GST Entry in Tally Prime: Complete Step-by-Step Guide (2025)

GST is the single most important compliance requirement for Indian businesses — and Tally Prime is the most widely used tool for managing it. But recording GST correctly in Tally requires understanding both GST rules and Tally's ledger structure. One wrong ledger, one wrong tax rate, and your GSTR-1 data is wrong.

This guide covers everything: how GST is structured in Tally, how to record sales and purchase invoices, how to prepare GSTR-1 and GSTR-3B, and how to handle ITC reconciliation and e-invoicing.

How GST Works in Tally Prime

Tally Prime handles GST through a combination of ledger groups, tax rates, and voucher types. When you create a sales or purchase ledger, you assign a GST tax rate to it. When you enter a voucher, Tally automatically calculates the GST components (CGST, SGST, or IGST) based on whether the transaction is intra-state or inter-state.

The three key GST components in Tally:

• CGST (Central GST) — collected by the central government on intra-state transactions
• SGST (State GST) — collected by the state government on intra-state transactions
• IGST (Integrated GST) — collected on inter-state transactions (replaces CGST + SGST)

Step 1: Enable GST in Your Tally Company

Before recording any GST transactions, you must enable GST in your company settings.

1. Go to Gateway of Tally → F11 (Features) → Statutory & Taxation
2. Set Enable Goods and Services Tax (GST) to Yes
3. Enter your GSTIN (GST Identification Number)
4. Select your State (determines CGST/SGST vs IGST application)
5. Set your Registration Type (Regular, Composition, etc.)
6. Enter your financial year start date
7. Press Ctrl+A to save

Step 2: Create GST Ledgers

You need separate ledger accounts for CGST, SGST, and IGST — both for output (sales) and input (purchases).

Output Tax Ledgers (for sales)

1. Go to Gateway of Tally → Accounts Info → Ledgers → Create
2. Create Output CGST — under group: Duties & Taxes, Tax type: CGST
3. Create Output SGST — under group: Duties & Taxes, Tax type: SGST
4. Create Output IGST — under group: Duties & Taxes, Tax type: IGST

Input Tax Ledgers (for purchases)

1. Create Input CGST — under group: Duties & Taxes, Tax type: CGST
2. Create Input SGST — under group: Duties & Taxes, Tax type: SGST
3. Create Input IGST — under group: Duties & Taxes, Tax type: IGST

Note: In TallyPrime 2.0+, GST ledgers are often auto-created when you enable GST. Check under Duties & Taxes group before creating manually.

Step 3: Set Up Sales and Purchase Ledgers with GST Rates

Each sales and purchase ledger needs a GST rate assigned to it.

1. Go to Accounts Info → Ledgers → Create (or Alter for existing)
2. Set the ledger under Sales Accounts or Purchase Accounts group
3. Set Is GST Applicable to Applicable
4. Enter the HSN/SAC code for the product or service
5. Set the Tax Rate (e.g., 18% for most services, 5%/12%/18%/28% for goods)
6. Tally will automatically split this into CGST (9%) + SGST (9%) for intra-state, or IGST (18%) for inter-state

Step 4: Record a GST Sales Invoice

This is the most common transaction — recording a sales invoice with GST.

1. Go to Gateway of Tally → Accounting Vouchers → F8 (Sales)
2. Press F2 to change the date if needed
3. In Party's A/c Name, select or create your customer ledger
4. Enter the Sales ledger (with GST rate already configured)
5. Enter the amount (base value, before GST)
6. Tally automatically calculates and shows CGST + SGST (intra-state) or IGST (inter-state) based on the customer's state in their ledger
7. Add the CGST, SGST or IGST ledgers to the voucher with the calculated amounts
8. Set the invoice number and verify the total
9. Press Enter or Ctrl+A to save

Key tip: The customer ledger must have the correct state filled in. If the customer is in the same state as you, Tally uses CGST + SGST. If they are in a different state, it uses IGST automatically.

Step 5: Record a GST Purchase Invoice

1. Go to Accounting Vouchers → F9 (Purchase)
2. Select the supplier in Party's A/c Name
3. Enter the Purchase ledger and amount
4. Add Input CGST and Input SGST (or Input IGST for inter-state) with the GST amounts from the supplier's invoice
5. Enter the supplier's invoice number in the reference field
6. Save with Ctrl+A

Important: The GST amounts you enter on the purchase side become your Input Tax Credit (ITC) — the GST you can claim back against your output tax. Accuracy here directly affects your net GST liability.

Step 6: Generate GSTR-1 from Tally

GSTR-1 is your outward supply return — all sales invoices for the month. Tally auto-compiles this from your sales vouchers.

1. Go to Gateway of Tally → GST → GSTR-1
2. Select the return period (month and year)
3. Tally displays the GSTR-1 data split by: B2B invoices, B2C large, B2C small, exports, nil-rated, amendments
4. Verify the data — check invoice counts, tax amounts, and state-wise breakdowns
5. Press E (Export) to export in JSON format for upload to the GST portal
6. Upload the JSON file on the GST portal and file

In TallyPrime with TSS, you can directly push GSTR-1 data to the GST portal without manual JSON export using the Connected Services feature.

Step 7: Prepare and File GSTR-3B

GSTR-3B is your monthly summary return — total output tax, ITC claimed, and net tax payable.

1. Go to Gateway of Tally → GST → GSTR-3B
2. Select the return period
3. Tally shows:
   • Table 3.1: Total outward supplies (from your sales)
   • Table 4: ITC available (from your purchases)
   • Net tax payable: Output GST minus ITC
4. Verify each figure against your books
5. Export or file directly via Connected Services
6. Pay the net tax liability via the GST portal before the filing deadline

Step 8: ITC Reconciliation (GSTR-2A/2B vs Purchase Register)

The most critical — and most often neglected — step in GST compliance is ITC reconciliation. You can only claim ITC on purchases where your supplier has also uploaded their invoice in their GSTR-1. If they haven't, your ITC claim will be blocked.

1. Download your GSTR-2A (auto-populated from supplier filings) from the GST portal
2. In Tally, go to GST → GSTR-2A Reconciliation
3. Import the GSTR-2A JSON file
4. Tally compares each purchase in your books against GSTR-2A and flags:
   • Matched — invoice exists in both
   • In books, not in GSTR-2A — supplier hasn't filed; follow up with vendor
   • In GSTR-2A, not in books — you missed recording a purchase
5. Resolve all mismatches before claiming ITC

Step 9: E-Invoicing in Tally Prime

If your annual turnover exceeds ₹5 crore, e-invoicing is mandatory. Every B2B invoice must get an IRN (Invoice Reference Number) from the GST portal.

1. Enable e-invoicing in F11 → GST → Enable e-Invoice
2. Create your sales invoice as usual
3. After saving, go to GST → e-Invoice → Generate IRN
4. Tally sends the invoice data to the IRP (Invoice Registration Portal) and retrieves the IRN and QR code
5. The IRN is automatically added to your invoice — print and share with the customer

E-invoicing requires an active TSS (Tally Software Service) subscription and internet connectivity.

Common GST Errors in Tally (And How to Fix Them)

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