In this guide · 8 sections
- First decide: one set of GST ledgers per GSTIN
- The GST ledger blueprint: how to create GST ledgers in Tally
- The monthly routine that makes year-end easy
- Year-end: GSTR-9, GSTR-9C and the reconciliation format
- GST accounting setup for audit: what the accounts need
- Common messes, and how the blueprint prevents them
- FAQs
- Sources
- Keep separate input and output ledgers for each tax head (CGST, SGST / UTGST, IGST, Cess) under Duties & Taxes, plus separate ledgers for reverse charge, ITC reversals and credit not yet in GSTR-2B.
- Blocked credit under section 17(5) never goes to an input ledger — charge it to the cost of the expense or asset when you book the bill.
- Each GSTIN is a distinct person (s.25(4)): keep each registration identifiable in the books — a separate Tally company, or a separate GST registration in one company (TallyPrime 3.0 onwards).
- Reconcile every month: GSTR-1 vs sales, GSTR-3B vs the ledgers, GSTR-2B vs input, and the electronic credit and cash ledgers vs the book balances. Year-end then only rolls up twelve tied months.
- In the accounts, revenue is net of GST; GST credit is an asset and GST payable a statutory due, shown gross where the law does not let one be set off against the other.
Try SignReady: SignReady maps GST ledgers through their Tally groups and remembers them next year.
Start freeMost year-end GST trouble is not a tax problem; it is a ledger problem. When a client books every GST amount into one "GST A/c", the year-end reconciliation becomes an exercise in archaeology. When the GST ledgers in Tally are built the right way from day one — inputs separate from outputs, reverse charge on its own, blocked credit kept out, unmatched credit parked — the GSTR-9 tables, the audit and the Schedule III note come straight from the ledgers. This is the blueprint we would give a client's accountant in April, and what an auditor should look for when inheriting a messy set of books. Law as at 6 October 2026; figures are illustrative.
First decide: one set of GST ledgers per GSTIN
Under section 25(4) of the CGST Act, a person with more than one registration is treated as a distinct person for each registration. Each GSTIN files its own returns and has its own electronic credit and cash ledgers; credit of one registration cannot pay the tax of another. Your books must therefore let you pull out every GST balance registration by registration.
- Separate Tally company per GSTIN — the traditional route, and still the cleanest when each state office keeps its own books. The accounts are then combined at year-end (see combined accounts for multiple businesses and branches).
- One company, several GST registrations — TallyPrime 3.0 onwards lets one company hold more than one GST registration (in the company's GST details, "Create another GST Registration for the Company"), with vouchers and returns for each. If you use this, keep a separate set of GST tax ledgers for each registration (for example "Input IGST — MH" and "Input IGST — KA"), so the trial balance shows each GSTIN's balances on their own lines.
The GST ledger blueprint: how to create GST ledgers in Tally
Create the tax ledgers under Duties & Taxes with Type of Duty/Tax = GST and the right tax type (Central, State / UT, Integrated, Cess), after enabling GST for the company (F11 → Enable Goods and Services Tax (GST) → Yes, with the GSTIN and registration details). Tally will work with one CGST ledger for everything; the structure below is a choice that pays off at year-end. This GST input output ledger structure works best with the ledgers grouped under two sub-groups of Duties & Taxes — "GST — Input" and "GST — Output" — so the trial balance shows the gross asset and the gross liability.
| Ledger (per GSTIN) | What goes in | Why separately |
|---|---|---|
| Output CGST / Output SGST (or UTGST) / Output IGST / Output Cess | Tax on outward supplies; reduced by credit notes | Ties to GSTR-1 and the liability side of GSTR-3B. Rate-wise output ledgers (Output CGST 9%, 2.5%) are optional: GSTR-1 is built from the rate on each item, so rate-wise ledgers add lines without adding control. |
| Input CGST / Input SGST (or UTGST) / Input IGST / Input Cess | Eligible credit on purchases and expenses | Ties to GSTR-2B and to the electronic credit ledger. Cess ledgers only for FY 2025-26 balances: compensation cess ended on most goods from 22 September 2025 and on tobacco and pan masala from 1 February 2026, so no new cess is charged after that. |
| RCM — Output CGST / SGST / IGST (liability) | Tax payable on reverse charge (s.9(3) / 9(4); for example legal fees, directors' sitting fees, GTA where applicable) | "Output tax" excludes reverse-charge tax (s.2(82)), so it cannot be paid from the credit ledger; it is paid in cash and must be traceable on its own. |
| RCM — Input CGST / SGST / IGST | Credit of the reverse-charge tax, once paid | Shows that RCM was both paid and claimed; an RCM liability with no matching input is a question for the client. |
| ITC — not yet in GSTR-2B (holding) | Credit on invoices booked but not appearing in GSTR-2B | Since 1 January 2022 credit depends on the supplier reporting the invoice (s.16(2)(aa)). Parking it keeps the input ledgers equal to what can be claimed. |
| ITC reversal — Rule 42 / 43; ITC reversal — Rule 37 (180 days); ITC reversal — Rule 37A | Credit reversed for exempt use, for suppliers unpaid after 180 days, and for suppliers who had not filed GSTR-3B by 30 September after the year end (reverse by 30 November) | Rule 37 and 37A credit can be re-availed later; a separate ledger shows what is waiting to come back. Permanent reversals (Rule 42 / 43) go to cost or rates and taxes. |
| GST TDS receivable (s.51) / GST TCS receivable (s.52) | Tax deducted by government customers or collected by e-commerce operators | These credits land in the electronic cash ledger; book them when they appear there. |
| GST electronic cash ledger | Cash deposited by challan, not yet used | Should equal the portal's cash ledger at every month-end. |
| GST on advances received (services) | Tax paid on advances for services (time of supply on receipt, s.13(2)) | Adjusted when the invoice is raised. Advances for goods: no tax at receipt for regular taxpayers (Notification 66/2017-Central Tax). |
| Interest on GST (s.50) / Late fee / Penalty | Expense ledgers, never netted into the output ledger | Explanation 1 to s.37(1) of the Income-tax Act, 1961 (which governs FY 2025-26) denies a deduction for expenditure incurred for any purpose which is an offence or prohibited by law, and penalties for breaking the law are disallowed on that basis; interest on delayed tax is generally argued to be compensatory. Separate ledgers make the tax audit clause on penalties simple. |
Blocked credit is never an input ledger. Credit barred by section 17(5) — for example motor vehicles except as permitted, food and beverages, membership of clubs, works contract and goods or services for construction of immovable property (other than plant and machinery) on own account — the Finance Act, 2025 confirmed the "plant and machinery" wording with effect from 1 July 2017 — is added to the cost of the expense or asset when the bill is booked. Likewise, if depreciation is claimed on the tax component of capital goods, the credit is not allowed (s.16(3)): capitalise either the asset net of GST with credit taken, or with GST and no credit, never both.
In the item masters, set the HSN / SAC and the GST rate on each stock item (or on the sales and purchase ledgers for services); Tally then calculates the tax and classifies the voucher for the returns. Keep the GST rate and HSN on the item or ledger, not typed by hand on each voucher.
The monthly routine that makes year-end easy
A GSTR-2B reconciliation in Tally and the other checks below, done each month after the return is filed, are what turn year-end into a roll-up. Most clients do some of these already; the point is to do all of them and to file the working.
| # | Monthly check | Ties | Common difference |
|---|---|---|---|
| 1 | Sales in books vs GSTR-1 | Taxable value and tax, by rate | Invoices dated in the month but entered late; credit notes missed |
| 2 | GSTR-3B vs output and input ledgers | Tax paid and credit claimed | Liability or credit adjusted in the return but not booked |
| 3 | GSTR-2B vs input ledgers | Invoice by invoice | Supplier has not reported; move to the "not yet in GSTR-2B" ledger |
| 4 | Electronic credit ledger vs input balances (after the set-off entry) | Head by head | Set-off entry not passed, or passed differently from the return |
| 5 | Electronic cash ledger vs book balance | Amount | TDS / TCS credits not booked; DRC-03 payments expensed in books |
| 6 | Creditors unpaid for over 180 days | Rule 37 | Credit not reversed; interest not provided |
Pass the set-off entry each month exactly as in the GSTR-3B (output debited, input and cash credited). Without it, the output and input ledgers grow all year and nothing can be tied to the portal. Keep one eye on the time limit for credit: under section 16(4), credit for an invoice cannot be taken after the 30th of November following the end of the financial year to which it pertains, or the filing of the annual return, whichever is earlier. An invoice sitting in the "not yet in GSTR-2B" ledger past that date is a write-off to cost, not an asset.
SignReady maps ledgers through their Tally groups — including groups the client created under Duties & Taxes — and remembers the mapping for next year. Where a GST balance must be shown gross, set that ledger in Balance Sheet classification.
Year-end: GSTR-9, GSTR-9C and the reconciliation format
From FY 2024-25 onwards, a registered person whose aggregate turnover is up to ₹2 crore is exempt from filing the annual return GSTR-9 (Notification 15/2025-Central Tax). A taxpayer whose aggregate turnover exceeds ₹5 crore also files a self-certified reconciliation statement in GSTR-9C (rule 80(3), as substituted by Notification 30/2021-Central Tax); there is no certification by an auditor now. Both are due by 31 December. Whatever the turnover, the auditor still needs the reconciliation below for the accounts.
| Turnover reconciliation — FY 2025-26 (one GSTIN) | ₹ |
|---|---|
| Revenue from operations as per books (net of GST) | 4,82,50,000 |
| Add: advances received for services, taxed on receipt, not yet revenue | 3,00,000 |
| Less: unbilled revenue accrued at 31 March, invoiced in April | (2,40,000) |
| Less: export incentives in other operating revenue (not a supply) | (1,10,000) |
| Taxable value as per GSTR-1 (and GSTR-3B) | 4,82,00,000 |
The example assumes no advances or unbilled revenue at 1 April; if there were, adjust for them in the opposite direction.
| ITC reconciliation — FY 2025-26 | ₹ |
|---|---|
| Eligible GST on purchase invoices booked in the year (input and holding ledgers) | 52,40,000 |
| Add: last year's invoices that appeared in GSTR-2B this year | 1,20,000 |
| Less: invoices not in GSTR-2B at 31 March (holding ledger) | (1,85,000) |
| Less: Rule 37 reversal — suppliers unpaid after 180 days | (35,000) |
| Net ITC claimed in GSTR-3B | 51,40,000 |
| Add: Rule 37 reversal (in GSTR-2B, claimed and then reversed) | 35,000 |
| Add: credit in GSTR-2B on blocked items (s.17(5)), charged to cost, not claimed | 50,000 |
| ITC as per GSTR-2B | 52,25,000 |
The other year-end items are the ones that cross the year: credit notes issued after 31 March against this year's sales (check whether they adjust this year's revenue, and that the tax is reduced within the time allowed by section 34), advances and unbilled revenue at both ends of the year, and the credit still in the holding ledger, judged against the 30 November cut-off. If GSTR-9 or 9C shows tax short paid, it is a liability in this year's accounts, with interest.
GST accounting setup for audit: what the accounts need
| Item | Where it goes (Division I) | Illustrative ₹ |
|---|---|---|
| Revenue | Revenue from operations, net of GST collected (ICAI Guidance Note on Division I, para 9.1.6) | 4,82,50,000 |
| CGST credit left after the March set-off | Short-term loans and advances — Others: balances with government authorities | 40,000 |
| Credit not yet in GSTR-2B (recoverable) | Same head, shown separately | 1,85,000 |
| Electronic cash ledger balance | Same head | 12,000 |
| SGST payable in cash for March | Other current liabilities — statutory dues (GN para 8.6.3 lists GST among them) | 25,000 |
The CGST credit of ₹40,000 and the SGST payable of ₹25,000 are shown gross: CGST credit cannot be used to pay SGST, so there is no right of set-off (the ICAI GST Handbook on finalisation uses this very example). Nor are balances of different GSTINs netted. The Guidance Note treats GST credit receivable as an advance recoverable; some preparers show it under other current assets — pick one and be consistent with the previous year. For the full line-by-line placement, see the Schedule III guide.
For the audit report and the tax audit, the same ledgers answer:
- CARO 2020 clause 3(vii)(a) and (b) — regularity of depositing GST and arrears over six months; disputed GST dues with the forum. The cash and payable ledgers, read with the GSTR-3B filing dates, are the evidence (check CARO 2020 applicability first).
- Section 43B — GST is a "tax" under clause (a), deductible in the year paid; GST for March paid by 20 April is within the due date of the return. For FY 2025-26 this is still the Income-tax Act, 1961.
- Form 3CD — GST registration numbers in clause 4, penalties in clause 21(a), unpaid GST under section 43B in clause 26, and the break-up of total expenditure between registered and unregistered suppliers in clause 44, which is much easier when exempt supplies and composition suppliers are identifiable.
Common messes, and how the blueprint prevents them
| What the auditor finds | Prevented by |
|---|---|
| Credit on cars, staff food or a building booked to the input ledger | Blocked credit charged to cost at the time of booking |
| One combined "GST A/c" with a net balance | Separate input, output, RCM and cash ledgers per tax head and GSTIN |
| Reverse charge never booked (legal fees, sitting fees) | RCM liability and RCM input ledgers that are checked monthly |
| Debit balance in an output ledger | Monthly set-off entry matching GSTR-3B; credit notes posted to the output ledger |
| Credit notes issued but tax not reduced in the return | GSTR-1 vs sales check each month |
| Credit kept on suppliers unpaid for more than 180 days | Rule 37 reversal ledger and a monthly ageing of creditors |
If you are the auditor and the client's books do not follow this structure, do not rebuild them; ask for the twelve GSTR-3B returns, GSTR-2B, the credit and cash ledgers, and put the differences to the client on the year-end audit query list. An analytical comparison of revenue with GST turnover (analytical review under SA 520) shows quickly whether the gap is worth chasing, and a ledger-wise Tally trial balance export for audit shows every GST ledger and its side. Then raise a single structure for next year — it is the cheapest audit adjustment you will ever propose.
Try SignReady: Opening vs last year's closing, checked ledger by ledger.
Start freeFrequently asked questions
How do I create GST ledgers in Tally?
Enable GST for the company (F11), then create each tax ledger under Duties & Taxes with Type of Duty/Tax as GST and the tax type (Central, State / UT, Integrated or Cess). For audit, create separate input and output ledgers for each tax head, plus ledgers for reverse charge, ITC reversals and credit not yet in GSTR-2B.
Should I keep separate input and output GST ledgers in Tally?
Yes, for audit purposes. Tally can work with one ledger per tax head, but separate input and output ledgers let you tie input to GSTR-2B and the credit ledger, and output to GSTR-1, and show the asset and liability gross in the Balance Sheet.
Where is GST input credit shown in the balance sheet under Schedule III?
Under Short-term loans and advances (others — balances with government authorities), or Long-term if not expected to be used within twelve months. Some preparers use Other current assets; be consistent. GST payable goes to Other current liabilities as a statutory due.
Can GST input and GST payable be netted in the balance sheet?
Only where the law lets the credit pay that liability for the same GSTIN. CGST credit cannot pay SGST, and one GSTIN's credit cannot pay another's tax, so those balances are shown gross.
Is GSTR-9 required for FY 2025-26 if turnover is below ₹2 crore?
No. From FY 2024-25 onwards, a registered person with aggregate turnover up to ₹2 crore is exempt from filing GSTR-9 (Notification 15/2025-Central Tax). GSTR-9C, self-certified, applies when aggregate turnover exceeds ₹5 crore.
Sources
- CBIC — Central Goods and Services Tax Act, 2017 (sections 2(82), 9, 13, 16, 17, 25, 49, 50, 51, 52; consolidated to September 2022 — later amendments by the Finance Acts 2023 to 2025)
- CBIC — Notification No. 30/2021-Central Tax (rule 80 substituted: GSTR-9 and self-certified GSTR-9C)
- CBIC — Notification No. 15/2025-Central Tax, 17 September 2025 (annual return exemption up to ₹2 crore)
- CBIC — Notification No. 66/2017-Central Tax, 15 November 2017 (no tax on advances for goods)
- ICAI — Guidance Note on Division I – Non Ind AS Schedule III (Revised 2022), paras 8.6.3, 8.7.6, 8.8.5, 9.1.6
- ICAI GST & Indirect Taxes Committee — Handbook on Finalisation of Accounts with GST Perspective
- ICAI — Guidance Note on CARO 2020 (Revised 2022), clause 3(vii)
- Tally Solutions — TallyPrime Help: Set up GST in your company
- Tally Solutions — TallyPrime Help: Set up tax ledgers for GST
Upload the Tally trial balances: SignReady maps the ledgers through their groups, checks this year's opening balances against last year's closing, turns material items into client queries and drafts Schedule III statements in editable Excel — first 3 finalisations free.
Version history: 6 Oct 2026 — first published.
