Define Tax Rate & Ledger or Stock Item

For Businesses dealing with multiple items having different tax rates, VAT rates can be configured at the ledger level and Stock Item Level

Defining Tax Rate at Ledger Master

To define the VAT rate in ledger:

1. Go to Gateway of Tally - Accounts Info - Ledgers - Create.
2. Enter the name of Ledger.
3. Select Duties & Taxes from Under Field.
4. Select VAT in Type of Duty/Tax field.
5. Enter the VAT rate in Percentage of Calculation. The rate entered here is used for calculating VAT in the invoice.

Note: In an invoice, if the rate predefined for the selected item is different from the rate specified in VAT ledger, the calculation will not happen due to mismatch in predefined rates of items and VAT ledger Master.

The Ledger Creation screen appears as shown below:

Define Tax Rate in Stock Item

To define VAT Rate for a stock item following steps to be done:

1. Go to Gateway of Tally - Inventory Info - Stock Items - Create
2. Enter the name of the Stock Item
3. Select the required group from under field
4. Select the required unit of measurement in Units Field
5. Select Applicable in VAT Applicable field
6. Set the option Set/ Alter Vat Details to Yes.

Select yes to Set/ Alter Statutory Details, follow window will appear now. Select Yes to Set/ Alter Vat Details:

Now you can see VAT Rate now on your computer Screen. Enter desired Tax Rate applicable on your item/ Commodity.

Now all is done. Tax Rate has been setup with your data.