Simple procedure of VAT calculations and recording and printing of VAT form in tally 9

VAT means Value added Tax and its detail is fully mention in A White Paper On State-Level Value Added Tax under Ministry of Finance . It has 23 pages and If you want to understand the system of accounting of VAT , you should learn these white papers thoroughly and deeply , after this you will understand that it is just Indirect tax and if you are already paying any service tax , it is most related with service tax because both are indirect taxs and you can easily treat it .

see White paper here .

If I want to tell you about VAT in Simple words , then read my simple Words

"There are three bodies in VAT . One is Govt. , second is buyer and third is seller . buyers buys the goods and include some value and then it sell to other customers . It means every buyer is also seller and every seller is also buyer upto good reaching to final customer . So , because is VAT is orginally sale tax and it must be on the amount which is added by any seller to sell it to other customers . Suppose , if I have buyer any goods at 300 Rs. include VAT , I will sell it at Rs. 400 . What amount , I should pay to Govt. if VAT is 4% on these commodities

400 X 4/100 = 16 RS.

But I have allready paid Rs. 12 when I buy same goods , so this input VAT will deduct and

Now my responsibility is just to pay to Govt. Rs. 16- Rs. 12 = Rs. 4

Because . I have just add value RS. 100 in input before selling product . I think this system is most simple and almost every country is using this system , India has started it from
April 1, 2005 .


Understand Scientific System use in Tally 9 for recording of VAT

Tally 9 software makes a very scientific system for recording of VAT .

In tally you will first activate this feature in separte statutory feature F11 option . For this you will write in the front of Enable Value added tax . you will also write in the front of set / Alter VAT , afte this you will go to a new section , that is called VAT detail after writing it , you also mention your tax payer identification no. (TIN ) in VAT TIN ( Regular ) and accept this form


Create Input VAT ledger Account under Duties and Taxes and fix its Rate . Then Credit Output VAT ledger Account and its rate , after this also create purchase , sale and debtor and creditor account .


Create the ledger of Stock items in Inventory info.


Now pass the voucher entry of Purchase , in this voucher when you mention the net amount of purchase and write it in it after this again a black box open and you have to write input VAT and this tally shows the rate , you have to calculate the VAT on total amount and write here and after this accept it and and it can be also print form by going to day book.









Now pass the voucher entry of sale in sale voucher , in this voucher when you mention the net amount of sale and write it in it after this again a black box open and you have to write output VAT and this tally shows the rate , you have to calculate the VAT on total amount and write here and after this accept it and and it can be also print form by going to day book.


You can see the net amount payable to Govt. for this


gateway of tally >> display >> statutory Report >> VAT Reports >> VAT Computation


Tally will automatically shows the net amount of VAT which , you have paid ,

In picture , I have purchased 10 computer from RAM and sell them and to RAJU with VAT input and with VAT output and Now tally tells me my net payable amount to Govt . that is 12500 and it will automatically shows in balance sheet in tally 9 which I have specially checked before write this article . Believe me !





click on picture for large view

Now when you will pay the NET VAT payable to Govt . at this time , create a new ledger account with name of net vat payable account under duties and taxes and next select VAT and pass the voucher entry in payment voucher , just write Net VAT payable account and write the net amount which , you seen in above VAT Computation in tally VAT report and you can also print its VAT Form 16 and when you will see the balance sheet , it shows that you have paid your current liability of NET Value of VAT .



Now I makes theme of my above article

1. Activate VAT
2. Create the ledger of VAT input , vat output , vat net tax liability , purchase , sale , creditor and debtor account and also create stock item ledger .
3. pass the voucher entry of purchase include vat input and pass the voucher entry of sale include output vat
4. See the net amount payable to Govt. in VAT computation
5. Pass the voucher entry of payment of net vat to govt.
6. Print VAT form 15 and VAT form 16