How purchase entry in Tally Prime works under GST
Purchase bills are the single largest source of typing in most accounts teams, which is why they are the second job, after bank reconciliation, that businesses hand to Tally automation. Before automating anything, though, it helps to know exactly what a correct entry looks like.
In TallyPrime every purchase is recorded in a Purchase voucher (F9). The voucher has two modes that matter: Item Invoice, for goods you track as stock, and Accounting Invoice, for services and expenses. You switch between them with Ctrl+H. Tally's own help page on recording purchases under GST covers every screen; this guide walks through the cases a trading or manufacturing business meets every week.
Before the first entry: four masters to set up
Nine out of ten GST problems in purchase entries start in the masters, not the voucher. Check these once and the vouchers almost fill themselves.
- Company GST details. Press F11, enable GST, and enter your state and GSTIN. The state decides whether a supplier is local or inter-state.
- Supplier ledgers under Sundry Creditors, with registration type, GSTIN, and state filled in. A supplier saved without a state is the most common reason Tally applies the wrong tax type.
- Purchase ledger under Purchase Accounts with GST marked applicable. Many businesses keep one ledger per tax rate or per business line; either works if the team uses it consistently.
- Input tax ledgers under Duties & Taxes: Input CGST, Input SGST, and Input IGST, each with type of duty set to GST and the matching tax type. Set GST rates and HSN/SAC on stock items so Tally calculates the tax for you.
Example 1 - Purchase from a supplier in the same state
A chemicals trader in Ahmedabad buys 500 kg of sodium bicarbonate from a supplier in Vadodara at ₹120 per kg, GST at 18%. Both are in Gujarat, so the tax splits into CGST and SGST.
- Press Alt+G, choose Create Voucher, and press F9 (Purchase).
- Press Ctrl+H and select Item Invoice.
- Enter Supplier Invoice No. and Date exactly as printed, for example VCL/2026-27/0412 dated 14 Oct. This is the field GSTR-2B matching depends on.
- Select the supplier in Party A/c name and the GST-applicable purchase ledger.
- Add the stock item: 500 kg at ₹120 = ₹60,000.
- Select Input CGST and Input SGST. Tally calculates ₹5,400 each, and the invoice total comes to ₹70,800. Compare it with the bill before saving.
- Press Ctrl+A to save.
If the supplier charged freight on the same bill, add your freight ledger below the item. Whether freight takes the item's GST rate depends on how the supply is billed, so confirm the treatment with your CA once and set the ledger up to match.
Example 2 - Purchase from another state (IGST)
The same trader buys the same 500 kg from a supplier in Mumbai. The steps are identical, but because the supplier's state is Maharashtra, select Input IGST instead: 18% of ₹60,000 is ₹10,800, and the total is still ₹70,800.
If Tally shows CGST and SGST for an out-of-state supplier, do not override the voucher. Fix the state in the supplier ledger. The next entry, and every report, will then be right.
Purchasing services, and bills under reverse charge
For services and expenses, such as a CA's fee, rent, or repairs, open the Purchase voucher in Accounting Invoice mode, select the expense ledger with GST applicable, enter the amount, and add the same input tax ledgers.
Some purchases attract reverse charge, where you pay the GST instead of the supplier. Goods transport agency freight is the case most traders meet. Mark reverse charge in the ledger's GST details and follow Tally's guide to purchases under reverse charge for the liability and credit entries. Which supplies fall under reverse charge is set by notification and does change, so check the current list with your CA rather than relying on last year's setup.
Mistakes that cost input tax credit
- Invoice number typed differently from the bill. INV-412 against INV/412 is enough to create a mismatch in GSTR-2B reconciliation.
- The same bill entered twice. It arrives by email and again as a hard copy. Purchases and input credit are both overstated until someone notices.
- Wrong or missing supplier GSTIN. Credit cannot be matched to a supplier filing that does not carry your entry.
- Expenses posted to the wrong ledger. Three people, three freight ledgers. The P&L still totals, but no one can trust the breakdown.
- Bills entered weeks late. The month's returns go out with credit missing, and the backlog lands on the same week as bank reconciliation.
Tally automation for purchase bills: four ways to stop typing
At 200 bills a month and four minutes a bill, purchase entry is more than 13 hours of typing before anyone checks anything. There are four ways to cut that, and they are not mutually exclusive.
| Method | What it reads | Effort per bill | Best fit |
|---|---|---|---|
| Manual entry (F9) | Nothing - every field is typed | 3 to 6 minutes per bill, more for long item lists | Under 30 bills a month, or unusual one-off bills |
| Excel import (TallyPrime 4.0+) | A spreadsheet you prepare in Tally's mapped format | Fast once the sheet exists; someone still types or copies each bill into it | Bills that already arrive as structured data from a portal or ERP |
| Docs by Ira (TallyPrime add-on) | PDF or image files, one invoice per file, English, not handwritten | Creates draft vouchers you review and accept | Teams on a recent release who want Tally's own option |
| AI bulk bill import (third-party) | A whole batch of PDF and photographed bills uploaded together | Review the flagged bills; the rest post after approval | High volumes, many suppliers, bills arriving on email and WhatsApp |
Excel import (TallyPrime 4.0 and later) is fast when the data is already structured, for example from a supplier portal. It does not help with a pile of PDFs, because someone still has to turn each bill into a row.
Docs by Ira is Tally's own AI add-on. According to the TallyHelp page, it reads PDF and image invoices (one transaction per file), extracts the party, invoice number, date, GST, and line items, and creates draft vouchers for you to review. Handwritten bills and non-English documents are not supported. Check the release and usage terms that apply to your licence.
Tally automation with AI from a third party works on the whole batch rather than one file at a time. In KolossusAI, the accountant uploads the month's bills together, PDFs from email and photos from WhatsApp. It reads each bill, matches the supplier ledger and stock items already in your Tally, splits CGST, SGST, or IGST from the supplier's state, and flags likely duplicates. Bills it is unsure about wait in a review queue; the rest post as purchase vouchers when someone approves them. The same workspace handles bank reconciliation, one-click entries, and chat with your Tally, which matters when the bills and the bank are both due in the same week.
Whichever route you choose, keep the controls from the manual process: one person approves, invoice numbers stay exactly as printed, and every posted voucher can be traced to its bill.
Conclusion
A correct purchase entry in Tally Prime with GST comes down to clean masters and three careful fields: supplier invoice number, supplier state, and the tax ledgers. Get those right and TallyPrime does the rest of the GST work for you.
Once volume grows, the question stops being how to enter a bill and becomes who should type it at all. If you are weighing that, our answer on whether AI can enter purchase bills into Tally compares the options in two minutes, and the guide to bank reconciliation in Tally Prime covers the other half of month end. For bills, bank, and entries in one place, see Tally automation with AI: it is ₹10,000 a year for web and mobile, with a 14-day free trial on your own Tally.