Ledger to Book Expenses with GST in TallyPrime: 2 Easy Steps

In TallyPrime, businesses must record expenses with GST applicability to claim Input Tax Credit (ITC) correctly and maintain compliance with GST regulations.

This guide explains how to create expense ledgers with GST, record transactions, and analyze GST reports.

Table of Contents

1. Why Book Expenses with GST in TallyPrime?

To claim Input Tax Credit (ITC) on business expenses.
To ensure proper tax filing in GSTR-3B and GSTR-1.
To comply with GST regulations for service-based expenses (e.g., rent, professional fees, advertising).

2. Common Business Expenses That Attract GST

Expense Type	Example	GST Rate
Rent	Office rent	18%
Professional Fees	CA, Legal, Consultancy Fees	18%
Advertising	Digital Ads, Newspaper Ads	18%
Repairs & Maintenance	Equipment/Office Maintenance	18%
Transportation	Freight, Courier Charges	5% or 18%
Telephone & Internet	Broadband, Mobile Bills (for business use)	18%

3. Steps to Create an Expense Ledger with GST in TallyPrime

Step 1: Enable GST in TallyPrime

Go to Gateway of Tally > F11 (Features) > GST.
Set “Enable Goods and Services Tax (GST)” to Yes.
Set “Set/Alter GST Details?” to Yes and enter:
- GST registration type (Regular/Composition)
- State and GSTIN details.
- Tax rates and classification.

Step 2: Create an Expense Ledger with GST

Example 1: Creating a “Rent Expense” Ledger

Go to Gateway of Tally > Create > Ledger.
Enter Ledger Name → “Office Rent”.
Under Group, select Indirect Expenses.
Set “GST Applicable” to Yes.
Set “Type of Supply” to Services.
Enter GST Details:
- Taxable Rate → 18% (CGST 9% + SGST 9% or IGST 18%).
- Nature of Transaction → “Inward Supply (Taxable)”.
Save the Ledger.

Example 2: Creating a “Professional Fees” Ledger

Ledger Name → “Legal Fees”.
Under Group → Indirect Expenses.
Set “GST Applicable” → Yes.
Set “Type of Supply” → Services.
GST Rate → 18%.
Nature of Transaction → “Inward Supply (Taxable)”.
Save the Ledger.

4. Recording an Expense Transaction with GST in TallyPrime

1. Scenario: Booking Rent Payment with GST

Company pays ₹50,000 rent + 18% GST to the landlord.

1. Steps to Record Rent Payment

Go to Gateway of Tally > Accounting Vouchers > F5 (Payment).
Select Bank Ledger (e.g., HDFC Bank).
Select “Office Rent” Ledger → ₹50,000.
Select GST Ledgers:
- CGST (9%) → ₹4,500.
- SGST (9%) → ₹4,500.
Total Payment Amount → ₹59,000.
Save the Entry.

2. GST Report Impact

GSTR-3B (ITC Section) → ITC on Rent (₹9,000).
GSTR-1 → No impact (as it is an inward supply).

5. Example: Booking an Invoice for Professional Fees in TallyPrime

1. Scenario: Legal Fees Paid

You receive a legal invoice of ₹1,00,000 + 18% GST from a law firm.

2. Steps to Record Legal Fees Payment

Go to Accounting Vouchers > F7 (Journal).
Debit “Legal Fees” Ledger → ₹1,00,000.
Debit “CGST (9%)” → ₹9,000.
Debit “SGST (9%)” → ₹9,000.
Credit “ABC Legal Services (Supplier)” → ₹1,18,000.
Save the Entry.

3. GST Report Impact

GSTR-3B → ITC Available on Legal Fees (₹18,000).
GSTR-1 → No impact.

6. Checking GST Reports for Expense ITC in TallyPrime

To verify the Input Tax Credit (ITC) on Expenses, follow these steps:

Go to Gateway of Tally > Display > Statutory Reports > GST Reports.
Select GSTR-3B.
Check the “Input Tax Credit” section for recorded expenses.
Cross-check with the supplier’s GSTR-1 filing.

7. Conclusion

Expense Ledgers with GST ensure accurate ITC claims.
TallyPrime allows tracking GST compliance seamlessly.
Proper ledger setup prevents errors in GST returns.