1. The Compliance Solution of Choice!
Tally.ERP9 Release 5.x
The Compliance Solution of Choice!

2. Agenda Release 5.x Highlights
Release 5.x Vs Lower Versions/Releases default features comparison
Release 5.x Vs Lower Versions/Releases Statutory feature comparison
Understanding Statutory Hierarchy in Release 5.x
Pre-migration Precautions / Recommendation
Qs prior Data Configuration
Steps for Data Migration
Release 5.x Data migration Rules

3. Why should I upgrade to Release 5.x?

4. Release 5.x Vs Lower Versions/Releases
Why should I upgrade to Release 5.x?

5. Features Comparison O P Sr. No. Description Release 4.x /
Lower Versions
Release 5.x 1.
On-demand Synchronization O P 2.
Post-dated Cheque Management 3.
E- Payments 4.
Application update & management 5.
Enhanced Installation experience 6.
Enhanced Licensing System 7.
Simplified Statutory Experience

6. Release 4.x / Lower Versions
Statutory Comparison
Sr. No.
Description
Release 4.x / Lower Versions
Release 5.x 1.
Flexibility to define tax rates on your own – Company / Stock Group / Stock Items / Accounting Groups / Accounting Ledgers / Transaction level O P 2.
No chances of charging incorrect tax during voucher entry. In-built validation (Local, interstate, international, exempted parties) 3.
Warning messages during voucher entry (Wrong / no tax charged) 4.
Detection of potential errors related to Tax Returns / Annexures 5.
View Tax Analysis in Voucher (To know which stock item got charged at what Rate)

7. Tax Computation Vs. Triangulation Report
Release 4.x / Older Versions provides the details only related to –
Output Tax
Input Tax
Tax Payable/Receivable
Release 5.x, not only provides you the Tax Computation details but also provides you the Triangulation Report which –
Shows Potential Errors done by the user which helps the user to know it well in advance before generating the return and thus avoids last minute panic situation while filing returns.
Helps you to Save Return & view it at any point of time
Generates Revised Return
Highlights if there are any modifications done after the return is saved
Provides flexibility to pass Statutory Adjustment / Payment transactions from Triangulation report itself.
No dependency on TSPL for stat releases for new classifications / tax rates, configure classifications/rates applicable to your business on your own.

8. Understanding Statutory Hierarchy in Release 5.x
Transaction Level
Accounting Ledger
Accounting Group
Stock Item
Stock Group
Company
Understanding Statutory Hierarchy in Release 5.x
Release 5.x provides the flexibility to define VAT % at – So, the rates are overridden in descending order i.e. Transaction level definition will override the Accounting ledger will override Accounting Group will override Stock Item will override Stock Group will override Company level definition. Let’s take a scenario to understand this in a better way.

9. Business Scenario Ganeshji Traders deals in FMCG Stock Item
Stock Group
Sub Group
VAT Rate
Parle G
Biscuits 5%
Monaco
Britania
Pepsi
Beverages
Soft Drinks
14%
Sprite
Coke
Tata Tea
Tea
10%
TajMahal Tea
Brooke Bond Tea
Bru Café
Coffee
Nescafe Coffee
Sunrise Coffee
Lux
Toiletries
Soap
Dove
Dettol
MATRIX
Shampoo
Sunsilk
L’OREAL
12%
Colgate
Toothpaste
Pepsodent
VICCO
Ganeshji Traders deals in FMCG

10. VAT Configuration by Ganeshji Traders
Considering the above example, Ganeshji traders can do the VAT configuration as below –
Setting Tax Rate
Remarks
Company level – 10%
Most of the stock items falling under 10%
Stock Group level (Biscuits) – 5%
All the stock items created under this stock group falls under 5%
Sub Group level (Soft drinks) – 14%
All the stock items falling under this stock sub group falls under 14%
Stock Item level (L’OREAL) – 12%
Particular item under a stock group falls under 12%
Accounting Group level
If the user has created separate Sales or Purchase groups like 5%, 10% etc. then he can define the VAT rate at the group level
Accounting Ledger level
Sales Exempt classification can be created and defined at the Sales – Exempt ledger level while selling stock to exempted Party
Transaction level (Override – F12)
In case of works contract where multiple taxes are involved or due to some other exceptions if the user wish to override all the definitions then user can override Assessable value or Tax rate by enabling the options in Voucher (F12:Configure) & later after selecting Sales ledger  Tax classification details  Press F12 to enable override options.

11. Pre-migration Precautions / Recommendation
Nature of data
Remarks
Customers using Release 4.5 or lower releases
Recommend you to first migrate the data to Release 4.93 and then to Release 5.0
Customizations
Migrate customizations before you migrate the data
Composite/Lump sum dealer
Release 5.x is not applicable for such dealers hence do not recommend
Release Co-existence
CA who is auditing data of Composite & Regular dealers, license co-existence is possible.
Also, for the customers who have multiple financial years data, license co-existence is available (previous financial years in 4.x & latest financial year in 5.x)
Multi-state Branches
Check for all state branches, release 5.x is supported or not
Banking
(Split before migration)
Banking transactions in 4.92: Upgrade to Release 4.93, Verify Company Data, Reaccept transactions related to banking and then split
Excise for Dealers
Export the Excise Closing Balances and then split the data

12. Qs prior Data Configuration
You need to have answers to the following questions before you configure any data –
Whether you are maintaining ‘Accounts only’ or ‘Accounts with Inventory’?
Which type(s) of taxes (VAT/TDS/Service Tax/Excise) applicable for your business?
Whether you deal in single / multiple tax rates?
Whether there any stock items for which the VAT rate got changed?
Whether you do business at local/National/International level?
Obtaining answers to the above questions will help you to proceed with the configuration procedure. That is, you will get to know whether you need to start defining tax details at –
Company level (F11  F3: Statutory) OR
Tax Rate Setup

13. Steps for Data Migration
Configuring
Tax Rates
Cross verification
Educating colleagues
Understanding
Business
Migrate
Tax Rate Setup
Take Data backup & Migrate the data to Release 5.x
Identify the tax rates applicable for your Business
As soon as you migrate, the first report which you should be checking is the ‘Tax Rate Setup’
Identify which rate is applicable for maximum stock items & configure the same at company level & decide the rest how to be configured at Stock Group / Company or Ledger
Post configuration, try to match the Release 5.x Triangulation report with lower release (Computation Report)
Explain the concept of Release 5.x Statutory hierarchy to the concerned people in your organization

14. Release 5.x Data migration Rules
Post migration, the rates get set at the Stock item level with the applicability as 1st April (1st date of current financial year)
For checking the rates to be applied the following hierarchy is applied –
Stock item percentage in item master, Interstate & Exempt transactions are excluded for checking rates
First it checks for the last Sales Taxable Voucher
If Sales voucher is not found, then it checks for the last Purchase Transaction & applies the rate at the Stock item level post migration
If a particular stock item was transacted with multiple VAT rates then it will pick up the last voucher rate & ignore the previous rates
If you have Date of last entry in October & don’t have any transaction for say Stock item A then it will go back till last 3 quarters to search for the transaction for stock item A. If not found, then will set the status as <Rate not configured>

15. Release 5.x Data migration Rules
Stock Item (Release 4.93)
Migrated Stock Item Status (Release 5.x)
Action to be performed
Only Opening Stock is available
<Rate Not Configured>
Identify & configure the rate
14.5%
Rate is picked from Purchase transaction & applied at stock item level as 14.5%
Purchase – Exempt
14.5%
Rate is picked from Sales transaction & applied at stock item level as 14.5%
There could be a possibility of charging tax to an exempted item, cross verify with customer & configure
1st transaction - 4%
2nd transaction – 5%
Rate is picked from the last Sales transaction & applied at stock item level as 5%
All applicable rates should be configured specifying effective date.
1st transaction %
2nd transaction - Sales (Exempt)
Sales Exempt transaction is ignored and 14.5% is applied at the stock item level
1st transaction – Sales (Exempt)
2nd transaction – Purchase (Exempt)

16. Tax Rate Setup Report To view Tax Rate Setup report go to,
Specifically for VAT & Excise as these two statutory modules are related to inventory.
A report (Tax classification / Stock Group-wise) from where the user can configure the VAT / Excise rates to the Stock Groups or Stock Items.
Note:
Please see, for existing customers post data migration, the rates get set at the Stock item level (From Release 5.3 onwards) so that they can start their billing without doing any configurations
This report is available for existing customers who are migrating the data as well as for the new customers who will be creating the company freshly in the new release.
To view Tax Rate Setup report go to,
Gateway of Tally  Inventory Info.  Tax Rate Setup  VAT/Excise OR
Gateway of Tally  Display  Statutory Reports  VAT/Excise  Tax Rate Setup
P.S. Copy Allocation Details (Gateway of Tally  Inventory Info.  Tax Rate Setup) option is also provided to copy the Stock item details to other Stock Groups / Stock Items.
To view Tax Rate Setup report go to,
Gateway of Tally  Inventory Info.  Tax Rate Setup  VAT/Excise OR
Gateway of Tally  Display  Statutory Reports  VAT/Excise  Tax Rate Setup
P.S. Copy Allocation Details (Gateway of Tally  Inventory Info.  Tax Rate Setup) option is also provided to copy the Stock item details to other Stock Groups / Stock Items.

17. Tax Computation (Triangulation Report)
This is a powerful & vital report introduced in Release 5.0 which would help the user to –
View Tax computation details (Gateway of Tally  Display  Statutory Reports  VAT  VAT Form)
Save return (Triangulation Report  F6: Save)
Generate Statutory Returns (Triangulation Report  Ctrl+P: Print Form)
Generate Annexures (Triangulation Report  Annexures Ready  Annexure  P: Print Form)
Re-compute return if masters/transactions were modified after saving returns (Triangulation Report  F5: Recompute)
Generate Revised Return if the modifications are done to an already filed return (Triangulation Report  F7: Save as Revised)
Keep a tab on Potential errors at regular intervals and rectify it. Thus, avoiding delay in filing statutory return if the errors were traced at the last moment. (Triangulation Report  Uncertain Transactions)
In this report, you need to mainly focus on the ‘Uncertain Transactions’ & ‘Annexure Errors’, these are mainly the exceptions / potential errors related to the statutory masters and transactions highlighted by Tally.
Clearing these exceptions one by one would keep reducing the uncertain transactions / Annexure errors count. Finally, to file the return successfully, you need to ensure that the count of both these buckets becomes 0.
Note: For few states, the bucket name would be “Incomplete/mismatch in information (to be resolved)”
Caution
Refrain from opening the triangulation report for large periods like 6 monthly or yearly. First rectify uncertain transactions for the period that is opened by default. This should clear maximum Exceptions in the data and therefore when you open larger period of the report you will not find many Exceptions.
Now, let’s understand how to migrate the VAT data by considering various business scenarios.

18. Single vat % applicable
Scenario 1

19. Scenario 1: Single VAT % Applicable
Shiv Enterprises is a trading company which deals in VAT commodities having single VAT rate i.e. 5% is applicable. How to configure VAT for his business?
Solution:
As a single VAT rate is applicable for their business, VAT rate can be set at the company level.
Gateway of Tally  F11: Features  F3: Statutory & Taxation  Enable Value Added Tax (VAT)? Yes  Set/alter VAT details? Yes  Set/alter tax/rate details? Yes  Tax rate = 5%  Save
P.S. You need NOT define the VAT rate at the Stock item or ledger level.
Note: For the states where the commodity details needs to be captured in Annexures, we suggest you to configure the commodity details & VAT rates from Tax Rate Setup screen instead of defining the VAT rate at the F11, company level.
Gateway of Tally  Inventory Info.  Tax Rate Setup  VAT
Facilitator to show the above scenario by creating a demo company.

20. Multiple vat % applicable (Stock items are grouped based on VAT %)
Scenario 2

21. Scenario 2: Multiple VAT % Applicable, items grouped based on VAT %
Balaji Enterprises is a trading company which deals in VAT commodities having multiple VAT rates 10% & 5%. Stock items available are grouped based on VAT Rates?
Solution:
As the stock items are grouped based on VAT rates, the VAT rate details can be set at the group level.
Gateway of Tally  F11: Features  F3: Statutory & Taxation  Enable Value Added Tax (VAT)? Yes
Gateway of Tally  Inventory Info.  Tax Rate Setup  VAT  VAT Rate Setup
Stock items will be shown based on Group
Select the VAT 5% group  Press ALT+S or Click ‘Set Rate’  Tax Rate = 5%  Press Ctrl+A to save
Select the VAT 10% group  Press ALT+S or Click ‘Set Rate’  Tax Rate = 10%  Press Ctrl+A to save
Facilitator to show the above scenario by creating a demo company.

22. Multiple vat % applicable (Stock items are not grouped based on VAT %)
Scenario 3 - CASE 1

23. Scenario 3: Multiple VAT % Applicable, items NOT grouped based on VAT %
CASE 1:
Balaji Enterprises is a trading company which deals in VAT commodities having multiple VAT rates 14.5% & 5%. How to configure these VAT rates for the stock items?
(50% of total stock item falling under 14.5% & 50% under 5%)
Solution:
You need not do any configuration as from Release 5.3 onwards, when you migrate the data from Release 4.93 to Release 5.x, the VAT rates will get set at the Stock item level based on the rate charged at the last transaction level.
However, if you have stock items which were not transacted in Release 4.x OR transacted without any tax then such stock items will not carry any VAT % in Release 5.x. In such case, you need to go to -
Gateway of Tally  Inventory Info.  Tax Rate Setup  VAT  <Rate Not Configured>
& define the rates applicable for these stock items. If you have stopped dealing in these stock items then you can ignore it.
Facilitator to show the above scenario by creating a demo company.

24. Scenario 3: Multiple VAT % Applicable, items NOT grouped based on VAT %
CASE 2:
Balaji Enterprises is a trading company which deals in VAT commodities having multiple VAT rates 10% & 5%. Majority of the stock items fall under 10%. How do we configure the VAT rates for their business?
Solution:
As majority of the stock items falls under 10%, first define the VAT rate i.e. 10% at the company level.
Gateway of Tally  F11: Features  F3: Statutory & Taxation  Enable Value Added Tax (VAT)? Yes  Set/alter VAT details? Yes  Set/alter tax/rate details? Yes  Tax rate = 10%  Save
Based on Tax Rate-wise
To view the list of stock items based on classification and to define the VAT rates,
Gateway of Tally  Inventory Info.  Tax Rate Setup  VAT  VAT Rate Setup  F5: Tax Rate-wise
Press Ctrl+Spacebar to select all the stock items
*Press Ctrl+C (Clear Rate) to remove the rates available at Stock item level (Note*)
Press ALT+F1 (Condensed) then bring cursor on classification 5% & press Shift+Enter to view the stock items (Detailed mode)
Press Ctrl+Spacebar to select all the stock items falling under 5% and press ALT+S (Set Rate) to define the VAT Rate
* As, post migration the rates are set at Stock item level, we can clear all the rates defined by pressing Ctrl+C

25. stock items vat% differs from stock group vat%
Scenario 4

26. Scenario 4: Stock items VAT% differs from Stock Group VAT%
When the VAT Rate is already defined at the Stock group level say 10% and VAT rate changes to 14.5% for a particular item falling under that stock group
Solution:
You can define the new VAT rate i.e. 14.5% at the stock item level.
Gateway of Tally  Inventory Info.  Stock item  Alter  Select the stock item  VAT Applicable = Applicable  Set/alter VAT details = Yes  Tax rate = 14.5%  Save (Ctrl+A)
Note: The VAT rate defined at the stock item level i.e. 14.5% will override the VAT rate defined at the stock group level i.e. 10%.

27. stock item taxable / exempted
Scenario 5

28. Scenario 5: Taxable Stock item which is sometimes Exempted
Ganeshji Enterprises is a trading company which deals in VAT commodities having VAT rate as 5% however, when he sells the commodities to certain Party (Exempted based on notification OR SEZ) for whom VAT is exempted, how do we handle this scenario? Solution: As discussed in previous scenarios, the rate can be defined at Company level (if single rate is applicable) OR can be defined at Stock Group or Stock item level in case of multiple rates. Now you wish to sell the taxable stock items as “Exempted”. For this, you can either do the following, In Party master  Set/Alter VAT details  F12: Configure  Allow exemption details  Type of Exemption = Notification / SEZ Create Sales Exempt Ledger  Set/Alter VAT Details  Nature of transaction as Sales Exempt & use this ledger while raising invoices for exempted Party (Instead of selecting your normal Sales ledger)
Facilitator to show the above scenario by creating a demo company.

29. ACCOUNTS ONLY COMPANY & MULTIPLE VAT RATES
Scenario 6

30. Scenario 6: Accounts Only Company & Multiple VAT Rates
Ganeshji Enterprises is a trading company which deals in VAT commodities having two VAT rates i.e. 5% & 10%. They don’t maintain any inventory, how do we configure & calculate VAT for this company?
Solution:
Gateway of Tally  F11: Features  F3: Statutory & Taxation  Enable Value Added Tax (VAT)? Yes
Gateway of Tally  Accounts Info.  Create/Alter  / Sales  Is VAT/CST Applicable? = Applicable  Set/Alter VAT Details? = Yes  Nature of Transaction = Purchase / Sales Taxable  Tax Rate = 5%
Gateway of Tally  Accounts Info.  Create/Alter  / Sales  Is VAT/CST Applicable? = Applicable  Set/Alter VAT Details? = Yes  Nature of Transaction = Purchase / Sales Taxable  Tax Rate = 10%
Gateway of Tally  Accounts Info.  Create/Alter  VAT  Type of duty/tax = VAT  Save
Note: To maintain single VAT ledger, user can leave the percentage field blank or else can create two separate VAT ledgers of 5% & 10% and define the percentages respectively.

31. Thank You