gain/Loss Adjust-
ment
5. Accept the Voucher Type Class screen and return to the Voucher Type Alteration screen

Step 2:
Create the inter-state sales entry by following the steps provided in Example 2. The completed
inter-state sales entry displays as shown:

Figure 2.49 Sales Invoice – Inter-State Sales


58


Step 3:
Let us now record the journal adjustment entry to account for the reversal of Interstate sales to
Sales outside the State and CST levied to branch account.
To create a journal adjustment entry,
Go to Gateway of Tally > Accounting Vouchers > F7: Journal > Select VAT Adjustment Class
from the Voucher Class list
i. Accounting for the value of Inter-State Sale made outside the state as Inter-State Tax
Free sales
1. Select Sale of Goods Outside the State in the Used for field
2. Debit Inter-State Sales ledger
3. In the Inventory Allocations screen, select Name of Item as Photo Copying Machine. Enter
the Quantity as 4 and Rate as 43,000
4. Select Inter-State Sales as the VAT/Tax Class from the VAT/Tax Class list
5. The amount will be displayed in the Debit field
6. Enter the details in the field Narration, if required
7. Credit the Inter-State Sales – Tax Free ledger. The VAT/Tax Class appears as Inter-State
Sales – Tax Free
8. In the Inventory Allocations screen, select Name of Item as Photo Copying Machine. Enter
the Quantity as 4 and Rate as 43,000
9. Select Inter-State Sales – Tax Free as the VAT/Tax Class from the VAT/Tax Class list
10.The amount will be displayed in the Credit field

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Figure 2.50 Journal Voucher – Sale of Goods Outside the State


ii. Transferring the value of CST paid to Branch office
1. Select Others in the Used for field
2. Debit the ledger CST @ 2%. In the VAT Class Details screen, select Inter-State Sales as the
VAT/Tax Class and enter the Assessable Value as 1,72,000
3. Enter the CST amount as 3,440
4. Credit National Enterprises and the credit amount will be displayed automatically

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6. Credit the branch ledger National Enterprises

Figure 2.51 Sales Outside the State – Reversing the CST amount


2.11 Sales to SEZ Units against Form – I
Form I is used for claiming the exemption from CST on the sales made to any Special Economic
Zone (SEZ). The buying dealer issues 'Form I' to the selling dealer. The selling dealer needs to
submit the same (Form I) to the department to claim all the export benefits available to original
exporter.

Example 13:
On 27-4-2009, M/s National Traders sold the following items to Tech Apparels, Gujarat against
Form I vide invoice number 012.

Fax Machines 2 15,000 30,000
Photo Copying Machines 1 43,000 43,000

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Step 1:
i. Sundry Debtor Ledger
Create the Sundry Debtor ledger by following the steps given in Example 2.

Step 2:
Let us enter the transaction in Tally.ERP 9.
To create an inter-state sales invoice against Form–I,
2. Select Tech Apparels in the Party’s A/c Name field from the List of Ledger Accounts.
4. Select the Inter-State Sales ledger in the Sales Ledger field from the List of Ledger Accounts.
5. On selecting the Inter-State Sales Ledger, the VAT/Tax Class appears as Inter-State Sales
from the VAT/Tax Class list
Amount field.
8. Similarly, select another stock item as Photo Copying Machine
Amount field.
10.Set Is Declared Goods Sale to No

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11.Select the Form to Receive as I Form

Figure 2.52 Sales Invoice – Sales against Form I

12.Set the field Show Statutory Details as No
13.Accept the
14.Enter the details in the Narration field if required

2.12 Sale of Special Category Goods
The State government, through a special notification may declare some of the goods as goods of
special category. All such goods are exempted from tax or charged at the lower rate than the
normal sales tax rate. CST will be levied at a lower rate on such goods when sold in the course of
interstate sale.

Example 14:
M/s National Traders, decided to add textiles into its line of business. So on 27-4-2009, it
purchases 150 nos of silk fabrics (commodity code – 2127) at Rs. 1,500 each from Kiran Textiles,
Chennai vide invoice number 03. The silk fabrics were taxable at 4% VAT.

63


Step 1:
Create the stock item – Silk Fabrics and sundry creditor ledger by following the steps given in
example 1.

i. Input VAT Ledger
Create the input VAT ledger with the following details:
Name Under Type VAT/Tax Inventory Percent- Method Rounding
of Class values age of of Calcu- Method
Duty are Calcula- lation
/Tax affected tion
Input VAT Duties VAT Input VAT No No On VAT Not Appli-
@ 4% & Taxes @ 4% Rate cable

ii. Purchase Ledger
Purchases @ 4% Purchase Yes Yes Purchases @ No
Accounts 4%

Step 2:
Let us now enter the transaction in Tally.ERP 9. To create a purchase invoice,
Go to Gateway of Tally > Accounting Vouchers > F9: Purchases
1. Enter the Reference number in the Ref. field
2. Select the Party’s A/c Name as Kiran Textiles from the List of Ledger Accounts
3. Select the Name of Item as Silk Fabrics from the List of Items
Amount field
5. Select Input VAT @ 4% from the List of Ledger Accounts

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6. Enter the details of the Narration field, if required

Figure 2.53 Purchase Invoice


Example 15:
On 28-4-2009, M/s National Traders sold 50 nos of Silk Fabrics at Rs. 1,700 each to Raj Textiles,
Karnataka vide invoice number 013.

Step 1:
Let us create the required masters to record the above transaction.
Creating Ledgers
i. Sale – Special Category Goods
Sale – Special Sales Yes Yes Inter-State Sales No
Category Goods Accounts – Spl. Category
Goods

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ii. Sundry Debtor Ledger
Create the ledger – Raj Textiles under Sundry Debtors.

Step 2:
Let us now record the entry in Tally.ERP 9. To create an entry for Inter-State Sale of Special
Category goods,
2. Select the Party’s A/c Name as Raj Textiles from the List of Ledger Accounts
4. Select Sale – Special Category Goods ledger in the Sales Ledger field from the List of
Ledger Accounts
5. On selecting the Sale – Special Category Goods, the VAT/Tax Class appears as Inter-State
Sales–Spl. Category Goods from the VAT/Tax Class list
6. Select the Name of Item as Silk Fabrics
Amount field.
8. Set the option Is Declared Goods Sales to Yes
9. Set the field Show Statutory Details as No
10.Enter the details in the Narration field, if required

Figure 2.54 Sales Invoice – Sale of Special Category Goods

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The option Is Declared Goods Sales will be set to Yes, when sale of special
category goods are categories as declared under CST Act. On selling the
goods exempted or taxed at lower rate under a state government notification
the option Is Declared Goods Sales will be set to No.

2.13 Taxable Local Sales
Example 16:
On 28-3-2009, M/s National Traders sold 70 nos of silk fabrics at Rs. 1,600 each to Harshita
Textiles vide invoice number 014. Output VAT was charged @ 4%.

Step 1:
Let us create the required masters to record the above transaction.

Creating Ledger
i. Output VAT @ 4%
Name Under Type VAT/Tax Inventory Percent- Method Rounding
of Class values age of of Calcu- Method
Duty are Calcula- lation
/Tax affected tion
Output Duties VAT Output No No On VAT Not Appli-
VAT @ 4% & Taxes VAT @ 4% Rate cable

ii. Sales Ledger
Sale @ 4% Sales Yes Yes Sales @ 4% No
Accounts

iii. Sundry Debtor Ledger
Create the ledger – Harshita Textiles under Sundry Debtors

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Step 2:
Let us now enter the transaction in Tally.ERP 9. To create a sales invoice,
1. Enter the reference in the Ref. field, if required.
2. Select Harshita Textiles in the Party’s A/c Name field from the List of Ledger Accounts.
4. Select the Name of Item as Silk Fabrics
Amount field
6. Select Output VAT @ 4% from the List of Ledger Accounts
7. Set Show Statutory Details field to Yes
9. Enter the details in the Narration field, if required

Figure 2.55 Sales Invoice

10.Press Y or Enter to accept the voucher.

68

Lesson 3: Accounting for CST Adjustments &
Payment

Lesson Objectives
On completion of this lesson, you will be able to

Record transactions of Sales returns
Account for price variations
Set-off the CST liability against input tax credit
Record CST Payment entry

3.1 Sales Returns
The buyer may return goods when is it not in accordance with the specifications made. On receipt
of the goods returned by buyer, an entry needs to be made in credit note. An entry to record any
change in sales consideration i.e., increase/decrease in sale price, can be made in debit note or
credit note as applicable using the VAT Adjustment – Others.

Let us record the entries pertaining to sales returns for:
Sales made against C Forms
Sales in the Course of Imports into India
Sales made against Form C+E1/E2
Consignment Transfers
Stock Transfers

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Accounting for CST Adjustments & Payment

Sales made against C Forms
i. Returns
Example 17:
On 4-4-2009, M/s National Traders received the following items returned by Mc Millan Techsys
against C Form. The goods returned was against the sales recorded on 2-4-2009.

Air Conditioner 1 28,000 28,000
Refrigerator 2 10,500 21,000

Step 1:
To enable the credit note feature, go to Gateway of Tally > F11: Features > F1: Accounting
Features
Enable the following fields:
Use Debit/Credit Notes
Use Invoice mode for Credit Notes
Use Invoice mode for Debit Notes

Go to Gateway of Tally > Accounting Vouchers > Crl+F8: Credit Note
2. Select Goods Sold Returned from list of VAT Adjustments in the Used For field

Figure 3.1 Credit Note – VAT Adjustments

3. Select Mc Millan Techsys as the Party’s A/c Name from the List of Ledger Accounts
4. Select Inter-State Sales as the Sales Ledger
5. On selecting Inter-State Sales, the VAT /Tax Class appears as Inter-State Sales
6. Select the Name of Item as Air conditioner from the List of Items
7. Enter the Quantity as 1 and Rate as 28,000. The Amount will be automatically displayed
8. Similarly, select Refrigerator, enter the Quantity as 2 and Rate as 10,500
9. Select Form C as the Form to Receive
10. Set Show Statutory Details to Yes

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Figure 3.2 Credit Note – Inter-State Sales


Sales against Form E1/E2
i. Returns
Example 18:
On 10-4-2009, M/s National Traders received 1 Washing Machine worth Rs. 12,000 from Rishita
Traders against Form E1. The sales return was against the sales dated 7-4-2009.

Step 1:
3. Select Rishita Traders as the Party’s A/c Name from the List of Ledger Accounts
4. Select Inter-State Sales – Form E1 as the Sales Ledger
5. On selecting Inter-State Sales – Form E1, the VAT /Tax Class appears as Inter-State Sales
Against Form – E1

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6. Select the Name of Item as Washing Machine from the List of Items
8. In the Annexure II – Transit Sale Details, select the Seller’s Name and Address as Univer-
sal Traders and Purchase Value – 10,500
9. Select Form C as the Form to Receive
10. Select Form E1 as the Form to Issue

Figure 3.3 Credit Note – Inter-State Sales against Form E1


ii. Price Variation – Increase in sale value
Example 19:
On 11-4-2009, M/s National Traders raised a debit note on Rishita Traders for an increase in Sale
value of the following items against Form E1 on sales dated 7-4-2009:

Item Description Amount
Water Purifier 2,000
Washing Machine 3,150

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Step 1:
Go to Gateway of Tally > Accounting Vouchers > Ctrl+F9: Debit Note
1. Select the Voucher mode (use the key combination Ctrl+V) to record the increase in sale
value.
3. Select Others from the list of VAT Adjustments in the Used For field.
4. Debit Rishita Traders from the List of Ledger Accounts and enter the amount as 5,150 in the
Debit field
5. In the Bill-wise Details screen select the reference dated 7-4-2009 and debit 5,150
6. Credit Inter-State Sales – Form E1 from the List of Ledger Accounts
7. In the Inventory Allocation screen, select
Water Purifier and enter the amount as 2,000
Washing Machines and enter the amount as 3,150
8. Select the VAT/Tax Class as Inter-State Sales Against Form – E1 from the VAT/Tax Class list
9. Set Is Declared Goods Sales to No
10. Select Form C as the Form to Issue and E1 Form as the Form to Receive

Figure 3.4 Debit Note – Increase in Sale Value


73


Stock Transfers
i. Returns
Example 20:
On 14-4-2009, National Enterprises returned 1 vacuum cleaner worth Rs. 15,000 to M/s National
Traders against Form F towards goods despatched on 13-4-2009.

Step 1:
3. Select National Enterprises as the Party’s A/c Name from the List of Ledger Accounts
4. Select Branch Transfer Outwards as the Sales Ledger
5. On selecting Branch Transfer Outwards, the VAT /Tax Class appears as Consignment/
Branch Transfer Outward
6. Select the Name of Item as Vacuum Cleaner from the List of Items
8. Set Is Sale in Principal’s A/c to No
9. Select Form F as the Form to Receive
10. Set Show Statutory Details to No

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Figure 3.5 Credit Note – Stock Transfer


ii. Additions
Example 21:
On 15-4-2009, M/s National Traders raised a debit note of Rs. 2,800 on National Enterprises to
account for an increase in the price of Washing Machines despatched on 13-4-2009.

Step 1:
value.
4. Debit National Enterprises from the List of Ledger Accounts and enter the amount as 2,800
in the Debit field
5. Credit Branch Transfer Outwards from the List of Ledger Accounts
6. In the Inventory Allocation screen, select Washing Machine and enter the amount as 2,800

75


7. Select the VAT/Tax Class as Consignment/Branch Transfer Outwards from the VAT/Tax
Class list
8. Set Is Declared Goods Sales to No
9. Select Form F as the Form to Issue

Figure 3.6 Debit Note – Stock Transfer


Consignment Transfers
i. Returns
Example 22:
On 17-4-2009, Parijata Enterprises returned 1 Refrigerator worth Rs. 8,500 to M/s National
Traders against Form F towards goods despatched on 16-4-2009.

Step 1:

76


3. Select Parijata Enterprises as the Party’s A/c Name from the List of Ledger Accounts
4. Select Branch Transfer Outwards as the Sales Ledger
5. On selecting Branch Transfer Outwards, the VAT /Tax Class appears as Consignment/
Branch Transfer Outward
6. Select the Name of Item as Refrigerator from the List of Items
8. Set Is Sale in Principal’s A/c to Yes
9. Select Form F as the Form to Receive
10. Set Show Statutory Details to No

Figure 3.7 Credit Note – Consignment Transfer


ii. Additions
Example 23:
On 18-4-2009, M/s National Traders raised a debit note against Form F for Rs. 4,800 on Parijata
Enterprises towards increase in the price of Water Purifier despatched on 16-4-2009.

77


Step 1:
value.
4. Debit Parijata Enterprises from the List of Ledger Accounts and enter the amount as 4,800
in the Debit field
5. Credit Branch Transfer Outwards from the List of Ledger Accounts
6. In the Inventory Allocation screen, select Washing Machine and enter the amount as 4,800
7. Select the VAT/Tax Class as Consignment/Branch Transfer Outwards from the VAT/Tax
Class list
8. Set Is Declared Goods Sales to Yes
9. Select Form F as the Form to Issue

Figure 3.8 Debit Note – Consignment Transfer


78


Sales in the Course of Imports into India
i. Returns
Example 24:
On 24-4-3009, M/s National Traders received 1 Fax Machine worth Rs. 15,000 returned by Home
Electronics against the sales recorded on 23-4-2009.

Step 1:
Let us now enter the transaction in Tally.ERP 9.
To create a Credit Note for Goods Sold Returned,
3. Select Home Electronics as the Party’s A/c Name from the List of Ledger Accounts
4. Select Sales in the Course of Import as the Sales Ledger
5. On selecting Sales in the Course of Import, the VAT /Tax Class appears as Sales in the
Course of Import into India
7. Enter the Quantity as 1. The Rate and Amount will be automatically displayed
8. In Annexure I – Import Details sub-screen, select Glamour Appliances as the Foreign
seller’s Name and Address and enter the Purchase Value as 13,000

79



Figure 3.9 Credit Note – Sales in the Course of Import


ii. Additions
Example 25:
On 25-4-2009, M/s National Traders raised a debit note of Rs. 4,000 on Home Electronics
towards increase in the price of Vending Machines despatched on 23-4-2009.

Step 1:
value.
4. Debit Home Electronics from the List of Ledger Accounts and enter the amount as 4,000 in
the Debit field
5. Credit Sale in the Course of Import from the List of Ledger Accounts
6. In the Inventory Allocation screen, select Vending Machine and enter the amount as 4,000

80


7. Select the VAT/Tax Class as Sales in the Course of Import into India from the VAT/Tax
Class list

Figure 3.10 Debit Note – Sales in the Course of Import


3.2 Adjustment Entries Pertaining to CST
3.2.1 Adjustment Towards Advance Tax or Refund
The advance CST payments, if any, made by the dealer can be adjusted towards the actual CST
liability for the return period. For setting off the advance payments with the CST liability of current
period, a journal entry with VAT Adjustment – Adjustment Towards Advance Tax or Refund
needs to be made.

Example 26:
On 2-4-2009, M/s National Traders paid Rs. 500 as advance payment towards CST. On 30-4-
2009, the advance amount paid was adjusted against a portion of the actual CST liability.

Step 1:
Let us create the Advance Tax ledger to record the above transaction.

81


Advance Tax ledger
Name Under Currency of Ledger Inventory values are affected
Advance Tax Current Assets Rs. No

Step 2:
Let us record the transaction in Tally.ERP 9
i. Advance CST Payment voucher
To create an advance CST payment voucher,
Go to Gateway of Tally > Accounting Vouchers > F5: Payment
1. Select the Bank ledger as National Bank in the Account field (create a bank ledger with the
name National Bank by using Alt+C key combination)
2. Debit the Advance Tax ledger
3. Enter the amount as 500

Figure 3.11 Advance CST Payment Voucher


82


ii. Journal Entry for Adjusting the Advance Tax Paid towards CST Liability
To create a journal voucher for adjusting advance tax paid towards CST liability,
Go to Gateway of Tally > Accounting Vouchers > F7: Journal
1. Select the Voucher Class as VAT Adjustment Class
2. Select Adjustment Towards Advance Tax or Refund as the VAT Adjustment in the Used
for field.
3. Debit CST @ 2% ledger. In the VAT Class Details screen, select the VAT/Tax Class as Inter-
State Sales and do not enter the assessable value
4. Enter the amount as 500 in the Debit field
5. Credit the Advance Tax ledger grouped under Current Assets
6. The Credit amount is automatically entered

Figure 3.12 Journal Voucher – Adjustment Towards Advance Tax or Refund


3.2.2 Adjustment Towards Entry Tax Paid
The entry tax paid, can be adjusted towards CST liability in a journal voucher using the VAT
Adjustment – Adjustment Towards Entry Tax Paid.

83


Example 27:
On 30-4-2009, M/s National Traders recorded an adjustment entry for entry tax of Rs. 1,000 paid
towards goods imported on 23-4-2009.

Step 1:
Let us create the entry tax ledger to account for the above transaction.
Entry Tax Ledger
Name Under Currency of Ledger Inventory values are affected
Entry Tax Current Assets Rs. No

Step 2:
i. Entry Tax Payment voucher
Create a payment voucher by following the steps given in example 26. The completed payment
voucher displays as shown:

Figure 3.13 Entry Tax Payment Voucher


84


ii. Journal Entry for Adjusting the Entry Tax Paid towards CST Liability
Go to Gateway of Tally > Accounting Vouchers > F7: Journal > Select the Voucher Class as
VAT Adjustment Class
1. Select Adjustment Towards Entry Tax Paid as the VAT Adjustment in the Used for field
2. Debit the CST @ 2% ledger. In the VAT Class Details screen, select Inter-State Sales as the
VAT/Tax Class and do not enter the Assessable Value.
3. Enter the amount as 1,000 in the Debit field
4. Credit the Entry Tax ledger grouped under Current Assets

Figure 3.14 Journal Voucher – Adjustment Towards Entry Tax Paid


3.2.3 Adjusting Excess Input Tax Credit against CST Dues
Any excess input tax credit that is available after adjusting the VAT liability, can be adjusted
towards CST dues. This adjustment entry has to be recorded in a journal voucher using the VAT
Adjustment – Adjustment Towards CST.

85


Example 28:
On 30-4-2009, M/s National Traders made the following entries:
1. Adjustment of output VAT against input tax credit
2. Adjustment of CST dues against the excess available ITC after setting-off the output tax

Step 1:

1. Adjustment of output VAT against input tax credit
Not Applicable
1. Debit the Output VAT @ 4% ledger
3. Credit the Input VAT @ 4% ledger and the VAT/Tax Class appears as Input VAT @ 4% auto-
matically

Figure 3.15 Journal Voucher – Entry to set–off Output VAT against Input tax credit


86


i. To create a journal adjustment voucher for setting-off a portion of CST liability towards
excess input tax credit,
VAT Adjustment Class
1. Select Adjustment Towards CST as the VAT Adjustment in the Used for field
2. Debit the CST @ 2% ledger. In the VAT Class Details screen, select Inter-State Sales as the
VAT/Tax Class and do not enter the assessable value
4. Credit the Input VAT @ 4% ledger and the VAT/Tax Class appears as Input VAT @ 4% auto-
matically

Figure 3.16 Journal Voucher – Adjustment Towards CST


3.3 Payment of CST
Central Sales Tax is payable in the state from which goods are sold. The tax so collected is
retained by the state in which it is collected. The State Government Sales Tax Officer who
assesses and collects local state sales tax also assesses and collects Central Sales Tax.
The due date is same as for the period to submit returns under Value Added Tax (VAT) of the
appropriate state. The CST payable amount should be rounded off to the nearest rupee.

87


Example 29:
On 30-4-2009, M/s National Traders paid Rs. 2,790 as CST dues.

Step 1:
Let us record the transaction in Tally.ERP 9. To create a CST payment voucher,
Go to Gateway of Tally > Accounting Vouchers > F5: Payment
1. In the Payment voucher screen, click the VAT Payment button or press Alt + V to display the
VAT Payment Details sub-screen

Figure 3.17 Payment Voucher – VAT Payment Button

2. In the Period From field, enter the dates as 1-4-2009 to 30-4-2009, as the period for which
payment is being made
3. Select CST as the type of payment in the Payment Towards field
4. Select Type of Payment as Not Applicable
5. Enter the date as 30-4-2009 in Deposit Date field

88


6. Enter the Name of Bank & Branch (remittance) as National Bank, Branch code (remit-
tance) as 21582 and Instrument No. as 003214

Figure 3.18 VAT Payment Details

7. Accept the VAT Payment Details screen and the Payment voucher screen will be displayed.
8. Select National Bank in the Account field
9. Debit the ledger CST @ 2% and enter 2,790 in the amount field

Figure 3.19 CST payment Voucher


89

Lesson 4: CST Reports

Lesson Objectives
On completion of this lesson, you will be able to

Generate VAT Computation and view CST details
Generate Group-wise Forms Receivable and Form Issuable report
Generate Ledger-wise Forms Receivable and Form Issuable report
Generate Reminder and Covering Letter
Use the autofill option to enter the Form Number and Date in Forms
Receivables and Issuables
Generate CST Return and Annexure

4.1 CST Details in VAT Computation
The VAT Computation reports provide the Assessable Value and the Tax Amount of the sales and
purchase transactions Entered using different VAT/ Tax classifications.

To view the VAT Computation report,
Go to Gateway of Tally > Display > Statutory Reports > VAT Reports > VAT Computation

90

CST Reports

The VAT Computation report displays as shown:

Figure 4.1 VAT Computation

The screen displays the total VAT and CST payable on sales and input tax credit on purchases
made during the specified period.

Assessable Value
The Assessable Value is the sum of the total value of goods at which they are purchased and
sold. This assessable value forms the value on which VAT is calculated.

Tax Amount
The total Tax Amount calculated on Assessable value using the respective Tax percentage is the
Tax Amount.

You can drill down the VAT Computation screen to view the VAT Classification
vouchers and further drill down to view the vouchers in alteration mode.

91

CST Reports

Show CST Details
In the VAT Computation screen, click on F12: Configure button and set the options Show All
VAT Classifications and Show CST Details to Yes to view the CST break up in inter-state sales
transactions:

Figure 4.2 VAT Computation with CST Break-up

92

CST Reports

Click the button F1: Detailed or press Alt + F1. The detailed VAT Computation screen with CST
adjustments is displayed as shown:

Figure 4.3 VAT Computation – CST Adjustment Entries

93

CST Reports

4.2 CST Reports
CST Reports display forms to be received and issued along with CST Forms. It allows you to track
pending forms, reconcile the forms and file CST returns.

To view CST Reports:
Go to Gateway of Tally > Display > Statutory Reports > CST Reports

Figure 4.4 CST Reports Menu

The CST Reports menu consists of:
Forms Receivable
Forms Issuable
CST Forms

4.3 Forms Receivables
The Forms Receivable report comments on various forms to be received from the dealer at any
given point of time. It displays the date of transaction, CST Sales ledger used, gross amount
inclusive of CST, form types and also contains two additional fields Form Number and Date, which
have to be filled when the prescribed forms are received from the purchasing dealer or the
customer.
Usually, this report is generated at the end of a financial year or month end (in specific cases).
However, Tally facilitates the generation of this report at any point of time.

To view Form Receivables Report
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > Form Receivable

94

CST Reports

i. Ledger-Wise Forms Receivables Report
Press Enter on Ledger in the Forms Receivables menu to view the list of Ledgers. Select the
Ledger – Mc Millan Techsys

Figure 4.5 Forms Receivables – Ledger Selection

The Forms to be received, for Mc Millan Techsys are displayed in the Forms Receivable screen
Press Alt + S or click on Set Form No. button in the buttons bar to enter the Form Number and
Form Date as shown:

Figure 4.6 Forms Receivables – Set Form Number
Press Enter to accept and save.

In case where there are different Forms received from the same debtor, the
Form specific report can be generated using F12: Configuration. In Forms
Receivables report of ledger, click on F12: Configure and select the
required Form Type in the Show Vouchers of field.

i. Group-Wise Forms Receivables Report
In the Forms Receivable menu, press Enter key on Group to view the List of Groups. Select
Sundry Debtors. Press Enter to view the Group-wise Forms Receivables report as shown:

Figure 4.7 Forms Receivables – Sundry Debtors Group

95

CST Reports

Click on F12: Configure and set the option Sort by Party Name to Yes as shown:

Figure 4.8 F12: Configuration

The Forms Receivables Report displays as shown:

Figure 4.9 Forms Receivables – Sorted by Party Name

Click on F12: Configure and set the options as shown:

Figure 4.10 F12: Configuration – Selection of Form Type

Show Vouchers of to Press Alt + S or click on Set Form No. button in the buttons bar to enter the
Form Number and Form Date

Figure 4.11 Forms Receivables – Group – Form Number and Date

Accept the Forms Receivable screen.

96

CST Reports

In Group-Wise Forms Receivables report, the Form Number and Form Dates
for all the inter-state sales made to all the Sundry Debtors can be entered in a
single screen. In case of ledger-wise report, the required party ledger can be
selected and the details pertaining to Form Number and Date can be speci-
fied.

4.4 Forms Issuable
Forms Issuable report comments on various forms to be issued to the dealer at any given point of
time. It displays the date of transaction, CST Purchases ledger employed, gross amount inclusive
of CST, form types and also contains two additional fields viz., Form Number and Date, which can
be filled when the prescribed forms are issued to the selling dealer or supplier.

To view Form Issuable Report
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > Form Issuable
Similar to the Forms Receivables report, the Forms Issuables report can also be viewed in the
following two ways,
Group-wise Forms Issuables
Ledger-wise Forms Issuables

i. Group-wise Form Issuables Report
In the Forms Issuable menu, select Group and then Sundry Creditors.
Click on F12: Configure and set the option Show All Vouchers to Yes. Retain the other default
fields.

Figure 4.12 Forms Issuables – Sundry Creditors

In Group-Wise Forms Issuables report, the Form Number and Form Dates for
inter-state purchases made from all the Sundry Creditors can be entered in a
single screen. In case of ledger-wise report, the required party ledger can be
selected and the details pertaining to Form Number and Date can be speci-
fied.

97

CST Reports

ii. Ledger-Wise Forms Issuables Report
Press Enter on Ledger in the Forms Issuable menu to view the list of Ledgers. Select the
Ledger – Rishita Traders
Forms to be issued for Rishita Traders is displayed in the Forms Issuable screen.

Figure 4.13 Forms Issuable – Rishita Traders

Press Alt + S or click on Set Form No. Button in the buttons bar to enter the Form Number and
Form Date.

Figure 4.14 Forms Issuable – Rishita Traders

Accept the Forms Issuable screen.

4.5 Auto–Fill Option for CST
The Auto Fill option for CST is available in the Form Issuable/ Form Receivable screen. This
option is used to filter the Forms Type and to fill up the form number for a group of vouchers.
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > Form Receivable >
Ledger > select National Enterprises
Press Alt + S or click on Set Form No. Button in the buttons bar to enter the Form Number and
Form Date

Figure 4.15 Forms Receivables – Auto Fill

Press F5: Auto Fill – CST to view Set Form Number screen
In the Set Form Numbers screen,
Select the Form from Form Types

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Enter the Form Number and Form Date for the group of vouchers

Figure 4.16 Auto–Fill – Set Form Numbers

Press Enter to accept the configuration.
Form Number and Form Date are captured and displayed as shown:

Figure 4.17 Forms Receivables – Form Numbers and Date using Auto Fill Option

Press Enter to accept and save.

4.6 Viewing All Vouchers
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > Form Receivable/
Form Issuable
Here select Forms Receivable > Group > Sundry Debtors
Press Alt + F2 to change the period
In the Forms Receivable screen, press F12: Configure
In the CST Report Configuration screen
Set Show All Vouchers to Yes
In Show Vouchers of field, select the C Form from Form Types
Set Sort by Party Name to Yes

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Accept the configuration. The Forms Receivables screen displays as shown:

Figure 4.18 Forms Receivables – Show All Vouchers

4.7 Reminder and Covering Letters
You can send reminder letters to parties who have to issue forms. You can also send covering
letters to parties, confirming receipt of forms.

4.7.1 Reminder Letters
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > Form Receivable
Select Rishita Traders from List of Ledgers
Change the period as 1-4-2009 to 11-4-2009
In the Forms Receivable screen, click on the P: Print button (Alt + P)

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In the Report Generation screen, set Print Reminder Letter to Yes

Figure 4.19 Report Generation screen – Reminder Letter

Press Enter to view the preview. The Print Preview of reminder letter displays as shown:

Figure 4.20 Reminder Letter – Print Preview screen

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4.7.2 Covering Letters
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > Forms Issuable
Select Universal Traders from List of Ledgers
In the F12: Configuration, set Show All Vouchers to Yes
Change the period as 1-4-2009 to 3-4-2009
In the Forms Issuable screen, click on P: Print (Alt + P)
In the Report Generation screen, set Print Covering Letter to Yes
The Print preview screen of Covering Letter for Universal Traders displays as shown:

Figure 4.21 Covering Letter – Print Preview screen

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CST Reports

4.8 CST Return Form
To view the CST Return Form,
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > CST Forms > CST
Return Form

Figure 4.22 CST Forms Menu

The CST Returns option will display the Report Generation screen. Enter the Tax Period in the
From and To fields, Name, Status/Designation, Place, Date, the Area Code and the Name of
Circle/Sector in their respective fields.

Figure 4.23 CST Return Form – Report Generation screen

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CST Reports

The print preview of CST Form I displays as shown:

Figure 4.24 CST Form I – Page 1

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CST Reports

Figure 4.25 CST Form I – Page 2

4.9 CST Annexure
To view the CST Annexure,
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > CST Annexure

Figure 4.26 CST Annexures Menu

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CST Reports

4.9.1 Annexure – I
This Annexure lists out the details of turnover claimed as sales in the course of import during the
month.
The print preview of CST Annexure I for M/s. National Traders displays as shown:

Figure 4.27 CST Annexure I – Sale of Goods in the Course of Import into India

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CST Reports

Returns and Additions
This is the additional facility provided by Tally.ERP 9. These values can be printed by the user on
enabling the option Print with Returns/Additions in F12: Print Configuration of each
Annexure.
CST Annexure I can be printed along with a statement displaying the details on Sales Returns or
Additions (Sale consideration for increase in price) on Sales of Goods in the course of import into
India.
This statement is printed on setting the option Print with Returns/Additions to Yes in the F12:
Print Configuration of CST Annexure I. The print preview of Returns/Additions supporting
CST Annexure I for M/s. National Traders displays as shown:

Figure 4.28 Annexure – I – Returns & Additions screen

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CST Reports

4.9.2 Annexure – II
This Annexure lists out the details of turnover claimed as exempted in the course of Inter-state
sales against Form E1/E2 as specified u/s 6(2) of the Act during the month.
The print preview of CST Annexure II for M/s. National Traders displays as shown:

Figure 4.29 Annexure II

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CST Reports

CST Annexure II can be printed along with a statement displaying the details of Sales Returns/
Additions on Sales of Goods against Form E1/E2.
The print preview of Returns/Additions supporting CST Annexure II for M/s. National Traders
displays as shown:

Figure 4.30 Annexure – II – Returns & Additions screen

4.9.3 Annexure – III
This Annexure lists out the details of all the Consignment transfers made directly to branch
outside the state by the dealer. All the entries made using VAT/Tax class Consignment / Branch
Transfer outward will be captured here when the option Is Sale in Principal's A/c is set to No in
the sales invoice.

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The print preview of CST Annexure III for M/s. National Traders displays as shown:

Figure 4.31 Annexure – III

CST Annexure III can be printed along with a statement displaying the details on Sales Returns/
Additions on Goods Transferred to the place of business in the other states.

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CST Reports

The print preview of Returns/Additions supporting CST Annexure III for M/s. National Traders
displays as shown:

Figure 4.32 Annexure – III – Returns & Additions screen

4.9.4 Annexure – IV
This Annexure lists out the details of all the Consignment transfers made through the agent of the
principal to the branch located outside state. The value of all the sales entries made using the
VAT/Tax class – Branch Transfers Outwards will be captured here on setting the option Is Sale
in Principal's A/c to Yes in a sales invoice.

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CST Reports

The print preview of CST Annexure IV for M/s. National Traders displays as shown:

Figure 4.33 Annexure IV

CST Annexure IV can be printed along with a statement displaying the details on Sales Returns/
Additions on Goods Transferred to the place of business in the other states.

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CST Reports

The print preview of Returns/Additions supporting CST Annexure IV for M/s. National Traders
displays as shown:

Figure 4.34 Annexure IV – Returns & Additions

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Implementation Of CST - Tally ERP

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