Multiple VAT Items in Single Invoice in Tally ERP9 (Inclusive of VAT)

Trading companies handle multiple items with different VAT rates. During invoicing it becomes easy to record a single invoice with items having different VAT rates.

Scenario

In the below case study we will look at invoicing items with different VAT rates in a single transactions. It also illustrates the creation of masters and configuring various options to enable VAT inclusive invoicing for items with different VAT rates.

Creating Masters

1. Create all Sales and respective Duty Ledgers: Go to Gateway of Tally > Accounts Info. > Ledgers > Create

a. Create Ledger - Sales @1% under the Group Sales Accounts. Set Used in VAT Returns to Yes and select Sales @1% as VAT/Tax Class.

b.  Create Ledger – Output Vat @1% under the Group Duties & Taxes. Select VAT as ‘Type of Duty/Tax’, Output VAT as ‘VAT Sub Type’ and Output VAT @1% as ‘Default VAT/Tax Class’.

c. Create Ledger - Sales @4% under the Group Sales Accounts. Set Used in VAT Returns to Yes and select Sales @4% as VAT/Tax Class.

d. Create Ledger – Output Vat @4% under the Group Duties & Taxes. Select VAT as ‘Type of Duty/Tax’, Output VAT as ‘VAT Sub Type’ and Output VAT @4% as ‘Default VAT/Tax Class’.

e.  Create Ledger - Sales @13.5% under the Group Sales Accounts. Set Used in VAT Returns to Yes and select Sales @13.5% as VAT/Tax Class.

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f. Create Ledger – Output Vat @13.5% under the Group Duties & Taxes. Select VAT as ‘Type of Duty/Tax’, Output VAT as ‘VAT Sub Type’ and Output VAT @13.5% as ‘Default VAT/Tax Class’.

2. Create Stock Item
 Gateway of Tally > Inventory Info > Stock Items > Create
a. Press F12: Set Specify Default Ledger Allocation for Invoicing to YES. (It will allow you to define specific Sales & respective Duty Ledgers for a particular stock item)

b. Create Stock Item – Item @1%. Enable Set/Modify Default Ledgers for Invoicing

At Default Accounting Allocations for Sales Invoice, select Sales @1% as default sales ledger and Sales @1% as VAT/Tax Class

Enter 99.01%  (i.e. 100/101*100) as percentage

Select Output Vat @1% as default duty Ledger, Output Vat @1% as VAT/Tax Class and put 0.99% (i.e. 100-99.01) as percentage

c. Create Stock Item – Item @4%.  Enable Set/Modify Default Ledgers for Invoicing

At Default Accounting Allocations for Sales Invoice, select Sales @4% as default sales ledger and Sales @4% as VAT/Tax Class

Enter 96.154%  (i.e. 100/104*100) as percentage

Select Output Vat @1% as default duty Ledger, Output Vat @1% as VAT/Tax Class and enter 3.846% (i.e. 100-96.154) as percentage

d. Create Stock Item – Item @13.5%. Enable Set/Modify Default Ledgers for Invoicing

• At Default Accounting Allocations for Sales Invoice, select Sales @13.5% as default sales ledger and Sales @13.5% as VAT/Tax Class
• Enter 88.106%  (i.e. 100/113.5*100) as percentage
• Select Output Vat @13.5% as default duty Ledger, Output Vat @13.5% as VAT/Tax Class and enter 11.894% (i.e. 100-88.106) as percentage

3. Alter Sales  Voucher Type to Create Class
a. Go to Gateway of Tally > Accounts Info > Voucher Types > Alter > Sales > Give a name of the Class (e.g. Inclusive Vat)

•  Set Override using Item Default to Yes

In case the option Override using Item Default? is enable, Sales & Duty Ledgers defined in the Item Masters will override the Sales & Duty Ledgers defined in the Voucher Class.

In the above scenario, Sales @1%, Output Vat @1% set for Item @1% at Item Master and Sales 13.5%, Output Vat @13.5% set for Item @13.5% at Item Master, will override Sales @4% & Output Vat @4% set in the Voucher Class respectively.

4. Create a Sales Invoice using the Newly Created Voucher Class 

a.  Gateway of Tally > Accounting Vouchers > Sales (or Press F8) > Select the Newly Created Voucher Class from the List

b. Select the required party and stock items in the sales invoice

c.  Go to Print Preview after saving the voucher (Press Alt+P)

d. In the Print Preview screen, press F12 to configure invoice printing 

• Set YES to Print VAT/CST Analysis of Items (to get the VAT details of the invoice like VAT Rate, Assessable Value, VAT Amount) and ‘Print VAT/CST % Column’ (to get the VAT Rate for each Item)

e. See the Preview / Take a Print:

5.  View the VAT Computation Report:

Go to Gateway of Tally à Display à Statutory Reports à VAT à VAT Computation

In this solution even operator does not need to remember which stock item belongs to what class of VAT. The same solution can be given for Multiple VAT Item Purchases (as inclusive of VAT) in single invoice.