Tax Ledgers should be created under Duties and Taxes group which contains all tax accounts like VAT, CENVAT, Excise, Sales and other trade taxes and total liability.
To create a Tax Ledger,
Go to Gateway of Tally > Accounts Info > Ledgers > Create
Type of Duty/Tax: This option is based on statutory compliance of company. For Indian statutory, by default, it will show the Excise and Others. Depends on features in F11: Statutory, more options will be included in the Type of Duty/Tax.
Inventory values affected: This is applicable for Companies maintaining Accounts with Inventory. Inventory allocation is required for Accounts like Sales, Purchase, Receipt note, Delivery note, etc. However, Tally.ERP 9 does not restrict you to particular accounts as you may have the need to affect inventory with accounts like Customs Duty and perhaps, direct expenses related to purchases such as Freight Inwards.
Cost Centres are applicable: Tally's concept of Cost Centres allows an additional dimension to a transaction.
You have to set Maintain Cost Centres to Yes in F11: Accounting Features, to get this option in the Ledger creation screen. If any of the transactions need to be allocated to any particular Cost Center, set this option to Yes.
Activate Interest calculation: Set this option to Yes to enable Tally.ERP 9 to calculate interest automatically based on the interest rate and style of calculation specified for this ledger account.
Use advanced parameters: The advanced parameters are particularly useful where interest rates change from time to time. Set this option to Yes to enable this.
Percentage of Calculation
The Group Duties and Taxes is used for automatic tax calculation. You need to specify the rate of tax e.g. 5%, 10%, 12.5% etc. You can use an automatic Discount calculation facility by specifying a negative percentage in this field. On entering a percentage, a new field Method of Calculation is displayed. From the Method of Calculation, you can select appropriate options to calculate the Tax/Duty.
This is used to round off the duty value. By default rounding method will be Blank. Once you select rounding Method, rounding Limit sub option will be displayed. Here you can specify the round off limit.
For Duty value 123.33 and rounding Limit is 1,
Downward rounding will show as 123
Normal rounding will show as 123
Upward rounding will show as 124
For Duty value 125.55 and rounding Limit is 1,
Downward rounding will show as 125
Normal rounding will show as 126
Upward rounding will show as 126