Accounts Executive 2nd Year (SNVVHSS) PDF

Basic concepts of Taxation Tax is a mandatory liability for every citizen of the country. There are two types of tax in India i.e. direct & indirect. Taxation in India is rooted from the period of Manusmriti & Arthasastra. Present Indian tax system which was based on the theory of maximum soci...

Basic concepts of Taxation Tax is a mandatory liability for every citizen of the country. There are two types of tax in India i.e. direct & indirect. Taxation in India is rooted from the period of Manusmriti & Arthasastra. Present Indian tax system which was based on the theory of maximum social welfare. The Parliament passes laws to approve taxes collected by the Central Government. In the case of the State Governments, the State Legislature holds this power. By the State Government the local governing bodies such as panchayats, municipalities and corporations also have the right to levy certain taxes. The State Government impose State GST, Excise on Liquor, VAT (value Added Tax) on Petrol & Diesel, Tax on Agricultural Income, land revenues, tolls and more. The local self- governing bodies impose employment tax, property tax, water tax etc… Need for Taxation The following are the needs for taxation:-  Maintain law and order  Safeguard security for the nation from foreign powers  Improve infrastructure facilities such as building roads, railways, bridges, canals etc..  Improve health care and education.  Provide welfare programmes which will bridge the gap between rich and poor. Classification of Tax: 1) Direct Taxes As the name suggested are taxes that are directly paid to the government by the taxpayer. It is a tax applied on individuals and organizations directly by the government. Eg:- Income Tax , Corporate tax, Capital gain tax, Wealth Tax, etc… 1|Page 2) Indirect Taxes An indirect tax is one that is not paid directly by a person to the government but collected by an intermediary and passed on to the government. Eg:- GST, Sales Tax , Excise Duty, Customs Duty etc… Differences between Direct Tax and Indirect Tax Points of difference Direct Tax Indirect Tax Incidence and impact Falls on the same Falls of different persons. person Taxable event When the income or Supply,Purchase, sale or wealth of the assessee manufacture of goods and reaches the maximum provision of services. limit. Tax burden The burden of tax The burden can be shifted cannot be shifted Scope of taxation Direct taxes are Indirect tax is ultimately collected only from paid by the end consumer people in respective tax of goods and services, has brackets. a wider scope. Nature of tax Progressive Regressive. Highest Body Central Board of Direct Central Board of Indirect Taxes (CBDT) plays an Taxes & Customs (CBIC) important role in plays an important role in planning & planning & implementing implementing direct indirect taxes policy in taxes policy in India. India Effect of inflation Direct taxes helps to Indirect tax may enhance reduce inflation inflation Cost of Administration High administrative Less administrative cost as cost compared to direct tax Tax evasion Tax evasion is possible Tax evasion is hardly possible Collection of tax difficult Easy Time of Collection The amount of direct The amount of indirect taxes is collected after taxes is collected at the the end of year time of sale or purchase or rendering of services. 2|Page Surcharge Surcharge is an additional charge or tax imposed on higher income groups at prescribed rate. It is imposed as an additional tax on income tax. Different rates of surcharge are applicable for different categories of taxpayers and the current rates of Surcharge are as follows:- Level of Income Surcharge on Income Tax Less than ₹ 50 Lakhs Nil ₹ 50 Lakhs to ₹ 1 Crore 10 % ₹1 Crore to ₹ 2 Crore 15 % ₹2 Crores to ₹ 5 Crore 25 % More than ₹ 5 Crores 37 % Cess Cess is a tax that is levied by the government to raise funds for a pre decided purpose. Cess is not a permanent source of revenue for the government, and it is discontinued when the purpose levying it is fulfilled. It can be levied on both indirect and direct taxes. Eg:- Health and education cess (4%), Cess on crude oil, Cess on export, Road and infrastructure cess, Flood cess etc… Difference between Cess and Surcharge Cess Surcharge Cess is used for a specific purpose The surcharge can be used for any only. It cannot be used for any reason that the government finds other reason. fit. Cess is aimed at public welfare. Surcharge aims to tax high earning individuals. Authorities calculate cess on the A surcharge is calculated on the surcharge and the total tax. total tax amount only. PAN PAN stands for Permanent Account Number. PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. The primary purpose of PAN is to bring a universal identification to all financial transactions and to prevent tax evasion by keeping track of monetary transactions of all taxpayers in India. 3|Page  A PAN card is a valuable means of photo identification accepted by all Government and non-Government institutions in the country. It is also mandatory for numerous other financial transactions such as:-  Opening of bank accounts  Fixed deposit of cash Rs.50,000 and above in a bank account  Buying and selling motor vehicles more than Rs.5,00,000  To avail loans from financial institutions  Applying for debit card and credit card  Making investments in securities.  Opening of Demat account  To do Foreign exchange transactions  Transaction of immovable properties  To make insurance payments exceeding Rs.50,000 in a year etc… Advance Tax Advance Tax is one of the modes of collection of tax by Government. The tax liability for the current financial year shall be estimated in advance and paid to the Government during that year itself in advance. Advance Tax shall be payable if the amount of tax payable by the assessee during the year is Rs.10,000/- or more ( Sec.208 of Income Tax Act 1961). Advance tax is also known as ‘Pay as you earn’ scheme. Due Date of Payment of Advance Tax Payment Due Date Amount to be Paid as Advance Tax First Installment (On or before 15 June) 15% of Tax liability Second Installment (On or before 15 September) 45% of Tax liability Third Installment (On or before 15 December) 75% of Tax liability Last Installment (On or before 15 March) 100% of Tax liability Exemption from payment of advance Tax a) Advance Tax need not be paid if the amount of tax payable is less than Rs.10000/- b) A resident senior citizen aged 60 years or more, does not have any income chargeable under the head "Profits and gains of business or Profession" is not required to pay advance Tax. 4|Page TDS The TDS concept is a tool by the Government to minimize tax evasion and collect at the income source. In the case of certain incomes, a tax is required to be deducted at source by the payer before making the payment. The rates have been specified under the income tax act under various categories. There are 32 items of incomes/payments on which TDS is deducted. The sole responsibility of deducting the tax before making the payment lies on the payer. To payer should have a valid tax deduction and collection account number (TAN) Conditions for deducting TDS a) Any person who is responsible for making payment of nature covered under the TDS provisions of Income Tax Act, 1961 shall be liable to deduct tax at source. b) Every employer who pays a salaried income to his employees, needs to deduct TDS on salary if the income amount is over the basic exemption limit ₹ 2,50,000/- TDS exemptions 1) For those who are not required to file Income Tax return. 2) For those who give a declaration under Section 15G/15H at the beginning of the financial year and verified by the deductor according to the Income Tax rules. Due date of filing TDS returns Quarter Period Last date of filing return First April to June 31st July Second July to September 31st October Third October to December 31st January Fourth December to March 31st May TCS (Tax collected at source) Tax collected by the seller on sale of certain specified goods. TCS is applicable for online trading (sales) as per GST laws. Rates of TCS:- The present TCS rates be 1%, 2%, 2.5% and 5% Eg:- Sale of Scrap-1%.Timber which is obtained from leased forest -2.5% 5|Page Due date of remittance of TDS & TCS Generally, the due date for TDS&TCS payment is always the 7th day of the next month, However, the TDS deducted in the month of March can be deposited till 30th April. For example, if an organization wants to pay TDS for the month of July, then the TDS payment due date for the same will be the 7th of August. TAN (Tax Deduction and Collection Account Number) TAN is a 10-digit alphanumeric number issued by the Income Tax Department (ITD). TAN is to be obtained by all persons who are responsible for deducting tax at source (TDS) or who are required to collect tax at source (TCS). Meaning of Income Tax The tax levied and collected on income earned by a person is called income tax. By virtue of powers conferred by Article 246 of the constitution of India, Parliament has exclusive power to make law with respect to any of the matters enumerated in List 1 (union list) in the seventh schedule to constitution. Entry no. 82 of the union list states Tax on income other than agricultural income. But tax on agricultural income is a state subject, has been brought in by entry no. 46 of the state list of the seventh schedule to constitution. Every person, whose taxable income in any previous year exceeds the non - taxable limit shall be liable to pay income tax at the rates in force during the current financial year. The Income Tax Act 1961 came into force on 1st April 1962. It applies to the whole of India. COMPONENTS OF INCOME TAX LAW 1. Income Tax Act - 1961 2. Income Tax Rules – 1962 3. Finance Act 4. Circulars & Notifications 5. Legal decision of courts 6|Page Basic Terms 1. Assessee Sec. 2(7) Assessee means a person by whom any tax or other sum of money is payable under this Act and includes. a) Every person  Who is liable to pay any tax  Who is liable to pay any other sum of money under this Act (e.g. interest, penalty etc… b) Deemed Assessee A person who is liable to pay tax not only on his own income but on the income of any another person. Deemed assesses includes legal representative, guardian or manager of infant and lunatic person etc… c) Assessee in default A person who has failed to fulfil his statutory obligations as per the income tax act such as not paid taxes to the government or not file his income tax return. 2. Assessment Year Sec. 2(9) The term has been defined under section 2(9). This means a period of 12 months commencing on 1st April every year. The year in which income is earned is the previous year and such income is taxable in the immediately following year which is the assessment year. Income earned in the previous year 2023 -2024 is taxable in the assessment year 2024- 2025. 3. Previous Year Sec. 3 Previous year means the financial year immediately preceding the assessment year. As mentioned earlier, the income earned during the previous year is taxable in the assessment year. 7|Page 4. Assessment Every taxpayer has to furnish the details of his income to the Income-tax Department. These details are to be furnished by filing up his return of income. The returns has to be filed electronically i.e through online using User ID and password. The Income Tax Department examines the return of income for its correctness. The process of examining the return of income by the Income-Tax department is called as “Assessment”. Residential Status (Sec.6) The scope of total income of an assessee is determined with reference to his/her residential status in the previous year. Residence and citizenship are different. An Indian may be non-resident or a foreigner may be resident for income tax purpose. The residential status may change from year to year but citizenship will not change. Residential status of an individual is determined on the basis of two conditions. They are called Basic conditions and Additional conditions. Basic Conditions Sec. 6(1) The residential status of an individual is determined on the basis of the period of his stay in India. I. Must be present in India for a period of 182 days or more during the previous year. II. Must be present in India for a period of 60 days or more during the previous year and 365 days or more during the 4 years immediately preceding the previous year. 8|Page However, the second condition is not applicable in the following cases: a) An Indian citizen who leaves India during the previous year for the purpose of employment outside India or as a member of the crew of an Indian ship. b) An Indian citizen or a person of India origin who, being outside India, comes on a visit to India during the previous year. Additional Conditions Sec. 6(6) I. He is a resident in at least 2 out of 10 previous year preceding the relevant previous year. II. His stay in India in the last 7 years preceding the relevant previous years is 730 days or more. Determination of Residential Status of an individual a) Resident and ordinarily resident Must satisfy at least one of the basic conditions and both the additional conditions. b) Resident but not ordinarily resident Must satisfy at least one of the basic conditions and one or none of the additional conditions. c) Non- resident Must not satisfy either of the basic conditions. Deemed Resident Indian Citizen Total Income other than foreign Income exceeds ₹15 lakh & Not liable to tax in any other country or territory by reason of his domicile or residence. Heads of income (Sec.14) 1. Income from salary 2. Income from house property 3. Income from business or profession 4. Income from capital gains 5. Income from other sources. 9|Page  Heads of Incomes Heads includes:- Income from Salary Salary, Allowances, Pension, Bonus, Incentives, Remuneration, Perquisites, Profit in lieu of salary etc… Income from House Property Rental Income from let out House Property. Income from Business or Income from any Business, Income from doing Profession profession such as practicing Doctors, Advocates, Chartered Accountants, Company Secretaries, Management/Technical Consultants etc… Income from Capital Gains Gains or Profit from Sale of Immovable Properties, Stocks and Shares etc… Income from Other Source Income earned from other than the above sources, such as Interest Income, Dividend Income, Winning from lottery, Horse race etc… Gross Total Income (GTI) Gross Total Income means aggregate of five heads of income of an assessee during the previous year computed according to the provisions of Act before making any deductions under Chapter VI A (Sec. 80 C to 80 U) Total Income (TI) Total Income means aggregate of five heads of income computed according to the provisions of the Act after making deductions under Chapter VI A (Sec. 80 C to 80 U) Difference between GTI & TI Basis GTI TI Meaning It is the total or aggregate It is the balance amount of all the five heads of remaining after making income. deductions of Sec. 80C to 80U from the Gross Total Income. Deductions U/s 80 It is the income before It is the income after making deductions under making deductions under section 80. section 80. 10 | P a g e  Income Tax Income Tax is not Income tax is computed computed on this income. on this income. Knowledge of Knowledge of deductions Knowledge of deduction Deductions is not required for is required for computation of this computation of this income income. Round-off It is not rounded-off It is rounded-off in multiple of ₹10 Difference between the Previous Year & the Assessment Year PY AY Sec.3 of the Income Tax Act is formed Sec. 2(9) is formed for the Assessment for the Previous Year. Year. Previous Year means the financial year Assessment Year means the period of immediately preceding the assessment twelve months commencing on the first year. day of April every year and ending on 31st March of the next year. Previous Year may be less than 12 Assessment Year will always be for a months in case of newly set up business period of 12 months. or profession. The year in which income is earned is The next year in which the previous known as the Previous Year. years income become taxable is known as the Assessment Year. 11 | P a g e  Meaning of Salary income Any remuneration received by an employee from the employer in consideration of his service is called salary. It includes monetary value of all benefits and facilities provided by the employer. Any value received by the employee on account of employer - employee relationship is taxable under the head Income from Salary. As per Sec. 17(1) of Income Tax Act 1961, salary includes the following:-  Wages  Any annuity or pension  Any advance salary  Any gratuity  Any leave salary  Any fees, commission  Bonus  Perquisites  Profits in lieu of salary etc…. Meaning of Allowances Allowances are the monetary benefits given by the employer to the employee over and above the basic salary for meeting various expenses. Allowances may be classified into 3 categories: a) Fully Taxable allowances b) Partially taxable allowances c) Non- taxable or exempted allowances Fully Taxable allowances Dearness allowance Non practicing allowance. City Compensatory allowance. Hill area allowance. Fixed medical allowance. Deputation allowance. Servant allowance. Over time allowance. 12 | P a g e Partially taxable allowances House Rent Allowance Non- taxable or exempted allowances Foreign allowance (to a government employee outside India) Sumptuary allowance given for supreme court and high court judges Allowances to the employees of UNO Perquisites “Perquisite” may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. “Perquisite” is defined in the section 17(2) of the Income tax Act as including:-  Value of rent free accommodation  Value of any benefit/amenity granted free or at concessional rate to specified employee  Free motor car facility for personal use of employee.  Free/Concessional Educational Facility.  Free/Concessional journeys. Steps for the computation of taxable salary Income:- 1) Compute gross salary for the financial year ie. take the sum of Basic pay, Taxable allowances, Taxable perquisites, Profit in lieu of salary etc… 2) Deduct professional tax paid and entertainment allowance received if any. 3) Deduct standard deduction from salary- ₹ 50,000/- Then Income from salary can be arrived. 13 | P a g e Computation of taxable portion of HRA Least of the following is exempted under sec. 10(13A) from actual HRA received. I. Actual HRA received during the year II. Rent paid in excess of 10% salary III. 40% or 50% salary (50% salary in case of Metro Politian cities and 40 % in case of other cities) (Delhi, Mumbai, Chennai and Kolkata) Chapter VI A deductions These are the deductions from Gross total Income available to assesses as per Sec. 80C to 80U of Income Tax Act 1961. Deduction under section: 80C Maximum amount of deduction under sec.80C is ₹1,50,000/- 80C allows deduction for:- Investment made in PPF , EPF LIC premium , Equity linked saving scheme Principal amount payment towards home loan Stamp duty and registration charges for purchase of property Sukanya samriddhi yojana (SSY) National saving certificate (NSC) National Pension System (NPS) Senior citizen savings scheme (SCSS) ULIP, tax saving FD for 5 years, Infrastructure bonds etc.. 14 | P a g e Deduction under section: 80D Section 80D is a facility introduced in the Income Tax Act to allow taxpayers to claim a deduction for Medical insurance premium paid. Deduction under section 80D can be availed by all taxpayers for making remittances of any premium or mediclaim policy availed in the name of:  The taxpayer himself  The spouse of the taxpayer  Dependent children of the taxpayer  Parents of the taxpayer. Interest on Housing Loan: Sec.24b Section 24b of income tax act allows deduction of interest on home loan from the taxable income. Such loan should be taken for purchase or construction or repair or reconstruction of house property. Maximum amount of deduction is ₹ 2,00,000 Rebate under Sec. 87A Section 87A provides a tax rebate to individual taxpayers if their total income is less than ₹5 lakh after claiming deductions. This rebate is only allowed to individuals. HUFs or firms, or companies cannot claim this rebate. Non -resident Taxpayers are not eligible for a rebate under sec. 87A. Income Tax slabs & Rates as Per Old Regime FY 2023 – 24 I. Income Tax Slab for Individual who are below 60 years Up to ₹ 2.5 lakh Nil Above ₹ 2.50 lakh - ₹ 5 lakh 5% Above ₹ 5 lakh - ₹ 10 lakh 20% Above ₹ 10 lakh 30% Add education cess @4% Individuals who have an income of less than Rs.5 lakh are eligible for tax Rebate under Sec. 87A 15 | P a g e  II. Income Tax Slab between 60-80 years (Senior Citizen) Up to ₹ 3 lakh Nil Above ₹ 3 lakh - ₹ 5 lakh 5% Above ₹ 5 lakh - ₹ 10 lakh 20% Above ₹ 10 lakh 30 % III. Income Tax Slabs for individual above 80 years (super senior citizen) Up to ₹ 5 lakh Nil Above ₹ 5 lakh - ₹ 10 lakh 20% Above ₹ 10 lakh 30% Computation of tax liability and monthly TDS on salary Step1: Assess Gross Salary Step 2: Assess Income from Salary Step 3: Assess Gross Total Income Step 4: Assess the Total Income (after deductions) Step 5: Assess Income tax as per current year’s Rate of tax. Step 6: Add surcharge if any Step 7: Add Education cess. Step 8: Assess TDS to be deducted from monthly salary 16 | P a g e  Basic Concepts of GST Meaning of GST GST is an indirect tax imposed on the supply of goods and services by the state and central government. It is a destination based single tax. The taxable event of GST is supply of goods or services. The GST has been defined as “a tax on supply of goods or services or both, except supply of alcoholic liquor for human consumption and petroleum products”. As per this definition SUPPLY is the taxable event under GST. Supply means supply of goods, supply of services or supply of both goods and services. But the supply of alcoholic liquor is exempted from the supply under GST. In addition to this the supply of petroleum products such as crude oil, high speed diesel, petrol, Aviation Turbine Fuel (ATF) and natural gas are also exempted from GST. The 101st constitutional amendment empowers the Centre and the States to levy and collect the Goods and Service Tax(GST). The tax shall be levied as dual GST separately but concurrently by the Center and the States/ Union Territories. The Central Government would have exclusive power to levy IGST on inter-State trade or commerce including imports. Structure of GST 17 | P a g e  a) CGST means Central Goods and Services Tax. It is the portion of tax on intra- state supply charged by central government. b) SGST means State goods and Service Tax. It is the portion of tax on intra -state supply charged by state government. c) UTGST means Union Territory Goods and Service Tax. It is the portion of tax on intra- state supply charged by a Union Territory government. d) IGST means Integrated Goods and Service Tax, imposed by the central government on the interstate supply of goods or services and on the import of goods or services or both. Benefits of GST The benefits of GST may be grouped as under:- a) Benefits to the nation and economy. b) Benefits to the business and industry. c) Benefits to the Consumers. A. Benefits to nation and economy 1) GST will help to create a unified common national market for India 2) It prevents cascading of taxes 3) It ensure harmonization of laws, procedure and rates of tax throughout the nation 4) It helps to boost export and manufacturing activity, generate more employment and thus increase GDP 5) It improves the overall investment climate in the country B. Benefits to the business and industry 1) Simple to calculate and easy to understand 2) Elimination of multiple taxes leads to simplification and uniformity 3) It will improve tax compliance, as all returns are to be filed online and input credits can be verified online. 4) Electronic matching of input tax credits all across India, makes the process more transparent and accountable. 5) Simplified and automated procedures for registration, returns, refunds, tax payments etc… C. Benefits to the consumers 1) Simpler tax system 2) Tax exemption and compounding schemes helps to consumers to buy products at lower price 18 | P a g e 3) Transparency in taxation system 4) Reduction in prices of goods and services due to elimination of cascading. 5) Uniform prices throughout the country GST COUNCIL GST council is the most important decision making body under GST. The GST council has been constituted under Article 279 A (1) of the constitutional amendment. The council consists of Union Finance minister as the chairman and the minister of state Revenue and finance as members. The decision of the council should be passed with 3/4th majority of the casted votes. The GST council has the following duties and powers:- 1) Recommend the goods and services which may be subjected or exempted from GST. 2) Recommend GST rates 3) Recommend the threshold limits for registration and compounding 4) Provide the mechanism for resolving disputes 5) Recommend for any special provisions. Basic terms in GST Goods: Means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and things attached to the earth or forming part of the land which agreed to be severed before supply or under a contract of supply. Services: means anything other than goods, money and securities but includes activities relating to the use of money or its conversion in any form for a consideration. Turnover: means the aggregate value of all taxable supplies, exempt supplies, and exports of goods and services made by a taxable person excluding taxes. 19 | P a g e Concept of Supply under GST (Section 7) CGST Act 2017 has provided an inclusive definition of Supply under Sec. 7(1) which states that: "Supply includes: a) All forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business b) Import of services for a consideration whether or not in the course or furtherance of business b) Import of services for a consideration whether or not in the course or furtherance of business c) The activities specified in Schedule I, made or agreed to be made without a consideration; (Supply made by a principal to agent). It is called deemed supply. d) The activities to be treated as supply of goods or supply of services as referred to in Schedule-II Exclusions from Supply (Schedule III) Sec.7(2) deals with the activities which shall be treated neither as a supply of goods nor as the supply of services as mentioned in Schedule III and to be notified by Government. It is otherwise called Negative List of Supply. It includes- a) Services by an employee in the course of his employment b) Services by Court/Tribunal. c) Functions performed by MLA,MP d) Services of the funeral, burial, crematorium or mobile mortuary. e) Sale of land & building. f) Actionable claims, other than lottery, betting and gambling. Inter-state and Intra-state supplies If the location of the supplier and the place of supply are in the same state, it is called intra-state and if the location of the supplier and the place of supply are in different states it is called inter – state supplies. 20 | P a g e Input Tax Input tax means the tax charged on the inward supply of goods, services and capital goods. The taxes may be Input CGST/SGST/IGST/UTGST charged on the supply of goods or services or both by a registered dealer. It does not include tax paid under composition levy. The definition of input tax also includes the tax payable under reverse charge. Output Tax Output tax means the tax collected on the outward supply of goods or services or both. The taxes may be Output CGST/SGST/IGST/UTGST. RCM (Reverse Charge Mechanism) Normally seller collects GST from buyers and pays to government. However in some case buyer pays GST directly to government this is called reverse charge in GST. (ITC) Input tax credit: means set off or reduction of the tax liability to the extent of input tax on inward supply. It means that Input CGST/SGST/IGST can be utilized for reducing the tax liability of Output CGST/SGST/IGST as per the provisions of GST Laws. Conditions to avail Input Tax Credit facility: A registered person is entitled to take credit of input tax only if the goods or services are used or intended to be used for the furtherance of business subject to conditions and restrictions. The following conditions are to be satisfied by a registered dealer for availing ITC a) He has received goods or services or both. b) He is in possession of tax invoice or debit note or such other tax paying documents as may be prescribed. c) The supplier has actually paid tax on the supply to the government, and d) He has furnished the return under sec. 39. 21 | P a g e  e) The input tax credit on capital goods can be availed in one installment, provided depreciation on such goods shall not be claimed as per Income Tax Act 1961. HSN (Harmonized System of Nomenclature) HSN is an internationally accepted coding system developed by World Customs Organisation (WCO) with the vision of classifying goods all over the world in a systematic and logical manner. SAC (Services Accounting Code) SAC is issued by CBEC to uniformly classify each service under GST. GSTN (Goods and Service Tax Network) GSTN is a non-profit, non-government organization which manages the entire IT system of the GST portal, which is the mother database for everything GST. It is formed under Sec. 25 of the companies Act 1956(Now Sec.8 of the Companies Act 2013). GSTIN (Goods and Service Tax Identification Number) GSTIN is the registration number allotted to every registered dealer under GST Act. The GSTIN is a 15 digit PAN based registration number. E-Way Bill E-way Bill is an electronic way bill for movement of goods which can be generated on the GST common portal. A movement of goods of more than ₹ 50000/- in value cannot be made by a registered person without an e-way bill. When an e-way bill is generated a unique e-way bill number (EBN) is generated and is available to the supplier, recipient and the transporter. 22 | P a g e Payment of GST The payment of GST by the normal tax payer is to be done on monthly basis and Composition tax payers will need to pay tax on a quarterly basis. Type of Taxpayer Frequency GST Payment Due Dates General Monthly 20th Day of the Next Month QRMP scheme Monthly 25th Day of the next Month Composition Quarterly 18th Day of the Next Month of Quarter Non-Resident Monthly 20th Day of the Next Month Input Service Distributor Monthly 13th Day of the Next Month TDS Deductor Monthly 10th Day of the Next Month TCS Collector Monthly 10th Day of the Next Month Quarterly Return Filing and Monthly Payment of Taxes (QRMP) Scheme CBIC introduced Quarterly Return Filing and Monthly Payment of Taxes (QRMP) scheme under GST to help small taxpayers whose turnover is less than Rs.5 crores. The QRMP scheme allows the taxpayers to file GSTR-3B on a quarterly basis and pay tax every month. The registered persons opting for this scheme can furnish the details of outward supplies using the Invoice Furnishing Facility (IFF). Interest on Late Payment of GST According to the GST Penalty regulations, interest will be charged at the rate of 18% per annum from the taxpayers who fail to pay their taxes on time. The interest will be levied for the days after the due date. Registration (Sec.22) Every supplier including his agent who makes a taxable supply of goods or services or both shall be liable to be get registered under GST law. In general, if the aggregate turnover of the supplier exceeds Rs.40 lakhs (Rs. 20 lakhs for north eastern and hill states) shall be liable to register himself. Special category of states are Arunachal Pradesh, Assam, Manipur Meghalaya, Mizoram, Nagaland, Tripura, Sikkim and Uttarakhand 23 | P a g e Composition scheme under GST (Sec.10) Composition scheme is a simple and easy scheme under GST for taxpayers. Small scale business can avoid tedious GST formalities and pay GST at a fixed rate of turnover in composition scheme. This scheme can be opted by any taxpayers whose turnover is less than ₹1.5 crore (Trader, Manufacturer, Restaurant service) The threshold limit is ₹ 75 Lakhs for north eastern states. The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Dealers not eligible to opt for composition scheme Manufacturer of ice cream, Pan masala or tobacco Business which supply goods through an e-commerce operator Casual taxable person or non-resident taxable person. GST-Compounding Rates Type of Business CGST SGST Total Manufacturers and Traders (Goods) 0.5% 0.5% 1% Restaurants not serving Alcohol 2.5% 2.5% 5% Service Providers 3% 3% 6% Manufacturers of bricks 3% 3% 6% Tax Invoice & Bill of Supply A registered person supplying taxable goods or services shall issue a tax invoice. The invoice should contain invoice No, GSTIN of the recipient, HSN, Value of goods/service, taxable value, place of supply, CGST/SGST/IGST rate and amount. Bill of supply is a transaction document that does not show any tax amount on it for which input tax cannot be charged. This is the main difference tax invoice. 24 | P a g e Cases to be issue a Bill of supply Supply of exempted goods or services Supplier is paying tax under composition scheme Voluntary Registration As per section 25 (3) a person may take voluntary registration, even if the dealer is not liable to be registered. PAN is mandatory for registration, but it is not mandatory to non-residents. A registered dealer has to file GST returns even though his tax liability is Nil. Compulsory registration Under sec. 24 of the GST Act the following persons are required to be get registered irrespective of their turnover. Person making any interstate taxable supply Casual taxable person E-commerce operators Non-resident taxable persons Input service distributor GST Returns A GST return is a document containing details of purchases, sales, debit notes, credit notes, Output GST, Input tax credit etc. which a taxpayer is required to file with the tax authorities. This is used by tax authorities to calculate tax liability. Filing of GST returns is compulsory for every registered dealer. GST returns has to be filed electronically. Regular dealers have to file three monthly returns and one annual return. They are GSTR 1, GSTR2, GSTR 3 GSTR 9. Composite dealers have to file one quarterly return and one annual return. They are GSTR 4 and GSTR 9A. 25 | P a g e Date of Filing GST Returns Quarterly Return 18th of subsequent month after each quarter. As per the latest amendments of the GST Act, GST late filing penalty has been reduced to Rs.25 per day under the CGST law and Rs. 25 per day under the SGST law, making it a total of Rs.50 per day for both intra and interstate supplies. Computation of Input tax and Output tax Computation of Input tax and Output tax for the month of …… 26 | P a g e  Prepare & perform payroll function Components of Payroll The main components of Payroll are:- Salary Details Statutory Details viz. PF, ESI, Gratuity, etc… Attendance and Leave records Appointments, Increments & Retirement of Employees Production linked incentives TDS on Salary Salary details The main components of salary are Basic pay, Allowances and Perquisites and. From the point of employer, the entire expense to maintain an employee is termed as Cost to Company (CTC). The different components of CTC are as under- 1) Basic Pay Basic pay/Salary is the base income of an employee. It is a fixed amount that is paid prior to any reductions or increases due to bonus, overtime or allowances. Basic salary is determined based on the designation of the employees and nature of works and the industry in which he or she works. Different types of Allowances  Dearness Allowance: - Dearness allowance is a certain percentage of the basic salary paid to employees, aimed at mitigating the impact of inflation  House Rent Allowance :– A house rent allowance is that component of the salary which is paid to employees for meeting the cost of renting a home  City compensatory allowance: It is an allowance to meet the high cost of living in metropolitan cities and other large cities.  Hill area allowance: It is an allowance given to face difficulties while working in hill or remote areas. 27 | P a g e   Risk Allowance: This allowance is given to those who carry out hazardous work that will affect health or bring financial loss over a period of time.  Special allowances: It is allowance given to meet specific purpose.  Conveyance Allowance: Conveyance allowance, also known as transport allowance, is a kind of allowance offered by employers to their employees to compensate for their travel expense to and from their residence and workplace.  Leave Travel Allowance: Leave travel allowance is offered by employers to their employees to cover the latter's travel expense when he or she is on leave from work.  Medical Allowance: Medical allowance is a fixed allowance paid to the employees of an organization to meet their medical expenditure.  Books and Periodicals Allowance :Books and periodicals allowance is a type of allowance provided to the employees to meet the expenses associated with purchase of books, periodicals and newspapers Perquisites These are generally non-cash benefits given in addition to the cash salary. Some examples of perquisites include provision of car for personal use, rent-free accommodation (RFA), payment of premium on personal accident policy, etc. The monetary value of perquisites gets added to the salary to find out CTC of an employee. Deductions from salary Deductions may be classified as statutory and non -statutory deductions. Statutory deductions are those which are compulsory as per statutes or laws. Non-statutory means those deductions from salary which are deducted as per the request of employees. I. STATUTORY DEDUCTIONS 1) Employees Provident Fund (EPF) Employee benefit scheme where investments are made by both employer and employee each month. EPF is governed by Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. It is a savings 28 | P a g e  platform that helps employees to save a portion of their salary each month, from which withdrawals is permitted. EPF applicability for employers a) Any company that has 20 or more employees in total is required by law to deduct EPF b) Subject to certain conditions even organizations with less than 20 employees are applicable EPF applicability for employees a) Any salaried employee with a monthly income of less than ₹15,000 needs to compulsorily be a member of the EPF. b) An employee with a monthly income higher than ₹ 15,000 (the current prescribed limit) is eligible to become a member of the EPF if he/she gets approval from the Assistant PF Commissioner and employer. 2) ESI (Employees State Insurance) ESI is a social security scheme given to employees in India. ESI is governed by Employees State Insurance Act 1948. If a company has 10 or more employees (20 in case of Maharashtra and Chandigarh) whose gross salary is below Rs. 21,000 per month, then the employer is required to avail ESI scheme for such employees. The rate of ESI contribution by employer is 3.25% of wages payable to employees and the contribution of employees is 0.75%. 3) GPF (General Provident fund):- It is a savings scheme available to state government employees. 4) SLI:-State Life Insurance Premium is a statutory deduction from the state government Employees as per government orders from time to time. 5) GIS:- Group Insurance Scheme is the insurance premium deducted from employees. 6) MEDISEP:- Medical Insurance for State Employees and Pensioners. It is a health insurance scheme for govt. Employees and pensioners. 29 | P a g e 7) NPS:-National Pension Scheme. It is a voluntary, retirement savings scheme. Employee contribution to NPS Tier I is 10% of the salary and DA with a matching contribution by the Employer. 8) Professional tax is a tax levied on the income earned by salaried employees and professionals, including chartered accountants, doctors and lawyers, etc… by the local authorities or state government. 9) Loan recoveries:- Employees may avail advances from the employer, which is to be recovered from salary by installments. In certain cases, recovery from salary may be made as per the directions of Courts or legal authorities. II. NON- STATUTORY DEDUCTIONS a) LIC Premium:-Personal Life Insurance premium of employees can be deducted from salary as per the demand of employees. b) PLI premium:- Postal Life insurance policy premiums are also a non- statutory deductions. c) NPS Tier II:- Contribution is optional to employees is a non-statutory deduction. Payroll processing Methods 1. Spreadsheets Spreadsheet-based payroll management is convenient at the initial stage of operations of a business because the number of employees is very few to manage. Though this is a cost-effective method, it’s not suitable for businesses having large number of employees. 2. Outsourcing Payroll outsourcing means entrusting to prepare payroll to an outside agency. They prepare Payroll every month based on the information and other data such as attendance, leaves, reimbursement details etc. 30 | P a g e 3. Automation Now a days most of the organizations use software to prepare payroll. There are many payroll automation tools and software available in the market which can reduce manual efforts and increase efficiency. But the software needs to be updated with the latest compliance of laws. Pay roll software facilitates to generate different Payroll Reports as under:-  Employee, Department, Location wise salary details  Computations as per Income Tax Act  TDS Deductions and Return  Form 16A/16  Incentive Details  Leave Details  Statutory Reporting as per PF, ESI, Gratuity, Bonus Norm etc… Advantages of using payroll software  Work out payroll calculations and deductions quicker  Generate accurate pay slips  Calculate bonuses, expenses, holiday pay, etc.. with minimum effort  Automate certain tasks, such as year-end reporting  Reduce the burden of compliance  Remove the need to understand complex tax legislation  Store data such as pay slips and annual reports in a secure, easily accessible system. Some other benefits of using software for preparing Payroll are:- 1) Linking payroll software with time recording. We can link payroll to timesheet systems that record employee attendance or time worked. This helps to automatically transfer information about hours worked into the payroll system and make payroll calculations much simpler. 31 | P a g e  2) Using payroll software for reporting. By using basic payroll data, together with data on attendance and hours worked, payroll systems can provide a number of reports. This allows in-depth analysis of staff costs for the business as a whole, across departments and even individual jobs and contracts. 3) Storing personnel records. Most of the organizations keep other data about employees, such as records of annual leave. As Payroll systems record these additional types of information, it avoids the need for a separate software package. 4) Using payroll system to plan future costs. As payroll packages can provide forecasts, we can use these to plan staff costs and budgets. Steps involved in executing Payroll 1. Prepare list of employees It is the first step of payroll processing. Prepare a list of employees with their designation. 2. Define payroll policy In this step, businesses should define their policies and get them approved by the management to ensure standard payroll execution. These policies include pay policy, leave and attendance policy, employee benefits policy, etc… 3. Gather employee inputs Employee inputs like PAN, address, bank account details, etc. are important for payroll processing. Hence, these inputs are collected from employees at the time of joining. 4. Validate employee inputs Once the inputs are received, check for validity of the details with respect to company policy, approval model, etc. Also, ensure that all active employees are taken into consideration, and no former employees are included for salary and compliance payments. 32 | P a g e 5. Calculate payroll In this stage, the validated inputs are fed into the system for processing payroll. This results in net payment calculations after adjusting necessary deductions and taxes due. These calculations are done using spreadsheets or automated payroll software. 6. Disburse employee salaries Employer has to ensure that their bank account has sufficient funds to make salary transfers. Then, a salary bank advice statement is sent to the concerned bank directing to disburse salaries. 7. Pay statutory dues At the time of payroll processing, all statutory deductions such as PF, TDS, ESI and PT are deducted. Then, these payments are made to the appropriate government departments within the due dates. 8. Distribute pay slips and tax computation sheets This step involves pay slip distribution to employees, along with their tax computation sheets. With an automated payroll system, businesses don’t have to distribute pay slips individually. Employees can log-in to their account and access their pay slips easily. 33 | P a g e Effective communication and customer satisfaction Effective communication Effective communication is the process of exchanging ideas, thoughts, opinions, knowledge, and data so that the message is received and understood with clarity and purpose thereof. In effective communication, both the sender and receiver feel satisfied. Communication may occur verbal, non-verbal, written, visual. Effectively, turn to the 5 C’s of communication to ensure message is:- Clear Correct Complete Concise Compassionate Characteristics of Effective Communication 1. Clear Message: The message which the sender wants to convey must be simple, easy to understand and systematically framed to retain its meaningfulness. 2. Correct Message: The information communicated must not be vague or false in any sense; it must be free from errors and grammatical mistakes. 3. Complete Message: Communication is the base for decision making. If the information is incomplete, it may lead to wrong decisions. 4. Precise Message: The message sent must be short and concise to facilitate straightforward interpretation and take the desired steps. 5. Reliability: The sender must be sure from his end that whatever he is conveying is right by his knowledge. Even the receiver must have trust on the sender and can rely on the message sent. 34 | P a g e  6. Consideration of the Recipient: The medium of communication and other physical settings must be planned, keeping in mind the attitude, language, knowledge, education level and position of the receiver. 7. Sender’s Courtesy: The message so drafted must reflect the sender’s courtesy, humbleness and respect towards the receiver. Active listening Active listening is the practice of giving full attention in a communication exchange. Some techniques include paying attention to body language, giving encouraging verbal cues, asking questions, and practicing non-judgment. Significance/Role of Effective Communication in Business  Employee Management: Effective communication ensures self-discipline and efficient management since the employees are heard by the top management, and there should be an open communication in the organization.  Team Building: People in the organization work as a team to accomplish common goals, thus effective communication boosts the morale of the whole team.  Growth of the Organization: It ensures better decision making, which intensifies public relations and enhances problem-solving ability. All this leads to corporate growth and development.  Build Strong Relationships: Interactions often simplify things; they positively motivate the employees to perform better and maintain long-term relations with others in the organization.  Ascertain Transparency and Develops Trust: Effective communication is considered to be a base for building trust and assures sharing of complete information.  Facilitates Creativity and Innovation: It creates an environment where employees are free to share their ideas by exploring their creative and innovative side. 35 | P a g e Benefits of Effective Communication in the Workplace:-  Efficient management of employees and building strong teams  Grow organization more rapidly and retain employees  Enhanced creativity and innovation  Stronger relationships and increased opportunities In the personal life, effective communication  Improved social, emotional, and mental health  Deeper connections with others  New bonds based on trust and transparency  Better problem–solving and conflict resolution skills Factors Considered For Addressing Customers, Superiors & Colleagues i. Factors considered for Addressing customers 1. Practice active listening The purpose of listening is to understand the customer problem, and not to be respond to it immediately. By asking question to understand what the need behind a certain problem is. The skill of asking questions has two key benefits:-One is developing empathy & the other is collecting customer feedback. The real communication with customer should not merely be a B2B, B2C but it's should be H2H (Human to Human). Empathy build human connection and show care as a human and as an organization. 2. Provide personalized communication with customers Personalizing every interaction with customers is crucial for building strong relationships and avoiding generic responses. It involves curiosity, research, and the right technology to enable customer-facing employees to respond effectively. 36 | P a g e 3. Develop admirable Customer Service speed Speed is a vital factor for a positive customer experience, as nearly 80% of consumers prioritize it. Achieving efficient customer service requires aligning teams and keeping them updated on product changes in a timely manner. 4. Invest in multichannel customer interactions COVID 19 pandemic created a sharp shift in how companies communicate with customers. Due to the new circumstances people became more comfortable with using technology. 5. Ensure data transparency and data privacy In today's digital age, it is important to ensure data privacy and meet ethical standards in customer service. Data transparency and privacy are currently the burning topics relating to customers data security. ii. Factors considered for Addressing Superiors  Think ahead and offer solutions to problems  Offer suggestions that produce results.  Make boss look good.  Communicate effectively at work.  Communicate on a personal level  Ask for feedback or help  Offer your help on projects. iii. Factors considered for Addressing colleagues  Listen actively.  Use face-to-face communication  Pay attention to nonverbal messages  Be present and engaged  Speak calmly and openly  Offer constructive criticism  Build and earn trust Value Customer Satisfaction & Maintain Service Orientation Customer satisfaction measures the happiness of customers with a company's products, services, and capabilities. Gathering customer satisfaction information through surveys and ratings enables companies to identify areas for improvement and make necessary changes to enhance customer satisfaction. This focus on improving products and services ultimately delivers value to customers. 37 | P a g e INVENTORY ACCOUNTING IN TALLY ERP 9 Inventory is an inevitable part of all trading and manufacturing organizations. Inventory refers to all the items of goods, merchandise and materials held by a business either for selling in the market to earn a profit or used for manufacturing new products. Inventory accounting is very important as it helps -  to maintain proper inventory records.  to know the stock level at any point of time.  to avoid shortage and excess of stores  to assess the stock turnover and stock movement  to facilitate product sales and plan product shipments to customers.  to execute production process,  to update the continuous changes that typically occur with inventories as businesses can add new items, sell existing items and remove obsolete items.  to determine what the exact financial position. I. STOCK GROUPS Stock Groups in Inventory are similar to Groups in Accounting Masters. Stock Groups are provided to help in the classification of stock items. Classification is done based on some common behavior. Stock group enable easy identification and reporting of stock items in statements. Creating Single Stock Group: Gateway of tally > Inventory Info > Stock Groups > Single > Create. The fields in the screen are:  Name: Type the name of Stock Group  Under: A list consists of existing stock group pop up. Select ‘Primary’ for creating a new stock group  Can quantities of item be added: By pressing ‘Yes’ the user can add stock groups in same unit of measure. Finally accept the screen. 38 | P a g e Displaying Single Stock Group: Gateway of tally > Inventory Info > Stock group > Single > Display. Altering Single Stock group: Gateway of tally > Inventory Info> Stock group > Single > Alter and save changes Creating Multiple Stock Group: Gateway of tally > Inventory Info > Stock Group > Multiple > Create. Displaying Multiple Stock Group: Gateway of tally > Inventory Info > Stock Group > Multiple > Display. Alter Multiple Stock Group: Gateway of tally > Inventory Info > Stock Group > Multiple > Alter II. STOCK CATEGORIES Stock Category offers a parallel classification of stock items. Like stock Groups, classification is done based on similarity in behavior. Enable Stock categories in Tally ERP 9 Gateway of Tally > F11 Features > F2: Inventory Features Set ‘Maintain Stock Categories’ to ‘Yes’ Create Single Stock Categories: Gateway of Tally > Inventory Info. > Stock Category > Single > Create. 39 | P a g e Display Single Stock Categories: Gateway of Tally > Inventory Info. > Stock Category > Single > Display Alter Single Stock Categories: Gateway of Tally > Inventory Info. > Stock Category > Single > Alter Delete Stock Categories: Gateway of Tally > Inventory Info. > Stock Category > Single > Alter Press ‘Alt + D’ to delete the stock Category Create Multiple Stock Categories: Gateway of Tally > Inventory Info. > Stock Category > Multiple > Create. Display Multiple Stock Categories: Gateway of Tally > Inventory Info. > Stock Category > Multiple > Display Alter Multiple Stock Categories: Gateway of Tally > Inventory Info. > Stock Category > Multiple > Alter III. STOCK ITEM Stock items are goods that a business Purchase, Manufacture or Sell. Stock Items in the Inventory transactions are similar to ledgers being used in accounting transactions. Therefore Stock Items are important in an inventory just as ledgers are important in accounting. Like Ledgers, stock items are the primary inventory entity. Creation of Single Stock Item Gateway of Tally > Inventory Info. > Stock Items > Single > Create Fields in the screen are: 40 | P a g e Name: Type the name of item Alias : Give alternative name or number Under: Type the stock group to which the item belongs. Category: Allocate the stock item to the category desired Units: Select unit of measure of stock Give details of Tax information on the right side of the screen and save it. Display Single Stock item: Gateway of Tally > Inventory Info. > Stock item > Single > Display Alter Single Stock item: Gateway of Tally > Inventory Info. > Stock item > Single > Alter Delete Stock item : Gateway of Tally > Inventory Info. > Stock item > Single > Alter Press ‘Alt + D’ to delete the stock item Create Multiple Stock Item Gateway of Tally > Inventory Info. > Stock Items > Multiple > Create Display Multiple Stock item Gateway of Tally > Inventory Info. > Stock item > Multiple > Display Alter Multiple Stock item Gateway of Tally > Inventory Info. > Stock item > Multiple > Alter Godowns It is a place to store stocks. Godowns may be single or multiple. Enable Godowns in Tally ERP 9 Gateway of Tally > F 11 Features > F 2: Inventory Features Set ‘Maintain Multiple Godowns’ to ‘Yes’ Create Godowns: Gateway of tally > Inventory info > Godowns > Single > Create The fields available in the screen are: 41 | P a g e Name: Name of the godown Under: The user can create ‘Primary Godown’ or ‘Secondary Godown’ under a godown and save it Displaying Godowns. Gateway of tally > Inventory Info > Godowns > Single > Display. Alter Godowns Gateway of tally > Inventory info > Godowns > Single > Alter Deleting Godown Gateway of tally > Inventory Info > Godowns > Single > Alter Select the Godown to be deleted from the list of godowns and press ‘Alt + D’ Creating Multiple Godowns Gateway of tally > Inventory Info > Godown > Multiple > Create Displaying Multiple Godowns Gateway of tally >Inventory Info > Godowns > Multiple > Display. Alter Multiple Godowns Gateway of tally >Inventory Info > Godowns > Multiple > Alter. Unit of Measure Unit of Measure is very important part of inventory management in Tally. It is not possible to study, inventory management in Tally without study Unit of Measure, because any stock item -as to be measured in some specific units for e.g. liquids will be measured in liters, solid will be measured in kg or items or nos or pieces and so on. 42 | P a g e  Two types of units in Tally  Simple Unit of Measure  Compound Units of Measure Simple Unit of Measure: A unit of measure that consists of only one Single Unit is called ‘Simple Unit of Measure’. For example: Meters, Kilograms, and Numbers etc… Compound Units of Measure: Many units are usually a combination of two or more units. For example, dozen of 12 pieces or box of 10 numbers. They are units with multiple factors. Such units are called ‘Compound Units of Measure’. Creation Unit of Measure Gateway of Tally > Inventory Info > Units of Measure > Create Field in the screen Type : Simple or Compound. Symbol: it is the abbreviated form by which stock item is identified. Example the abbreviation ‘nos’ Formal Name: This represent the complete symbol. For Example ‘Numbers’ No. of decimal Place : Display of Unit of Measure: Gateway of Tally > Inventory Info. > Units of Measure > Display Alter of Unit of Measure: Gateway of Tally > Inventory Info. > Units of Measure > Alter 43 | P a g e  SHORT-CUT KEYS FUNCTIONS KEYS To Create Single Stock Group I-G-C To Create Multiple Stock Group I-G-R To Display Single Stock Group I-G-D To Display Multiple Stock Group I-G-I To Alter Single Stock Group I-G-A To Alter Multiple Stock Group I-G-T To Create Single Stock Categories I-C-C To Create Multiple Stock Categories I-C-R To Display Single Stock Categories I-C-D To Display Multiple Stock Categories I-C-I To Alter Single Stock Categories I-C-A To Alter Multiple Stock Categories I-C-T To Create Single Stock Items I-I-C To Create Multiple Stock Items I-I-R To Display Single Stock Items I-I-D To Display Multiple Stock Items I-I-I To Alter Single Stock Items I-I-A To Alter Multiple Stock Items I-I-T To Create Single Godown I-D-C To Create Multiple Godown I-D-R To Display Single Godown I-D-D To Display Multiple Godown I-D-I To Alter Single Godown I-D-A To Alter Multiple Godown I-D-T GST ACCOUNTING IN TALLY ERP9 Enabling GST in tally Step1: Gateway of Tally > F11 Features > Statutory & Taxation. Step 2: Activate the option ‘Enable Goods and Service Tax’ and ‘Set/Alter GST details’ by typing ‘Yes’ against these options. Then fill the details as shown in the picture: (GSTIN/UIN is compulsory). 44 | P a g e Ledgers pertaining to GST for supply of goods The ledgers that are affected GST are:  Sales Ledger  Purchase Ledger  Party Ledger  SGST Ledger  CGST Ledger  IGST Ledger  Cess Ledger 45 | P a g e Sales Ledger Separate sales ledgers can be created for Local sales, Interstate sales and Non- taxable sales. Steps to create Local sales ledger / Inter- state Sales ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen to create Local Sales /Inter state sales Ledger. Type ‘Yes’ against the field ‘Inventory values are affected’ Type ‘Yes’ against the field ‘Is GST Applicable Type ‘No’ against the field ‘Set/Alter GST Details’ Type of Supply select ‘Goods’, and finally accept the screen. Steps to create Non taxable sales ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen to create Non-taxable Sales Ledger. Type ‘Yes’ against the field ‘Inventory values are affected’ Type ‘No’ against the field ‘Is GST Applicable Type ‘No’ against the field ‘Set/Alter GST Details’ Type of Supply select ‘Goods’, and finally accept the screen. Purchase Ledger Separate purchase ledgers can be created for Local Purchase, Interstate purchase and Non-taxable purchase. Steps to create Local purchase ledger / Inter-state purchase ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen to create Local/Interstate Purchase ledger Ledger. Type ‘Yes’ against the field ‘Inventory values are affected’ Type ‘Yes’ against the field ‘Is GST Applicable Type ‘No’ against the field ‘Set/Alter GST Details’ 46 | P a g e  Type of Supply select ‘Goods’, and finally accept the screen. Steps to create Non taxable purchase ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen to create Non-taxable purchase Ledger. Type ‘Yes’ against the field ‘Inventory values are affected’ Type ‘No’ against the field ‘Is GST Applicable Type ‘No’ against the field ‘Set/Alter GST Details’ Type of Supply select ‘Goods’, and finally accept the screen. Party Ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen and accept. (PIN code is compulsory) SGST Ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen to create ‘ SGST ‘ ledger Step.3: Select ‘Duties and Taxes’ in ‘under group’ Step.4: Select ‘GST’ as type of duty or Tax Step.5: Select ‘State Tax’ in the field ‘Type of Tax : Step.6: Give ‘0%’ in the field Percentage of calculation Step.7: Rounding Method is: ‘Not applicable’ and finally accept the screen. CGST Ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen to create ‘ CGST’ ledger Step.3: Select ‘Duties and Taxes’ in ‘under group’ 47 | P a g e Step.4: Select ‘GST’ as type of duty or Tax Step.5: Select ‘Central Tax’ in the field ‘Type of Tax : Step.6: Give ‘0%’ in the field Percentage of calculation Step.7: Rounding Method is: ‘Not applicable’ and finally accept the screen. IGST Ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen to create ‘ IGST’ ledger Step.3: Select ‘Duties and Taxes’ in ‘under group’ Step.4: Select ‘GST’ as type of duty or Tax Step.5: Select ‘Integrated Tax’ in the field ‘Type of Tax: Step.6: Give ‘0%’ in the field Percentage of calculation Step.7: Rounding Method is: ‘Not applicable’ and finally accept the screen. Cess Ledger Step.1: Gateway of Tally > Accounts info > Ledgers > Single Create Step.2: Fill the information in this screen to create ‘Cess’ ledger Step.3: Select ‘Duties and Taxes’ in ‘under group’ Step.4: Select ‘GST’ as type of duty or Tax Step.5: Select ‘Cess’ in the field ‘Type of Tax : Step.6: Give ‘0%’ in the field Percentage of calculation Step.7: Rounding Method is: ‘Not applicable’ and finally accept the screen. 48 | P a g e GST Reports Tally ERP9 has the powerful facility to generate various reports required by GST Acts. The important reports available now are GSTR-1, GSTR-2 and GSTR-3B. They can be displayed as follows: a) Gateway of Tally > Display > Statutory Report > GST > GSTR-1> change period >Select ‘View Summary’ from Button panel b) Gateway of Tally > Display > Statutory Report > GST > GSTR-2> change period. c) Gateway of Tally > Display > Statutory Report > GST > GSTR-3B> change period >Select ‘View Summary’ from Button panel BANK RECONCILIATION STATEMENT Bank reconciliation statement is a report or statement prepared by the business to match the bank transactions recorded in the books of accounts with the bank statement. The bank reconciliation statement helps to check the correctness of the entries recorded in the books of accounts and thereby, ensures the accuracy of bank balances. Procedure: Step-1: Create a company. Step-2: Create ledgers necessary ledgers Step-3: Make Voucher entries of all items in the Bank Account Book. (i.e, Receipt, Payment or Contra Voucher) Step-4: Identify the Transactions (items) in the Pass Book which are not shown in the Cash Book Step-5: Create the ledgers of the above (Step-4) identified transactions through Single/multiple ledger creation. 49 | P a g e  Step-6: Make voucher entries of the above (Step-5) transactions (i.e, Receipt, Payment or Contra vouchers) Step-7: Go to Gateway of Tally > Display > Accounts Books > Ledgers > Select Bank account > Change Period Step-8: Press “F5” there appear a field to enter “Bank Date”. Type Pass Book date of each transaction Step-9: Change period (Alt + F2) i.e the date we want to reconcile Step-10: Press “F5” there shows the Bank balance of that period at the bottom. Difference between TDS & TCS TDS implies the amount TCS refers to an amount Meaning deducted from the accumulated by the seller. recipients income in the form of tax. Nature Expense Income Responsible person Deducted by payer Collected by seller It applies to salary, rent, Collected on the sale of Transactions Covered brokerage, professional goods such as timber, fees, interest, minerals, liquor, toll commissions etc… plazas etc… Specified expenses Sale of specified items is Imposition crosses the prescribed made limit 50 | P a g e