GST Payable and GST Payment Under Which Head in Tally

"Under which head?" is the most common Tally question about GST. Put a GST ledger in the wrong group and the tax either vanishes from the GST reports, turns up in the profit and loss account, or leaves the balance sheet showing a liability you have already paid. This guide answers which head GST payable goes under in Tally, which head the GST payment goes under, and where every other GST ledger belongs: input and output, reverse charge, TDS and TCS, the cash ledger, and interest and late fee.

The short answer

Every ledger that holds GST itself, whether payable or receivable, goes under the Duties & Taxes group. When you create it, set Type of Duty/Tax to GST and Tax Type to Central Tax, State Tax, Integrated Tax or Cess. That is what lets Tally pick up the ledger in sales and purchase vouchers and show it in GSTR-1, GSTR-3B and the other GST reports.

Duties & Taxes sits inside Current Liabilities, which is why GST payable shows there on the balance sheet. Input GST sits in the same group so the two net off. A debit balance on the group means credit is being carried forward.

Every GST-related ledger and its group

The cess here is the GST compensation cess, which applies to fewer goods than it used to; see GST compensation cess before creating a cess ledger you may not need.

How to create a GST ledger in TallyPrime

1. Make sure GST is enabled for the company (F11, Company Features) with your GSTIN and state.
2. Go to Create → Ledger.
3. Name it clearly, for example Output CGST or Input IGST.
4. Set Under to Duties & Taxes.
5. Set Type of Duty/Tax to GST.
6. Set Tax Type to Central Tax, State Tax, Integrated Tax or Cess.
7. Leave the percentage of calculation at zero, so Tally takes the rate from the item or ledger rather than from this ledger.
8. Save, and repeat for each tax type.

Screen labels shift a little between TallyPrime releases and Tally.ERP 9, but these fields exist in all of them. If a field is missing, GST is usually not enabled for the company yet.

Input and output: one ledger or two?

Tally works with a single CGST ledger used on both sales and purchases: credits on sales, debits on purchases, net balance payable. Many accountants still prefer separate Input and Output ledgers, and there are good reasons to:

• the input ledger balance can be compared directly with the electronic credit ledger on the portal;
• the set-off at month end is visible as its own journal entry;
• credit reversals and blocked credit are easier to spot.

Either way, both go under Duties & Taxes with the same settings. The set-off entry, debiting output and crediting input in the order the law allows, is shown in GST payment journal entry.

Reverse charge ledgers

Under reverse charge you pay tax on a purchase yourself, and the liability must be paid in cash, not from credit. Keep it apart from your normal output tax: create RCM Payable CGST, RCM Payable SGST and RCM Payable IGST under Duties & Taxes, type GST. Mark the purchase or expense ledger as attracting reverse charge so Tally books the liability and shows it in the reverse charge section of GSTR-3B. When the RCM tax is paid, the credit is taken in the input ledgers in the usual way. Which supplies are covered is in reverse charge mechanism.

GST TDS and TCS ledgers

If you supply to a government department, it may deduct GST TDS from your payment. If you sell through an e-commerce marketplace, the operator collects GST TCS. Either way, the amount reaches your electronic cash ledger once you accept it on the portal, and you use it to pay tax. In the books it is a receivable: put GST TDS Receivable or GST TCS Receivable under Current Assets, or under Duties & Taxes with type Others if you want it alongside the GST ledgers. Do not set the type to GST, or Tally will treat it as tax on your own supplies.

Do not mix this up with income-tax TDS, which has its own ledgers and its own rules; see TDS on a GST bill and GST TDS and TCS explained.

Recording the GST payment

The question "GST payment under which head in Tally" usually means: what do I debit when I pay the challan? The answer is the GST ledgers themselves. Record a payment voucher that debits Output CGST, Output SGST or Output IGST (and RCM payable, if any) and credits the bank.

In the payment voucher, TallyPrime offers a statutory payment option for GST. Choose it, select the tax period and type of payment, and Tally fills in the liability and records the challan details (CPIN, CIN and bank reference) so the payment links to the right return in its reports. What those challan numbers mean is covered in CPIN, CIN and BRN, and creating the challan in GST challan payment (PMT-06).

Interest, late fee and penalty

These are paid on the same challan but are not tax. Create ledgers such as GST Interest, GST Late Fee and GST Penalty under Indirect Expenses, with GST not applicable. Putting them in a Duties & Taxes ledger inflates the tax paid in Tally's reports and leaves a balance that never reconciles. How they are calculated is in GST late fee and interest.

Common mistakes

The last one is not a grouping problem, but it is the one that costs money. Party GSTINs can be checked against the live registration with the gstinapi.com GSTIN verification API; GST verification in Tally shows how to run it over your ledgers, and e-invoice in TallyPrime covers what the IRP rejects when masters are wrong.

Frequently asked questions