Excise Accounting

in Tally 9

Tally (India) Pvt. Ltd. 2007
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Version: Excise Accounting in Tally 9/1.1/Training/August 2007

i
Contents
Introduction
Excise Duty....................................................................................................................................................................... 1
Basic Excise Duty ....................................................................................................................................................... 2
Special Duty of Excise ................................................................................................................................................ 2
Additional Duty of Excise (AED)................................................................................................................................ 2
Education Cess on Excise Duty .................................................................................................................................. 2
Secondary and Higher Education Cess on Excisable Goods ..................................................................................... 2
Customs Duty................................................................................................................................................................... 3
Basic Customs Duty.................................................................................................................................................... 3
Additional Customs Duty............................................................................................................................................ 3
Special Additional Duty on Customs Duty ................................................................................................................. 3
Education Cess on Customs Duty............................................................................................................................... 4
Secondary and Higher Education Cess on imported goods ....................................................................................... 4
Basis of Calculation of Duties .................................................................................................................................... 5
1. Creation of Masters
1.1 Company Setup....................................................................................................................................................... 6
1.2 Ledger Classifications.......................................................................................................................................... 10
1.2.1 Party Ledgers.................................................................................................................................................. 10
1.2.2 Sales and Purchases Ledger .......................................................................................................................... 11
1.2.3 VAT Tax Ledgers ............................................................................................................................................ 12
1.2.4 Excise Duty Ledgers ....................................................................................................................................... 13
1.3 Stock Items ............................................................................................................................................................ 31
2. Transactions
2.1 Purchases................................................................................................................................................................ 33
2.2 Sales ........................................................................................................................................................................ 45
1
Introduction
The basic scheme of taxation in India envisages levy of indirect taxes on excisable goods manu-
factured/ produced/ imported into India. These Indirect taxes are generally administered by the
central government and the revenue from such levies is deposited to their credit.
There are basically two broad categories of duties, which are applicable whenever goods are
imported into or exported out or manufactured in India:
Excise Duty
Customs Duty
Businesses engaged in manufacturing / production of excisable goods or imports of goods into
India are liable to pay Excise duty / Customs Duty, as applicable.
This manual provides a step-by-step walkthrough for accounting of various duties of excise and
customs applicable to manufacturers and importers.
Excise Duty
Excise Duty or Duty of Excise is a tax on goods produced or manufactured in India and intended
for home consumption i.e., sale in India. The Excise Duty is chargeable at the time of production
or manufacturing. However, for convenience it is charged at the time of removal.
It is basically an indirect tax, which the manufacturer or producer passes on to the ultimate
consumer. The levy and collection of Duty of Excise is provided under authority of the Central
Excise Act, 1944 at the rates specified under Central Excise Tariff Act, 1985. The duty is
commonly referred as the Basic Excise Duty. In addition to this duty a few items like fibre, yarn,
etc., also attract Additional Excise Duty under Additional Duties of Excise (Textiles and Textile
Articles) Act, 1975. The additional Duties of Excise (Goods of Special Importance) Act, 1957 and
Miscellaneous Cess Acts provide authority for collection of Additional Excise Duty and Cess
respectively on several manufactured items over and above Basic Excise Duty.
The Duties levied under Central Excise Act are:
Introduction
2


Basic Excise Duty
Basic Excise Duty is levied under Sec. 3 of Central Excise Act, 1944 on all excisable goods other
than salt, at rates set forth in the schedule to Central Excise Tariff Act, 1985. The present general
rate is 16% and there is a partial exemption for a few products. It is also termed as CENVAT.
Special Duty of Excise
Special Duty of Excise is leviable on items covered in Schedule II to Central Excise Tariff, like
aerated soft drinks, Polyester Filament Yarn (PFY), Air conditioners, pan masala, cars, etc.
Relevant provisions of the Finance Act every year specify whether SED shall be or shall not be
levied and collected in the relevant financial year.
Additional Duty of Excise (AED)
Additional Excise is levied on some goods of special importance under Additional Duties of Excise
(Goods of Special Importance) Act, 1957. This is levied in lieu of Sales Tax and shared between
Central and State Governments.
The Additional Duty is in addition to Excise Duty. Rules, procedures, penalties, etc. for collecting
these duties are same as basic duty. This duty is different from Additional Duty under Customs
Act, which is often called Countervailing Duty.
Some items covered are textile articles like cotton fabrics, silk and wool fabrics, man-made fibres,
terry fabrics, metallised yarn, embroidery, sugar, etc.
Education Cess on Excise Duty
The Finance (No. 2) Act, 2004 states that Education Cess is Duty of Excise, to be calculated on
aggregate of all duties of excise including special Excise Duty or any other duty of excise, but
excluding Education Cess on excisable goods). All provisions of Central Excise Act, including
those relating to refunds, exemptions and penalties will apply to education cess.
Presently, the rate of Educational Cess is 2% i.e., if Excise Duty rate is 16%, Education Cess will
be 0.32%.
Secondary and Higher Education Cess on Excisable Goods
The Finance Act 2007 imposed an additional Cess termed Secondary and Higher Education Cess
@ 1% of the aggregate of duties of excise on excisable goods. This Cess is in addition to the
existing Education Cess of 2% and is calculated in the same manner as Education Cess. The
Existing Education Cess (2%) and Secondary and Higher Education Cess (1%) are to be
excluded while calculating both the Cesses.
Introduction
3


Customs Duty
Customs Duty is a tax on import into India and export out of India. The levy and collection of
Customs Duty are specified in the schedules to the Customs Tariff Act, 1975. In addition to basic
Customs Duty, Special Additional Duty (SAD) at the rates specified and Countervailing Duty
(CVD) equal to Excise Duty is also payable.
The Duties levied under Customs Act are:
Basic Customs Duty
Basic Customs Duty is levied under section 12 of Customs Act. Generally, it is charged as a per-
centage of Assessable Value. The rate of Customs Duty varies for different items (i.e., either at
standard rate or at preferential rate).
In order to promote Indian agriculture and Indian automobile sector, duties on some articles are
charged at higher rates, for instance the Customs Duty on new motor cars/ two wheeler is 60%,
whereas on second hand motor cars/ two wheelers it is 100%.
Additional Customs Duty
Additional Customs Duty is usually known as Countervailing Duty (CVD) and is levied under
section 3(1) Customs Tariff Act. It is basically imposed when the excisable goods are imported, in
order to counter balance the Excise Duty, which is otherwise leviable on similar goods if manufac-
tured within the State i.e., if the goods are not produced or manufactured in India, the Excise Duty
that would be leviable on those like goods, if they were produced in India is taken as the measure.
The rate of Excise Duty is considered for quantifying CVD payable on similar products manufac-
tured or produced in India. In case, if different rates are chargeable on the good, the highest rate
among those rates is to be considered. The duty is leviable on value of goods plus basic Customs
Duty payable plus any other sum chargeable on that commodity under any law in addition to and
in the same manner as duty of customs (i.e., NCCD of Customs), but excluding Anti Dumping
Duty, Special Additional Duty and Safeguard Duty.
For instance, if the Customs Value of goods is Rs. 20,000, Customs Duty is 30% and Excise Duty
on similar goods manufactured in India is 16%. Then, basic Customs Duty is Rs 6,000/-. Addi-
tional Customs Duty (CVD) is payable on value plus Basic Customs Duty, i.e., on Rs 26,000/- [Rs
20,000+6,000]. Thus, CVD payable is Rs 4,160 (16% of Rs 26,000).
Special Additional Duty on Customs Duty
Special Additional Duty is levied to provide a common base to domestic goods which have to
suffer sales tax. Special Additional Duty is computed on the aggregate of the following compo-
nents excluding Anti Dumping Duty and Safeguard Duty.
1. Assessable value
2. Basic Duty of Customs
3. Surcharge
4. Additional duty of Customs (CVD)
Introduction
4


Consider the example explained in the above paragraph. If the Special Additional Duty (SAD) is
payable @ 4% then the SAD will be calculated on Rs. 30,160/- (Customs Duty + CVD + SAD i.e.,
20,000+6,000+4,160) = 1206.40/-
Education Cess on Customs Duty
The Finance (No. 2) Act, 2004 states that Education Cess on Customs Duty is a duty of
customs, to be calculated on aggregate of custom duties on imported goods but excluding
safeguard duty, Countervailing duty on subsidised Articles, Anti Dumping Duty levied under
Customs Tariff Act and the Education Cess on imported goods.
All provisions, rules and regulations of Customs Act, including those relating to refund, exemption
from duty and imposition of penalty will apply to Education Cess on imported goods.
Presently, the rate of Educational Cess is 2%. For example, if the value of an item is Rs.1000,
Customs Duty is 20% and Excise Duty is 16%, the calculation will be as follows:
The duty is worked out as shown:
Thus, the total duty payable will be Rs. 4,037.57/- i.e., Customs Duty Rs. 2,000/-, CVD - Rs
1,958.40/- and Education Cess Rs. 79.17/-.
Secondary and Higher Education Cess on imported goods
The Finance Act 2007 has imposed an additional Cess termed Secondary and Higher Education
Cess @ 1% of the aggregate of duties of customs on imported goods. This Cess is in addition to
the existing Education Cess of 2% and is calculated in the same manner as Education Cess. The
Existing Education Cess (2%) and Secondary & Higher Education Cess (1%) are to be excluded
while calculating both the Cesses.
Consider the above example, the 1% of Secondary & Higher Education Cess will be Rs. 39.58/-
(i.e., 1% on Rs. 3,958.40)
Sl.No. Particulars Rate of
Duty
Amount
(in Rs.)
A. Assessable Value 10,000.00
B. Customs Duty 20% 2,000.00
C. Sub-total for calculating CVD (A+B) 12,000.00
D. Countervailing Duty (CVD)+Cess @ 2% on CVD 16.32% 1,958.40
E. Sub-total for calculating Cess (B+D) 3,958.40
F. Educational Cess 2% 79.17
Introduction
5


Basis of Calculation of Duties
Excise Duty
Customs Duty
Sl.No. Duties of Excise Basis of Calculation
1. Basic Excise Duty BED On Assessable Value
2. Special Excise Duty SED On Assessable Value
3. Additional Duty of Excise
Goods of Special Importance
AED [GSI] On Assessable Value
4. Additional Duty of Excise T&TW AED [T&TW] On Assessable Value
5. National Calamity Contingent Duty NCCD On
(BED+SED+AED[GSI]+AED
[T&TW]
6. Educational Cess On
(BED+SED+AED[GSI]+AED
([T&TW]+NCCD)
7. Sec. & Higher Educational Cess On
(BED+SED+AED[GSI]+AED
([T&TW]+NCCD)
Sl.No. Duties of Customs Basis of Calculation
1. Basic Customs Duty BCD On Assessable Value
2. Countervailing Duty CVD On Assessable Value + BCD
3. Educational Cess On (BCD+CVD) excluding CVD
on subsidised Articles
4. Sec. & Higher Educational Cess On (BCD+CVD) excluding CVD
on subsidised Articles & above
Education Cess
6
1. Creation of Masters
Tally 9 facilitates smooth and error free Excise Accounting for manufacturers and dealers,
engaged in manufacturing / trading of excisable goods. It ensures better transparency and greater
levels of compliance with the statutes. It takes a one-time configuration in ledger masters in Tally
for Excise Accounting to be activated.
1.1 Company Setup
Consider the following example which illustrates creation of a new company in Tally 9 for Excise
Accounting in Tally.
M/s. Steelage Industries (P) Ltd., is leading manufacturers of Engine Valves in Bangalore.
Step 1: Create/ Alter Company screen
In the Company Creation screen,
Select India in the Statutory compliance for field
Specify the State and Pin Code details
Select Accounts with Inventory in the Maintain field
Creation of Masters
7


The completed Company Creation screen is displayed as shown.
Figure 1.1 Company Creation screen
Press Enter to accept.
Step 2: F11: Statutory & Taxation features
Go to Gateway of Tally > press F11: Features > Statutory & Taxation
1. Set Enable Value Added Tax (VAT) and Set/Alter VAT Details to Yes
Creation of Masters
8


The Statutory & Taxation screen is displayed as shown.
Figure 1.2 F11 - Statutory and Taxation screen
2. Press Enter and the VAT Details screen appears
3. Select Karnataka in the State field
4. Select Regular in the Type of Dealer field
5. Enter the date of applicability in the Regular VAT Applicable From field
The VAT Details screen is displayed as shown.
Figure 1.3 VAT Details screen
6. Specify the VAT TIN numbers, Inter-state Sales Tax Number and PAN/ Income-Tax
No. details
Creation of Masters
9


The completed F11: Statutory & Taxation screen is displayed as shown.
Figure 1.4 F11: Statutory & Taxation screen
7. Press Enter to accept
Creation of Masters
10


1.2 Ledger Classifications
Create necessary Purchases, Sales, Party ledgers & Excise Duty, Customs Duty ledgers and
Stock Items as explained below:
1.2.1 Party Ledgers
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
The completed Ledger Creation screen of Sterling Steel Industries is displayed as shown.
Figure 1.5 Ledger Creation screen of Sterling Steel Industries
Press Enter to accept
Create M/s. Decora Equipments ledger in the similar manner.

Ledger Under Maintain balances
bill-by-bill
Inventory Values
are affected
Sterling Steel Industries Sundry Creditors Yes No
Decora Equipments Sundry Debtors Yes No
Creation of Masters
11


1.2.2 Sales and Purchases Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
The completed Ledger Creation screen of Sales Excisable Goods is displayed as shown.
Figure 1.6 Ledger Creation screen of Sales Excisable Goods
Press Enter to accept
Similarly, create purchase ledger.
Ledger Under Inventory values
are affected
Used in VAT
Returns
VAT/Tax Class
SalesExcisable
Goods
Sales
Accounts
Yes Yes Sales @ 4%
Purchases
Excisable Goods
Purchase
Accounts
Yes Yes Purchases @
4%
If VAT is not applicable, then set Used in the VAT Returns to No.
Creation of Masters
12


1.2.3 VAT Tax Ledgers
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
The completed Input VAT @ 4% ledger screen is displayed as shown.
Figure 1.7 Input VAT Ledger Creation screen
Press Enter to accept.
Similarly, create Output VAT @ 4% ledger.
Ledger Under Type of
Duty/Tax
VAT/Tax
Class
Inventory
Values are
affected
Percent-
age of
Calcula-
tion
Method
of Cal-
culation
Input VAT @ 4% Duties &
Taxes
VAT Input VAT
@ 4%
No 4% On VAT
Rate
Output VAT @ 4% Duties &
Taxes
VAT Output VAT
@ 4%
No 4% On VAT
Rate
Creation of Masters
13


1.2.4 Excise Duty Ledgers
Basic Excise Duty Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Ledger Creation screen,
1. Type Basic Excise Duty in the Name field
2. Select Duties & Taxes in the Under field
3. Select Excise in the Type of Duty/Tax field
Ledger Under Type of
Duty/Tax
Duty
Head
Inventory
Values are
affected
Percent-
age of Cal-
culation
Method of
Calcula-
tion
Basic Excise Duty Duties
& Taxes
Excise Excise
Duty
No 16% On Total
Sales
Special Excise
Duty
Duties
& Taxes
Excise Special
Duty
No 4% On Total
Sales
Education Cess
on Excise Duty
Duties
& Taxes
Excise Cess on
Duty
No 2% Surcharge
on Tax
Secondary and
Higher Education
Cess on Excise
Duty
Duties
& Taxes
Excise Cess on
Duty
No 1% Surcharge
on Tax
Creation of Masters
14


The Ledger Creation screen for Basic Excise Duty is displayed as shown.
.
Figure 1.8 Ledger Creation screen for Basic Excise Duty
4. Select Excise Duty in the Duty Head field
Types of Duty/Tax refers to the nature of duty or tax chargeable on the pur-
chase/ sales turnover.
In Tally, there are basically four Duty/ Tax types:
CST
This tax type is used in tax ledgers for calculating tax on
sales/ purchases made in the course of Interstate trade or
commerce.
Excise
This duty type is used in duty ledgers for calculating duty
amount on the value of goods manufactured in India.
VAT
This tax type is used in tax ledgers for calculating sales tax on
local sales/ purchases made within the respective state.
Others
This tax type is used in tax ledgers for calculating tax (if any)
other than the types mentioned above, which are applicable
on the sales.
Creation of Masters
15


The Ledger Creation screen for Basic Excise Duty is displayed as shown.
Figure 1.9 Ledger Creation screen for Basic Excise Duty
Duty Head refers to the type of Excise duty or Customs Duty applicable on
the goods manufactured and imported respectively.
In Tally, there are basically six Duty Head types:
Additional Duty
This duty head is used when any duty in addition to the basic
duty under Excise/ Customs is chargeable on the aggregate of
duty value.
Cess on Customs Duty
This duty head is used when any duty is to be calculated on
aggregate of custom duties on imported goods. For example,
Education Cess on Customs Duty, Secondary and Higher Edu-
cation Cess on Imported Goods
Cess on Duty
This duty head is used when any duty is to be calculated on
aggregate of all duties of excise including Special Excise Duty
or any other duty of excise applicable on manufactured
goods. For example, Education Cess on Excise Duty, Second-
ary and Higher Education Cess on Excisable goods, NCCD etc.
Creation of Masters
16


5. Set Inventory values are affected to No
6. Specify 16% in the Percentage of Calculation field and press Enter
7. Select On Total Sales in the Method of Calculation field
The Ledger Creation screen for Basic Excise Duty is displayed as shown.

Figure 1.10 Ledger Creation screen for Basic Excise Duty
Customs Duty
This duty head is used when the duty amount is to be calcu-
lated on the Assessable Value or on Current sub-total of the
imported goods.
Excise Duty
This duty head is used when the duty amount is to be calcu-
lated on the Assessable Value of the manufactured goods.
Special Duty
This duty head is used when the duty amount is to be calcu-
lated on the Assessable Value of the manufactured goods or
imported goods. For example, Special Duty of Excise, Special
Additional Duty on Customs Duty, AED [GSI], AED [T & TA],
AED [T & TW] etc.
Creation of Masters
17


The completed Ledger Creation screen for Basic Excise Duty is displayed as shown.
Figure 1.11 Completed Ledger Creation screen for Basic Excise Duty
8. Press Enter to accept
Type of Duty under Method of Calculation refers to the calculation
criteria on the basis of which the duty/ tax is to be computed. In Tally, there
are basically two calculation types, when the Duty head is selected as
Excise Duty.
On Total Sales
This method is used when the computation of duty/ tax is to
be done on the total turnover or the sale value.
Tax based on Item Rate
This method is used when the computation of duty/ tax is to
be done on the rate of the Stock Item.
Creation of Masters
18


Special Excise Duty Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Ledger Creation screen,
1. Type Special Excise Duty in the Name field
2. Select Duties & Taxes in the Under field
3. Select Excise in the Type of Duty/Tax field
4. Select Special Duty in the Duty Head field
The Ledger Creation screen for Special Excise Duty is displayed as shown.
Figure 1.12 Ledger Creation screen for Special Excise Duty
5. Set Inventory values are affected to No
6. Specify 4% in the Percentage of Calculation field and press Enter
7. Select On Total Sales in the Method of Calculation field
Creation of Masters
19


The completed Ledger Creation screen for Special Excise Duty is displayed as shown.
Figure 1.13 Completed Ledger Creation screen for Special Excise Duty
8. Press Enter to accept
Education Cess on Excise Duty Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Ledger Creation screen,
1. Type Educ. Cess on Excise Duty in the Name field
2. Select Duties & Taxes in the Under field
3. Select Excise in the Type of Duty/Tax field
4. Select Cess On Duty in the Duty Head field
Creation of Masters
20


The Ledger Creation screen for Educ. Cess on Excise Duty is displayed as shown.
Figure 1.14 Ledger Creation screen for Educ. Cess on Excise Duty
5. Set Inventory values are affected to No
6. Specify 2% in the Percentage of Calculation field and press Enter
7. Select Surcharge on Tax in the Method of Calculation field
Creation of Masters
21


The Ledger Creation screen for Educ. Cess on Excise Duty is displayed as shown.
Figure 1.15 Ledger Creation screen for Educ. Cess on Excise Duty
Types of Duty under Method of Calculation refers to the calculation criteria
on the basis of which the duty/ tax is to be computed. In Tally, there are
basically two calculation types, when the Duty head is selected as Cess on
Duty.
Additional Duty
This method is used when the Cess is calculated on Excise
Duty, which is computed on the Assessable Value of the
goods. This is in addition to the basic duty.
Surcharge on Tax
This method is used when the Cess is calculated on the Excise
Duty, Special duty and Additional duty. This is computed as
an additional charge on the applicable duties of Excise/
Customs.
Creation of Masters
22


The completed Ledger Creation screen for Educ. Cess on Excise Duty is displayed as shown.
Figure 1.16 Ledger Creation screen for Educ. Cess on Excise Duty
8. Press Enter to accept
Creation of Masters
23


Secondary & Higher Education Cess on Excise Duty Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
The completed Sec. & Higher Educ. Cess on Excise Duty ledger screen is displayed as shown.
Figure 1.17 Completed Sec. & Higher Educ. Cess on Excise Duty ledger screen
Press Enter to accept
Creation of Masters
24


Customs Duty Ledgers
Basic Customs Duty Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Ledger Creation screen,
1. Type Basic Customs Duty in the Name field
2. Select Duties & Taxes in the Under field
3. Select Excise in the Type of Duty/Tax field
Ledger Under Type of
Duty/Tax
Duty
Head
Inventory
Values
are
affected
Percent-
age of
Calcula-
tion
Method of
Calcula-
tion
Basic Customs
Duty
Duties
& Taxes
Excise Customs
Duty
No 25% On Total
Sales
Countervailing
Duty (CVD)
Duties
& Taxes
Excise Customs
Duty
No 4% On Total
Sales
Education Cess
on Customs Duty
Duties
& Taxes
Excise Cess on
Customs
Duty
No 2% Surcharge
on Tax
Secondary and
Higher Education
Cess on Customs
Duty
Duties
& Taxes
Excise Cess on
Customs
Duty
No 1% Surcharge
on Tax
Creation of Masters
25


The Ledger Creation screen for Basic Customs Duty is displayed as shown.
Figure 1.18 Ledger Creation screen for Basic Customs Duty
4. Select Customs Duty in the Duty Head field
Creation of Masters
26


The Ledger Creation screen for Basic Customs Duty is displayed as shown.
Figure 1.19 Ledger Creation screen for Basic Customs Duty
5. Set Inventory values are affected to No
6. Specify 25% in the Percentage of Calculation field and press Enter
7. Select On Total Sales in the Method of Calculation field
Creation of Masters
27


The Ledger Creation screen for Basic Customs Duty is displayed as shown.
Figure 1.20 Ledger Creation screen for Basic Customs Duty
The completed Basic Customs Duty ledger screen is displayed as shown.
Figure 1.21 Completed Basic Customs Duty ledger screen
8. Press Enter to accept
Creation of Masters
28


Countervailing Duty (CVD) Ledger
As explained in the earlier chapter, Countervailing Duty (CVD) is calculated on the Assessable
value of goods plus basic customs duty plus National Calamity Contingent Duty (NCCD of
Customs). Hence, to facilitate computation of CVD on current sub-total, define the following con-
figuration in F12.
Step 1: F12: Configure
Go to Gateway of Tally > F12: Configure > Invoice / Orders Entry
Set Calculate Tax on current Sub-Total to Yes
Figure 1.22 F12: Configuration - CVD
You can also enable the above settings during voucher entry.
Creation of Masters
29


Step 2: Create CVD Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Ledger Creation screen,
1. Type Countervailing Duty (CVD) in the Name field
2. Select Duties & Taxes in the Under field
3. Select Excise in the Type of Duty/Tax field
4. Select Customs Duty in the Duty Head field
5. Set Inventory values are affected to No
6. Specify 4% in the Percentage of Calculation field and press Enter
7. Select On Total Sales in the Method of Calculation field
The completed Ledger Creation screen for Countervailing Duty (CVD) is displayed as shown.
Figure 1.23 Ledger Creation screen for Countervailing Duty (CVD)
8. Press Enter to accept
Creation of Masters
30


Education Cess on Customs Duty
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Ledger Creation screen,
1. Type Educ. Cess on Customs Duty in the Name field
2. Select Duties & Taxes in the Under field
3. Select Excise in the Type of Duty/Tax field
4. Select Cess on Customs Duty in the Duty Head field
5. Set Inventory values are affected to No
6. Specify 2% in the Percentage of Calculation field and press Enter
7. Select Surcharge on Tax in the Method of Calculation field
The completed Ledger Creation screen for Education Cess on Customs Duty is displayed as
shown.
Figure 1.24 Ledger Creation screen for Education Cess on Customs Duty
8. Press Enter to accept
Creation of Masters
31


Secondary & Higher Education Cess on Customs Duty
Go to Gateway of Tally > Accounts Info > Ledgers > Create
The completed Ledger Creation screen for Sec. & Higher Educ. Cess on Customs Duty is
displayed as shown.
Figure 1.25 Ledger Creation screen for Secondary & Higher Education Cess on Customs Duty
Press Enter to accept
1.3 Stock Items
For entering the transactions of purchase and sales, create the Stock items with the unit of
measure. By this you will be able to raise the Item Invoice and get the Stock Summary with all
Stock Item details.
Create the following Stock Items
Stock Item Under Units
Hot Rolled Coils 100mm Primary MT
Iron Bars Primary Kgs
Copper Alloy Strips Primary Kgs
Engine Valve 5 Primary Nos
Creation of Masters
32


Go to Gateway of Tally > Inventory Info. > Stock Items > Create
In the Stock Item creation screen,
1. Type Hot Rolled Coils 100mm in the Name field
2. Select Primary from the List of Groups in the Under field
3. Select MT (Metric Tonnes) in the Units field
The completed Stock Item Creation screen is displayed as shown.
Figure 1.26 Stock Item Creation
4. Press Enter to accept
Similarly, create other Stock Items.
33
2. Transactions
2.1 Purchases
Consider the following example to illustrate Excise Purchases transactions.
Illustration 1
On 2
nd
April 2007, M/s. Steelage Industries purchased the following goods from M/s. Sterling
Steel Industries vide Bill No. 483.
The same is accounted as shown.
Particulars Quantity Rate Amount
(in MT) (in Rs.) (in Rs.)
Hot Rolled Coils - 100mm 400 500 200,000.00
Assessable Value 200,000.00
Basic Excise Duty 16% 32,000.00
Special Excise Duty 4% 8,000.00
Total Duty Value 40,000.00
Education Cess 2% 800.00
Sec. & Higher Education Cess 1% 400.00
Total Cess Value 1,200.00
Total Amount 241,200.00
Value Added Tax (VAT) 4% 9,648.00
Total Invoice Amount 250,848.00
Transactions
34


Create Purchase Invoice
Go to Gateway of Tally > Accounting Vouchers > press F9: Purchase
1. Press F2 and change the date to 02/04/2007
2. Specify 483 as the Supplier Invoice No. and the Date as 02/04/2007
3. Select Sterling Steel Industries in Partys A/c Name field and press Enter
4. Select Purchases Excisable Goods in the Purchase Ledger field and the VAT/
Tax Class field is automatically prefilled as Purchases @ 4%
5. Select Hot Rolled Coils 100mm in the Name of the Item field
6. Type the Quantity as 400, Rate as 500 and press Enter to accept the Amount
7. Select Basic Excise Duty from List of Ledger Accounts and press Enter to accept
the rate and duty amount
Figure 2.1 Purchase Voucher screen with Basic Excise Duty entry
8. Select Special Excise Duty and press Enter to accept the rate and duty amount
9. Select Educ. Cess on Excise Duty and press Enter to accept the rate and cess
amount
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35


The Purchase Voucher screen with Educ. Cess on Excise Duty is displayed as shown.
Figure 2.2 Purchase Voucher screen with Educ. Cess on Excise Duty
10. Select Sec. & Higher Educ. Cess on Excise Duty and press Enter to accept the rate
and cess amount
11. Select Input VAT @ 4% ledger and press Enter, the VAT amount i.e., Rs. 9,648
appears by default
12. In the Bill-wise Details screen, specify the Type of Ref as New Ref and type 483 in
the Name field
13. Press Enter to accept the screen
14. Type the details of the transaction in the Narration field
Transactions
36


The completed Purchase Voucher screen is displayed as shown.
Figure 2.3 Purchase Voucher screen
15. Press Enter to accept
Transactions
37


Illustration 2
On 3
rd
April 2007, M/s. Steelage Industries purchased the following goods from M/s. Southern
Metalloys Pvt. Ltd., Bangalore (vide Bill No.12).
The same is accounted as shown:
Create necessary Purchases, Party ledgers and the following Duty ledgers to execute the above
transaction.
Particulars Quantity Rate Amount
(in MT) (in Rs.) (in Rs.)
Iron Bars 500 30 15,000.00
Assessable Value 15,000.00
Basic Excise Duty 16% 2,400.00
AED [GSI] 8% 1,200.00
Total Duty Value 3,600.00
NCCD 1% 36.00
Education Cess 2% 72.00
Sec. & Higher Education Cess 1% 36.00
Total Cess Value 144.00
Total Amount (1+2+3) 18,744.00
As explained earlier, the Local Sales Tax/ VAT is not applicable when
Additional duty is chargeable.
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38


Excise Duty Ledgers
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
The completed Ledger Creation screen for Additional Duty of Excise (GSI) is displayed as
shown.
Figure 2.4 Ledger Creation screen for Additional Duty of Excise (GSI)
Press Enter to accept
Ledger Under Type of
Duty/Tax
Duty Head Inventory
Values are
affected
Percent-
age of Cal-
culation
Method of
Calcula-
tion
Additional
Duty of Excise
(GSI)
Duties
& Taxes
Excise Special
Duty
No 8% On Total
Sales
National
Calamity Con-
tingent Duty
(NCCD)
Duties
& Taxes
Excise Cess on
Duty
No 1% Surcharge
on Tax
Transactions
39


The completed Ledger Creation screen for National Calamity Contingent Duty (NCCD) is
displayed as shown.

Figure 2.5 Ledger Creation screen for National Calamity Contingent Duty (NCCD)
Press Enter to accept
Transactions
40


Create Purchase Invoice
Setup:
Press F12, set Allow selection of VAT/Tax Class during entry to Yes.
The F12: Configure screen is displayed as shown.
Figure 2.6 F12: Configure for Selecting of VAT Class
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41


Go to Gateway of Tally > Accounting Vouchers > press F9: Purchase
The completed Purchase Voucher screen with AED, NCCD entry is displayed as shown.
Figure 2.7 Purchase Voucher screen with AED, NCCD entry
Press Enter to accept
Transactions
42


Illustration 3
On 4
th
April 2007, M/s. Steelage Industries imported the following goods from M/s. Spring Steels
Pte Ltd., Germany (vide Bill No.24/2007).
The same is accounted as shown:
Create necessary Purchases and Party ledgers to execute the above transaction.
Create Purchase Invoice:
Go to Gateway of Tally > Accounting Vouchers > press F9: Purchase
1. Press F2 and change date to 04/04/2007
2. Specify 24/2007 as the Supplier Invoice No. and the Date as 04/04/2007
3. Select Spring Steels Pte Ltd., in Partys A/c Name and press Enter
4. Select Purchases Excisable Goods in the Purchase Ledger field and the VAT/
Tax Class as Imports
5. Select Copper Alloy Strips in the Name of Item field
6. Type the Quantity as 100, Rate as 150 and press Enter to accept the Amount
7. Select Basic Customs Duty and press Enter to accept the rate and duty amount
8. Select Countervailing Duty (CVD) and press Enter to accept the rate and duty
amount
Particulars Quantity Rate Amount
(in MT) (in Rs.) (in Rs.)
Copper Alloy Strips 100 150 15,000.00
Assessable Value 15,000.00
Basic Customs Duty 25% 3,750.00
Countervailing Duty 4% 750.00
Total Duty Value 4,500.00
Education Cess 2% 90.00
Sec. & Higher Education Cess 1% 45.00
Total Cess Value 135.00
Total Invoice Amount 19,635.00
Transactions
43


The Purchase Voucher screen with CVD entry is displayed as shown.
Figure 2.8 Purchase Voucher screen with CVD entry
You will find that CVD is calculated on the Assessable value plus duty value i.e., 4% on 18,750/-
(15,000+3,750) = Rs. 750/-.
9. Select Educ. Cess on Customs Duty and press Enter to accept the rate and cess
amount
10. Select Sec. & Higher Educ. Cess on Customs Duty and press Enter to accept the
rate and cess amount
11. In the billwise details screen, specify the Type of Ref as New Ref and press Enter to
accept 24/2007 in the Name field
12. Press Enter to accept the screen
13. Type the details of the transaction in the Narration field
Transactions
44


The completed Purchase Voucher screen is displayed as shown.
Figure 2.9 Purchase Voucher
14. Press Enter to accept
The above invoice can also be entered in multi-currency.
Transactions
45


2.2 Sales
Consider the following example to illustrate Excise Sales transactions.
Illustration 4
On 5
th
April 2007, M/s. Steelage Industries sells the following goods to M/s. Decora Equipments,
Bangalore.
The same is accounted as shown.
Step 1 : Create Sales Invoice
Go to Gateway of Tally > Accounting Vouchers > press F8: Sales
1. Press F2 and change date to 05/04/2007
2. Select Decora Equipments in Partys A/c Name and press Enter
3. Select Sales Excisable Goods in the Sales Ledger field and the VAT/Tax is
defaulted as Sales @ 4%
4. Select Engine Valve 5 in the Name of the Item field and press Enter
5. Type the Quantity as 500, Rate as 250 and press Enter twice
6. Select Basic Excise Duty and press Enter to accept the rate and duty amount
7. Select Educ. Cess on Excise Duty and press Enter to accept the rate and cess
amount
8. Select Sec. & Higher Educ. Cess on Excise Duty and press Enter to accept the rate
and cess amount
9. Select Output VAT @ 4% ledger and press Enter, the VAT amount i.e., Rs. 5,824 is
calculated automatically
10. In the Bill-wise Details screen, press Enter to accept the default bill allocations
11. Type the details of the transaction in the Narration field
Particulars Quantity Rate Amount
(in MT) (in Rs.) (in Rs.)
Engine Valve - 5" 500 250 125,000.00
Assessable Value 125,000.00
Basic Excise Duty 16% 20,000.00
Total Duty Value 20,000.00
Education Cess 2% 400.00
Sec. & Higher Education Cess 1% 200.00
Total Cess Value 600.00
Total Amount 145,600.00
Value Added Tax (VAT) 4% 5,824.00
Total Invoice Amount 151,424.00
Transactions
46


The completed Sales Voucher screen is displayed as shown.
Figure 2.10 Sales Voucher
12. Press Enter to accept
Step 2 : Print Sales Invoice
13. Press Pg Up
14. Press Alt + P and press Enter
Transactions
47


The printed Sales Invoice screen is as shown.
Figure 2.11 Printed Sales Invoice