EDGE Computer Training Centre

Tally.90

VALUE ADDED TAX (VAT)

Value added tax is a consumption tax. As value addition takes place, tax on
the value added is paid at the stage.
Example:
Organization A Bought Goods of Rs 1000 and paid vat 4% and sold
Goods to Organization B of Rs 2000 on which VAT was charged @ 4%

VAT CLASSIFICATION FOR PURCHASES TRANSACTION:

NAME
Input VAT @1%

ALIAS
Purchases @1%

RATE
1%

TYPE OF TAX
VAT

Input VAT @4%

Purchases @4%

4%

VAT

Input VAT @12.5%

Purchases @12.5%

12.5%

VAT

Purchases capital
Goods 4%

------

4%

VAT

Purchases capital
Goods 12.5%

------

12.5%

VAT

Special Rate
Purchases 70%

------

70%

VAT

Special Rate
Purchases 34%

------

34%

VAT

Consignment/Branch
Transfer Inwards

------

---

Exempt

Purchases from
Others

------

---

Exempt

Purchases from URD

------

---

Exempt

Purchase - Exempt

------

---

Exempt

Imports

-----

---

Exempt

Inter-State
Purchases

-----

---

CST

VALUME -2

EDGE Computer Training Centre

Tally.90

VAT CLASSIFICATION FOR SALES TRANSACTION:

NAME
Output VAT @1%

ALIAS
Purchases @1%

RATE
1%

TYPE OF TAX
VAT

Output VAT @4%

Purchases @4%

4%

VAT

Output VAT @12.5%

Purchases @12.5%

12.5%

VAT

Output CST

Inter-State Sales
Special Rate Sales
@70%
Special Rate Sales
@22.5%
Special Rate Sales
@33%

4%

CST

70%

VAT

22.5%

VAT

33%

VAT

Works contract @1%

1%

VAT

Sales - Exempt

----

---

Exempt

Consignment/Branch
transfer outwards

-----

---

Exempt

Output VAT @70%

Output VAT @22.25%
Output VAT@ 33%
Output VAT @1% on
works contract

TYPE OF DEALERS:
1. Un Registered Dealers

Dealers having turnover below threshold limit are exempted from the
VAT Act.
2. Dealers Registered Under VAT Act

Dealers registered under VAT Act may have either of the following
Status.
Composite Dealers: Dealers having turnover less than limit

determined for composition and have opted for composite scheme.

Registered dealers: Dealers registered under state VAT act eligible

to issue TAX INVOICE and claim set-off for input tax paid by them.

VALUME -2

EDGE Computer Training Centre

Tally.90

Problem: 1
1.

2.

3.

4.

Bought goods From Shahul

Purchase@ 4%

9,600

Input vat@ 4%

400

Bought goods from Benarji

13,125

Input vat@12.5%

1,875

Bought goods for Cash

5,000

Purchase@1%

4,950

Input vat@1%

50

Sold goods to Arun

12,000
11,520

Output vat@ 4%

480

Sold goods to Surya

Sales @12.5%

17,500
15,312

Output vat@12.5%
6.

2,188

Sold goods for Cash

Sales @1%

6,000
5,940

Output vat@1%
7.

Input vat@ 4%

(Exempt)

8,500

8,500
1,000
960
40

Surya Returns Us Goods

Sales Returns @12.5%
Output vat@12.5%

11.

7,000

We Returns Shahul Goods

Purchase Returns@ 4%

10.

(Exempt)

7,000

Sold goods to Vanitha for Cash

Sales Exempt

9.

60

Bought goods From Neethu

Purchase Exempt

8.

15,000

Purchase@12.5%

Sales@ 4%
5.

10,000

2,000
1,750
250

Vanitha Returns Us Goods for Cash (Exempt) 500

Sales Returns Exempt

500

VALUME -2

EDGE Computer Training Centre

Tally.90

Problem: 2
1.

Bought goods From Shahul

10,550

Paid Vat 4%
2.

Bought goods from Benarji

15,500

Paid Vat 12.5%

3.

Bought goods for Cash

5,560

Paid Vat 1%
4.

Sold goods to Arun

12,780

Charged vat 4%
5.

Sold goods to Surya

17,500

Charged vat@12.5%
6.

Sold goods for Cash

6,750

Charged vat@1%
7.

Bought goods From Neethu

(Exempt)

7,500

8.

Sold goods to Vanitha for Cash

(Exempt)

8,500

9.

We Returns Shahul Goods

1,950

Input vat@ 4%
10.

Surya Returns Us Goods

2,200

Output vat@12.5%
11.

Vanitha Returns Us Goods

(Exempt)

500

VALUME -2

EDGE Computer Training Centre

Tally.90

PROBLEM 1

PURCHASED

1. Bought goods from Good luck Audio Systems

S.
No
1
2
3
4

Items Name
2.1
5.1
4.1
5.1

Philips HomeTheatre
Sony

Intex

Creative

Quantity

Rate

20
15
10
25

1,100
4,000
2,500
3,500

Vat
Rate
4%

Amount
22,000
60,000
25,000
87,500

Total VAT: 7,780

S.
No
1
2
3
4

Items Name
Sony DVD Players
Samsung DVD Players
LG DVD Players
Philips DVD Players

Quantity

Rate

10
15
30
25

3,500
3,000
3,400
3,600

Vat
Rate
12.5%

Amount
35,000
45,000
10,200
90,000

2. Bought goods from Good luck Audio Systems

Total VAT: 22,525

3. Goods Returns to Good luck Audio Systems

S.
No
1
2
3
4

Items Name

Quantity

Rate

4.1 Intex HomeTheatre

2.1 Philips

Samsung DVD Players

Philips DVD Players

2
1
2
2

2,500
1,100
3,000
3,600

VAT RETURNS: 4%
12.5%

Vat
Rate
4%

12%

Amount
5,000
1,100
6,000
7,200

: 244
: 1,650

VALUME -2

EDGE Computer Training Centre

Tally.90

PROBLEM 2

SALES

4. Sold Goods to Digital Media Systems

S.
No
1
2
3
4

Items Name
2.1
5.1
4.1
5.1

Quantity

Rate

10
10
5
5

1,300
4,200
2,600
3,700

Philips HomeTheatre
Sony

Intex

Creative

Vat
Rate
4%

Amount
13,000
42,000
13,000
18,500

Total VAT: 3,512

5. Sold Goods to Digital Media Systems

S.
No
1
2
3
4

Items Name
Sony DVD Players
Samsung DVD Players
LG DVD Players
Philips DVD Players

Quantity

Rate

5
10
15
15

3,800
3,300
3,600
3,800

Vat
Rate
12.5%

Amount
19,000
33,000
54,000
57,000

Total VAT: 20,375

6. Goods Returns from Digital Media Systems

S. No
1
2
3
4

Items Name
4.1 Intex HomeTheatre
2.1 Philips

Samsung DVD Players

Philips DVD Players

VAT RETURNS: 4%

Quantity
2
1
2
2

: 180
12.5 4%

Rate
1,600
1,300
3,300
3,800

Vat Rate
4%

12%

Amount
3,200
1,300
6,600
7,600

: 1,775

VALUME -2

EDGE Computer Training Centre

Tally.90

BRANCH TRANSFERS
Organization having branches transfer of materials from one branch to
another although inter branch transfer do not attract any tax, how ever
proper accounting is essential and the figures are reported in the VAT return.
Branch transfer transaction can be either way i.e, transfer in (or)
transfer out.
Example
On 1st April 2009, Balaji computers, Tirupati delivers 10Qt. HP 1007
Laser printers to their branch situated at Super computers, price Rs.4,500
each.
Ledger
1. Balaji Computers, Super Computers

Branches/Divisions

2. Transfer out

Sales

VAT (Yes)

Consignment / Branch Transfer

Outwards
Note: When Branch transfer inwards you just change Transfer in Ledger
instead of Transfer out

VALUME -2

EDGE Computer Training Centre

Tally.90

INTER-STATE PURCHASES AND SALES

On purchases from other state, Central Sales Tax (CST) is paid which is
not set off against output vat on inter-state sales. Since the inter-Sate
Purchases is reported in the monthly vat return the inter-state purchases
account should be set to used in vat returns to reflect in vat computation and
returns.
The treatment in case of inter-state Sales is however different where
input vat can be adjusted against output CST so output CST ledger should
to be placed under Duties and taxes groups as usual and classified as CST
for auto computation.
Inter-State Purchases
Example:
Chennai Computers Purchases following UPS from POWER SYSTEM,
Bangalore.
V-GUARD

----------

10Nos@ 2,250

CST

----------

4%

Ans: 23,400
Ledger Creation:
Inter-sate purchases ---- Purchases Account --- VAT--- yes--Inter-state
purchase.
Note: Generally, an organization has done CST purchases they dont show
tax separately if you want to show tax separately create input CST ledger
under purchases or Direct expense group.
Inter-state sales
Ledger Creation:
1. Inter-State Sales Sales Account --- VAT --- Inter-State sales
2. Output CST Duties & Taxes --- CST InterState Sales 4%-- on
Total Sales
Example:
Chennai Computers Purchases following UPS from POWER SYSTEM,
Bangalore.
V-GUARD

----------

10Nos@ 2,500

CST

----------

4%

Ans: Output CST= 1,000

VALUME -2

EDGE Computer Training Centre

Tally.90

VAT ON MRP
Few states have enacted that on certain items (e.g. Medicines) VAT
should be paid on the MRP (Printed on the pack) instead of the actual sales
rate in the bill.
Stock item master set up for MRP
Press F12 master configuration, set yes at Calculate VAT on MRP in
stock item master creation, a new field MRP (Maximum Retail Price) to
appear to enter the MRP for the items.
MRP inclusive of VAT
If VAT is to be charged extra, select No here and in case in MRP includes
VAT select YES
Example:
Mumbai medical stores sold the following items to Balaji Medicines (all
attracting VAT 4%
Items
Cefloxin
Cefran

MRP
75
50

Quantity
100
100

Billing Rate
45
30

Amount
4,500
3,000

VAT @ 4% ----------------------- 500

Total ------------------------------ 8000
Note: VAT Calculation made on MRP Rate
Computation formula for MRP rate: (For above Example)
VAT On = MRP Quantity
75

100

= 7,500

Inclusive of all tax 4% (VAT) = 7,500 4/104 = 288.46

VALUME -2

EDGE Computer Training Centre

Tally.90

EXEMPTED PURCHASES AND SALES

Under the state vat act, certain items are exempted from levy of vat
and are placed under exempted list however the transactions of exempted
goods should reflect in the vat computation and vat return.
Example:

Items
Item-A
Item-B

Quantity
5 Nos
10 Nos

Cost
10,000
5,875

Selling Price
12,000
6,905

PURCHASES FROM UN-REGISTER DEALER

Dealer may buy products from vendors who are not register under the
state vat act. Since URD cannot charge vat and issue tax invoice, therefore
no input tax can be claimed on such purchases and reported separate head

10

VALUME -2

EDGE Computer Training Centre

Tally.90

IMPORTS AND EXPORTS

Imports and exports other are under exempted under to purview of
vat. However, proper accounting is necessary as the same is reflected in the
vat computation as well in returns.
Example:
Chennai computers imports the following LCD monitors from Samsung
through their regional office
18 Samsung LCD

50Nos Rs 7,500

19 Samsung LCD

60Nos Rs 7,900

Example for Exports:

Chennai computers Exports the following monitors to Bangladesh computers,
Dacca:
18 Samsung LCD

50Nos Rs 8,500

19 Samsung LCD

60Nos Rs 9,000

Refund of input vat for exports:

Exports are VAT exempted and goods purchased with in the state for
exports are also exempted from VAT.
Ledger
Tax Paid on Export
Goods
Input Vat on Export
Goods
Purchase @4%

Under Groups

Duty/Tax Type

VAT/Tax Class

D&T

Others

------

D&T

VAT

Input VAT 4%

Purchase A/c

VAT

Purchase 4%

Sales - Export

Sales A/c

VAT

Exports

11

VALUME -2