TallyPrime with GST: Step-by-Step Guide for Beginners

The fastest way to learn TallyPrime is to set up one small practice business and record a week of its transactions from start to finish. This guide does exactly that: you will create a company, switch on GST, make ledgers and stock items, record GST purchase and sales invoices, a payment and a receipt, and then check every number in the reports.

All business names, GSTINs and amounts below are fictional practice data. The GST rate of 18% is used only to keep the arithmetic simple — real rates depend on the HSN code of each item and are revised by the GST Council, so always confirm the current rate before billing real customers.

The practice business

The one GST rule you must understand first

• Same state (intra-state) sale or purchase: tax is split equally into CGST (Central) and SGST (State). At 18%, that is 9% + 9%.
• Different state (inter-state): the whole tax is IGST (Integrated), 18%.

Tally decides this automatically by comparing your company's state with the party's state. That is why entering the correct state in every party ledger matters more than anything else.

Step 1: Create the company

1. Open TallyPrime. Press Alt+K (Company menu) → Create.
2. Enter Company Name: Sai Office Furniture. The mailing name fills automatically.
3. Fill Address, select State: Telangana, Country: India, and the PIN code.
4. Check Financial year beginning from: 1-4-2026 and Books beginning from: 1-4-2026.
5. Leave the password blank for practice (in a real office, set one and record it safely).
6. Press Ctrl+A to accept.

Step 2: Enable GST and enter registration details

1. After the company is created, the Company Features screen opens. You can also open it any time with F11.
2. Set Enable Goods and Services Tax (GST) to Yes. Keep Maintain Inventory on, since we trade chairs.
3. Enter the GST registration details. Depending on your release, this appears as Set/Alter GST Details or as a separate GST Registration screen. Fill: State (Telangana), Registration Type (Regular), GSTIN (use a dummy number in practice), Applicable from (1-4-2026), and the periodicity of GSTR-1 (Monthly or Quarterly).
4. Accept with Ctrl+A.

Step 3: Create ledgers

A ledger is an account — a person, a bank, a tax, an income or an expense. Each ledger must sit under the correct group, because the group decides where it appears in the Balance Sheet or Profit & Loss. Go to Gateway of Tally → Create → Ledger for each row below. (The Cash and Profit & Loss A/c ledgers already exist.)

The opening balances (capital ₹1,00,000 Cr and bank ₹1,00,000 Dr) are equal, so the opening trial balance agrees. Some trainers prefer separate input and output tax ledgers as shown; others use one ledger per tax type (CGST, SGST, IGST). Both work — follow your office's practice.

Step 4: Create the unit and stock item

1. Create → Unit: Type Simple, Symbol Nos, Formal name Numbers, Number of decimal places 0. Accept.
2. Create → Stock Item: Name Office Chair, Under Primary, Units Nos.
3. In the GST section, enter the HSN code and set the GST rate details: Taxability Taxable, IGST rate 18%. TallyPrime fills CGST 9% and SGST 9% automatically. Type of supply: Goods.
4. Leave the opening quantity blank (we start with zero stock). Accept.

Putting the rate on the stock item means every invoice for that item calculates tax correctly without you typing a percentage each time.

Step 5: Record the transactions

Open Gateway of Tally → Vouchers and use the function keys below. When the voucher screen shows "Accounting Invoice" or "As Voucher" instead of "Item Invoice", press Ctrl+H (Change Mode) and select Item Invoice for purchases and sales of stock.

Transaction 1 — Purchase, same state (F9), 2 April 2026

Bought 20 Office Chairs at ₹2,500 from Ravi Furniture Mart, supplier invoice RFM/112.

1. Press F9. Set the date with F2 to 2-4-2026.
2. Supplier Invoice No: RFM/112, Date: 2-4-2026.
3. Party A/c name: Ravi Furniture Mart. Purchase ledger: Purchase @18%.
4. Item: Office Chair, Quantity 20, Rate 2,500. Amount shows 50,000.
5. Below the item, select Input CGST and Input SGST. Tally calculates 4,500 each.
6. Check the total: 59,000. In bill-wise details choose New Ref RFM/112. Accept.

Transaction 2 — Sale, same state (F8), 5 April 2026

Sold 5 chairs at ₹3,200 to Lakshmi Traders, Warangal.

1. Press F8, date 5-4-2026. Party: Lakshmi Traders. Sales ledger: Sales @18%.
2. Item: Office Chair, Qty 5, Rate 3,200 → 16,000.
3. Select Output CGST and Output SGST → 1,440 each. Total 18,880. Accept.

Transaction 3 — Sale, other state (F8), 8 April 2026

Sold 8 chairs at ₹3,200 to Kumar Enterprises, Andhra Pradesh.

1. Press F8, date 8-4-2026. Party: Kumar Enterprises.
2. Item: Office Chair, Qty 8, Rate 3,200 → 25,600.
3. Select Output IGST → 4,608. Total 30,208. Accept.

If Tally shows CGST and SGST here instead of IGST, the party's state in the ledger is wrong. Fix the ledger, then re-open the invoice.

Transaction 4 — Payment to supplier (F5), 10 April 2026

Paid Ravi Furniture Mart ₹59,000 by bank transfer. Press F5, Account: State Bank of India, Particulars: Ravi Furniture Mart, Amount 59,000, bill-wise Agst Ref RFM/112. Accept.

Transaction 5 — Receipt from customer (F6), 12 April 2026

Received ₹18,880 from Lakshmi Traders by UPI into the bank. Press F6, Account: State Bank of India, Particulars: Lakshmi Traders, Amount 18,880, Agst Ref the sales invoice. Accept.

Step 6: Check every number

Never trust an entry until a report agrees with your manual calculation. Here is what each figure should be.

Expected balances after all five entries

Where to find these reports

• Stock Summary and Balance Sheet: directly on the Gateway of Tally.
• Day Book (all vouchers by date): Gateway → Day Book, or Display More Reports → Day Book, depending on release. Alt+G → "Day Book" always works.
• A ledger's transactions: Display More Reports → Account Books → Ledger, then pick the ledger.
• Outstanding bills: Display More Reports → Statements of Accounts → Outstandings → Receivables / Payables.
• GST returns: Display More Reports → GST Reports → GSTR-1 or GSTR-3B.

Step 7: Read GSTR-1 and GSTR-3B

GSTR-1 is the return of outward supplies (sales). In our example it should show two B2B invoices: Lakshmi Traders (taxable 16,000, CGST 1,440, SGST 1,440) and Kumar Enterprises (taxable 25,600, IGST 4,608).

GSTR-3B is the summary return where tax is paid. It shows output tax of ₹7,488 and eligible input tax credit of ₹9,000.

Does Sai Office Furniture owe tax this month?

Credit is used head by head, under rules set by GST law. CGST credit cannot pay SGST, and SGST credit cannot pay CGST, but both can pay IGST:

1. Output CGST 1,440 is paid from CGST credit 4,500 → CGST credit left 3,060.
2. Output SGST 1,440 is paid from SGST credit 4,500 → SGST credit left 3,060.
3. Output IGST 4,608 is paid from the remaining CGST credit 3,060 and then 1,548 of SGST credit → SGST credit left 1,512.

Result: no cash tax payable, and ₹1,512 of SGST credit carries forward. (Check: 9,000 credit − 7,488 tax = 1,512.) In practice, the GST portal and your accountant apply the current utilisation rules; TallyPrime's reports help you prepare, and the return is filed on the GST portal.

Correcting mistakes, backups and good habits

• Alter a voucher: open the Day Book, select the voucher, press Enter, correct and accept.
• Delete a voucher: open it and press Alt+D. In a real office, ask before deleting; many owners prefer a credit note or an audit trail.
• Backup: Alt+Y (Data) → Backup, choose a destination such as a pen drive or a separate folder. Take a backup daily in a real office.
• Use narration: type a short note in every voucher ("UPI ref 4521…, against INV-2"). It saves hours during audits.
• Match the bank weekly: compare bank ledger with the bank statement (bank reconciliation) instead of waiting for month-end.

Practice tasks to try next

1. Record a receipt of ₹30,208 from Kumar Enterprises and confirm their balance becomes nil.
2. Lakshmi Traders returns 1 chair. Record a credit note (Ctrl+F8) for ₹3,200 + CGST 288 + SGST 288 = ₹3,776, and check the stock rises to 8.
3. Pay office rent of ₹10,000 from the bank (create a Rent ledger under Indirect Expenses).
4. Withdraw ₹5,000 cash from the bank with a Contra voucher (F4).
5. Print or export the sales invoice as PDF and check the GST break-up printed on it.

If any concept here — debit, credit, ledger groups — feels unclear, read accounting basics for beginners first; Tally is far easier once the logic is clear. For jobs and interview preparation, see the Tally career guide. Nipun India's Tally With GST course, run at partner training centers, covers these steps along with payroll, TDS, MIS reports and e-invoicing.

Frequently asked questions