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Adding and Applying Discount in TallyPrime

Learning Objective: This guide explains how to enable the discount column in TallyPrime, apply item-wise discounts, use a discount ledger, calculate GST after discount, and understand different types of discounts through practical examples.

1. Enabling the Discount Column

TallyPrime can display a separate discount column while entering items in sales or purchase invoices. This is particularly useful when the discount is different for each item.

1 Go to:
Gateway of Tally → F11 (Features) → Inventory Features

2 Turn ON the option:

Use discount column in invoices

3 Select the required discount format:

Percentage – Example: 10%
Amount – Example: ₹500
Both Percentage & Amount – Useful when both values need to be visible.

Tip: Item-wise discount is convenient when different products have different discount rates. For example, Product A may have 10% discount while Product B may have 5%.

2. Applying Discounts in a Sales Voucher

Once the discount column is enabled, you can enter the discount while creating a sales invoice.

1 Go to:
Gateway of Tally → Vouchers → Sales (F8)

2 Select the Party Ledger, i.e. the customer.

3 Enter the stock item details:

Stock Item
Quantity
Rate
Discount

4 Enter the discount in the Disc% column if the discount is percentage-based.

Example: Item-wise Discount

Suppose Product A is sold for ₹500 per unit and the customer receives a 10% discount.

Gross Value = ₹500
Discount = ₹500 × 10% = ₹50
Net Value = ₹500 − ₹50 = ₹450

Therefore, the taxable value for that item becomes ₹450, subject to the applicable tax rules and configuration.

3. How Discount Affects GST

When an eligible discount is entered at the invoice/item level, the taxable value is generally reduced before GST is calculated. The exact tax treatment depends on the nature and timing of the discount and applicable GST rules.

Simple GST Calculation

Description	Amount
Product value	₹5,000
Discount @ 10%	₹500
Taxable value	₹4,500
GST @ 18%	₹810
Invoice value	₹5,310

Important: Do not assume that every type of discount automatically reduces GST value. Discounts must satisfy the applicable GST provisions. In particular, post-supply discounts can have different tax implications. Always verify the treatment applicable to your transaction.

4. Using a Discount Ledger – Alternative Method

A discount ledger can be useful when the discount is treated as a separate accounting adjustment rather than an item-wise discount.

Step 1: Create the Discount Ledger

Go to:
Gateway of Tally → Accounts Info → Ledgers → Create

Suggested Ledger Name: Discount Allowed

Group: Indirect Expenses or another appropriate group based on your accounting policy.

Step 2: Record the Sales Voucher

Enter the customer.
Enter the stock items, quantities and rates.
Allocate the appropriate discount amount.
Review the accounting impact before saving the voucher.

Step 3: Review Tax Calculation

Check whether the discount has been configured and recorded in a way that correctly affects the taxable value under the applicable tax rules.

Step 4: Save the Voucher

Verify the final invoice amount, tax calculation and ledger postings before accepting the voucher.

5. Types of Discounts in TallyPrime

Discount Type	How to Apply	Example
Trade Discount	Enter the discount in the item-level discount column.	10% discount on Product A.
Cash Discount	Configure the relevant cash/trade discount option or record the discount according to the accounting procedure followed.	₹500 discount on the invoice total for prompt payment.
Multiple Discounts	Use appropriate discount columns/configuration where supported, or record separate adjustments according to the business requirement.	Trade discount + seasonal discount.

6. Detailed Example Scenario

Consider a sales invoice containing two products:

Product	Quantity	Rate	Gross Value
Product A	10	₹500	₹5,000
Product B	5	₹300	₹1,500
Subtotal			₹6,500
Discount @ 10%			₹650
Net Taxable Value			₹5,850
GST @ 18%			₹1,053
Final Invoice Value			₹6,903

Subtotal = ₹6,500
Discount = ₹6,500 × 10% = ₹650
Net Value = ₹6,500 − ₹650 = ₹5,850
GST = ₹5,850 × 18% = ₹1,053
Final Value = ₹5,850 + ₹1,053 = ₹6,903

7. Item-wise vs Overall Discount

Feature	Item-wise Discount	Overall Discount
Applied to	Individual stock items	Total invoice or accounting adjustment
Example	Product A – 10%	₹500 off the invoice
Best suited for	Different discounts for different products	Common discount or adjustment across an invoice
Where to look	Disc% / Discount column	Appropriate ledger or invoice-level configuration

8. Multiple Discount Example

Suppose a product has a gross value of ₹10,000 and the business gives two successive discounts:

Trade Discount = 10%
Seasonal Discount = 5%

First Discount = ₹10,000 × 10% = ₹1,000
Balance = ₹10,000 − ₹1,000 = ₹9,000

Second Discount = ₹9,000 × 5% = ₹450
Final Value = ₹9,000 − ₹450 = ₹8,550

Remember: Two successive percentage discounts of 10% and 5% are not the same as a single 15% discount. The second percentage is calculated on the amount remaining after the first discount.

9. Important Notes

For item-wise discounts, use the appropriate discount column.
For an overall adjustment, use the appropriate invoice/ledger mechanism based on your accounting requirement.
Verify the GST treatment of discounts according to the applicable GST provisions.
Restrict access to discount-related settings and entries where necessary to prevent unauthorized discounts.
Review discount reports and ledger balances regularly.
Before finalizing an invoice, verify quantity, rate, discount, taxable value, GST and final invoice amount.

10. Practical Workflow

Step 1: Enable the discount column.

Step 2: Open Sales Voucher using F8.

Step 3: Select the customer.

Step 4: Enter stock item, quantity and rate.

Step 5: Enter the applicable discount.

Step 6: Verify taxable value and GST.

Step 7: Verify the final invoice value.

Step 8: Accept/save the voucher.

11. Practice Questions

Question 1 – Basic Discount

A product is sold for ₹2,000. The customer receives a 10% discount. Calculate the discount amount and net value.

Show Answer

Discount = ₹2,000 × 10% = ₹200
Net Value = ₹2,000 − ₹200 = ₹1,800

Question 2 – GST After Discount

A product has a value of ₹5,000. A 10% eligible discount is given. Calculate the taxable value and GST at 18%.

Show Answer

Discount = ₹500
Taxable Value = ₹4,500
GST @ 18% = ₹810

Question 3 – Multiple Items

Product A: 5 units × ₹800
Product B: 10 units × ₹300
Discount: 10% on the total value
GST: 18%

Calculate the subtotal, discount, taxable value, GST and final invoice value.

Show Answer

Product A = ₹4,000
Product B = ₹3,000
Subtotal = ₹7,000
Discount @ 10% = ₹700
Taxable Value = ₹6,300
GST @ 18% = ₹1,134
Final Invoice Value = ₹7,434

Question 4 – Successive Discounts

An invoice contains goods worth ₹20,000. The customer receives 10% trade discount followed by 5% seasonal discount. Calculate the final value before GST.

Show Answer

First discount = ₹20,000 × 10% = ₹2,000
Balance = ₹18,000
Second discount = ₹18,000 × 5% = ₹900
Final value = ₹17,100

Question 5 – TallyPrime Practical Exercise

Create a sales invoice in TallyPrime with the following details:

Customer: ABC Traders
Product A: 10 units × ₹500
Product B: 5 units × ₹300
Discount: 10%
GST: 18%

Enable the discount column, enter the invoice and verify whether the taxable value and GST are calculated correctly.

Question 6 – Conceptual Question

When would you prefer an item-wise discount over an overall invoice-level adjustment?

Suggested Answer

An item-wise discount is preferable when different products have different discount rates or when the discount needs to be clearly associated with individual stock items.

12. Quick Revision

Topic	Remember
Discount Column	Enable it when item-wise discount entry is required.
Disc%	Used for percentage-based item discounts.
Discount Amount	Used when a specific discount amount needs to be entered.
Discount Ledger	Useful for recording discounts as a separate accounting adjustment.
GST	Verify the taxable value and applicable GST treatment after discount.
Security	Control who can modify discount settings and discount values.

Key Takeaway: Use the discount column when the discount belongs to individual items. Use an appropriate ledger or invoice-level mechanism when the discount is intended as a separate overall adjustment. Always verify the resulting taxable value, GST and final invoice amount before accepting the voucher.

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