GST Purchase Entry in Tally

To record a GST purchase in TallyPrime, open a Purchase voucher (F9), select the supplier and the stock item, then add the CGST and SGST ledgers for a purchase within your state, or the IGST ledger for an interstate purchase. Tally calculates the tax from the item's GST rate and records it as your input tax credit, the GST you paid that you can later set off against the GST you collect on sales. Recording purchases correctly is what makes your ITC and your GST returns accurate.

Before you start

Make sure your GST setup is done: GST enabled under F11, a GST rate and HSN on the stock item, and the CGST, SGST and IGST ledgers created under Duties & Taxes. Also make sure the supplier's ledger has their GSTIN entered, so the purchase is a proper GST purchase. If any of this is missing, the tax won't calculate correctly.

Why the purchase entry matters for GST

A GST purchase entry does two jobs at once. It records the expense/stock (accounting and inventory), and it records the GST you paid as input tax credit (GST). That input tax credit is money you can subtract from the GST you owe on sales. So a careless purchase entry doesn't just mess up your books, it can cost you real ITC. This is why accountants are careful to record every purchase invoice accurately and match it later with the GST portal.

Step by step: intrastate GST purchase

Example: buying 20 units of a product at ₹800 each (₹16,000) at 18% GST from a supplier in your own state.

1. Gateway of Tally ▸ Vouchers ▸ press F9 (Purchase).
2. Set the date with F2.
3. Party A/c name — select the supplier (with their GSTIN in the ledger).
4. Select the Purchase ledger.
5. Choose the stock item, enter quantity 20 and rate 800. Tally shows ₹16,000.
6. On the next lines, select CGST and SGST. Tally fills 9% each = ₹1,440 + ₹1,440.
7. The invoice total becomes ₹18,880.
8. Save with Ctrl + A.

Step by step: interstate GST purchase

Same purchase, but the supplier is in another state:

1. Follow the same steps, but on the tax line select IGST instead of CGST/SGST.
2. Tally fills 18% IGST = ₹2,880.
3. Invoice total is again ₹18,880.

Tally decides CGST/SGST vs IGST from the supplier's state, so with correct states and ledgers it guides you to the right one.

The debit/credit behind it

For the intrastate example, the entry is:

You (the buyer) now owe the supplier ₹18,880. The purchase is ₹16,000, and the ₹2,880 GST sits in your input GST ledgers as credit you can claim. Notice this mirrors a sales entry, but here GST is a debit (input credit) rather than a credit (output liability).

How this feeds your GST return

Every GST purchase you record adds to your input tax credit for the period. At return time:

• Output tax (from sales) − Input tax credit (from purchases) = GST payable.
• Your purchases should also match GSTR-2B, the portal's statement of ITC available to you, which is built from your suppliers' filings.

If a supplier didn't file, the invoice may not appear in GSTR-2B, and that ITC can be held up. So the purchase entry in Tally is only half the story; matching with the portal is the other half.

Worked example (a month of purchases)

Over a month, a shop records purchases totalling ₹1,00,000 with ₹18,000 GST (all 18%, intrastate). It records sales of ₹1,50,000 with ₹27,000 GST. From the purchase entries, Tally shows ₹18,000 input credit. From the sales, ₹27,000 output tax. GST payable = ₹27,000 − ₹18,000 = ₹9,000. The purchase entries directly reduced the tax the shop pays.

Pro tips

• Always enter the supplier's GSTIN in their ledger; it's needed for a valid GST purchase and for return matching.
• Use invoice mode with stock items so both your inventory and ITC update from one entry.
• Match your recorded purchases with GSTR-2B on the portal each month to confirm your ITC is available.
• Choose IGST for interstate purchases and CGST/SGST for within-state; Tally guides you if states are set right.

Common mistakes

• Choosing CGST/SGST for an interstate purchase. Use IGST when the supplier is in another state.
• Missing supplier GSTIN. Without it, the purchase isn't a proper GST purchase and matching fails.
• Typing tax manually. Let Tally calculate from the item's rate; manual figures cause return mismatches.
• Not matching with GSTR-2B. You might record ITC that the portal doesn't allow because the supplier didn't file.

Key takeaways

• Purchase voucher (F9) ▸ supplier ▸ Purchase ledger ▸ item ▸ GST ledgers.
• CGST + SGST for within-state; IGST for interstate.
• GST paid on purchases is your input tax credit (a debit), set off against output tax.
• Match your purchases with GSTR-2B to confirm the ITC is available.

Practice task

In your practice company, record a GST purchase of 10 units of an item at ₹500 each at 18% GST, once from a supplier in your state (CGST+SGST) and once from another state (IGST). Then check the input GST ledgers to see the credit recorded.

Record real GST purchases, claim ITC and file returns with a trainer in the ADFA program at HCI.