How to create VAT calculating Ledgers (Input, Output) in Tally ERP 9

Apart, Trading Account ledgers like Purchases and Sales ledgers we need to create Input VAT and Output VAT ledgers for every Trading Ledger. And this is the common way of VAT computation where Invoice amount will be divided into Assessable and VAT amounts. The Assessable amount will be recorded in the Trading ledgers where as the VAT amount will be recorded in the VAT ledgers here called as Input VAT and Output VAT ledgers.

VAT Ledger Creation in Tally ERP 9

And here Input VAT ledger to be used along with Purchases ledger, where as Output VAT ledger to be used along with Sales ledger while recording VAT Purchases and VAT Sales in Tally ERP 9 Software.

And let us start creating the Input VAT and Output VAT ledgers in Tally Software for VAT 5% Purchases and VAT 5% Sales.

Creating Input VAT @ 5% Ledger in Tally ERP 9

After you have configured Sales Tax (VAT), and created VAT Purchases @ 5% ledgers in a Company, we need to create Input VAT @ 5% ledger, where VAT amount against the Assessable Value of Purchases needs to be calculated and reported in as per VAT rules. We can get the VAT amount of various VAT/Tax Classes such as 1%, 5%, 14.5% by creating the various Input VAT ledger. So, it is recommended to append VAT Percent at the end of the Ledger name to distinguish it from other VAT Classes. In the Ledger Creation screen

1. Name the Ledger as Input VAT @ 5%
2. Choose Duties & Taxes group from the List of Groups for Under option.
3. Select VAT from the list of Types of Duty/Tax for Type of Duty/Tax option.
4. Choose Input VAT for VAT Sub Type option.
5. Select Input VAT @ 5% for VAT/Tax Class option.
6. Choose any one of the Rounding Methods for Rounding Method option.
7. Enter the digit for Round Limit e.g. 0, 1, or 2. And save the screen.

Creating Output VAT @ 5% Ledger in Tally ERP 9

Likewise Input VAT ledger creation we need to create the Output VAT ledger for the computation of VAT on Assessable Sale value. In the Ledger Creation screen

1. Name the Ledger as Output VAT @ 5%
2. Choose Duties & Taxes group from the List of Groups for Under option.
3. Select VAT from the list of Types of Duty/Tax for Type of Duty/Tax option.
4. Choose Output VAT for VAT Sub Type option.
5. Select Output VAT @ 5% for VAT/Tax Class option.
6. Choose any one of the Rounding Methods for Rounding Method option.
7. Enter the digit for Round Limit e.g. 0, 1, or 2. And save the screen.

We have seen the VAT Ledgers for only VAT @ 5% for creating Input VAT and Output VAT for other VAT types just select the appropriate VAT/Tax Class at the time of creating ledger.