What to Do When Tax Rate Is Not Specified in TallyPrime – Complete 2025 Guide for GST Users

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GST-based accounting in TallyPrime depends on correct tax rates, ledger classifications, and item configurations. Sometimes, while recording a transaction, TallyPrime displays warnings like:

• "Tax rate not specified"
• "Unable to calculate GST"
• "Rate not configured for this ledger/item"

This can happen during sales, purchases, credit notes, debit notes, or while viewing GST returns.
If you don’t fix it, GST reports, invoices, and returns will show errors.

This guide explains why this happens, how to fix it, and how to prevent it in the future.

1. Why Does TallyPrime Show “Tax Rate Not Specified”?

TallyPrime displays this message when any of the GST configuration steps are incomplete. Common reasons include:

1. Item has no GST rate defined

You created a stock item but did not specify 0%, 5%, 12%, 18%, or 28%.

2. Ledger is not linked to GST

Sales/Purchase ledger missing:

• Nature of transaction
• Tax classification
• Rate

3. HSN/SAC not entered

Some taxable items need HSN/SAC for GST calculation.

4. GST details missing in Party Ledger

Party not marked as:

• Registered
• Composition
• Unregistered

5. Tax ledger (CGST/SGST/IGST) not created properly

6. Inter-state or intra-state mismatch

Wrong state selection makes Tally unable to decide IGST vs CGST/SGST.

7. Exempt/NIL-rated item not marked correctly

2. How to Fix “Tax Rate Not Specified” in TallyPrime (Step-by-Step Solution)

Below are the practical fixes you can apply depending on the issue.

2.1 Fix GST Rate in Stock Item

Steps:

1. Go to Gateway of Tally → Alter → Stock Item
2. Select your item
3. Enable “Set/Alter GST Details”
4. Enter:
   • HSN Code
   • Tax Rate (5%, 12%, 18%, etc.)
5. Save

Tip:

If unsure about the rate → temporarily put 0% and update later.

2.2 Fix GST in Sales or Purchase Ledger

Steps:

1. Go to Alter → Ledger
2. Select Sales or Purchase ledger
3. Under GST Details, set:
   • Nature of Transaction (Sales Taxable / Purchase Taxable)
   • Taxability (Taxable / Exempt / NIL Rated)
   • Rate (as per item)

Important:

If item tax rate is already set, keep ledger tax rate blank to avoid conflict.

2.3 Fix Party Ledger GST Details

Steps:

1. Go to Ledger → Party Name
2. Enable “Set/Alter GST Details”
3. Choose:
   • Regular / Composition / Unregistered
4. Select correct State
5. Enter GSTIN (optional for unregistered)

This ensures Tally decides correctly between IGST or CGST-SGST.

2.4 Fix Tax Ledgers (CGST/SGST/IGST)

You must have 3 main tax ledgers:

• CGST @ 9%
• SGST @ 9%
• IGST @ 18%

(or as applicable)

Steps:

1. Create/Alter Ledger
2. Under Tax Type = GST
3. Enter correct percentage
4. Specify Type of Duty/Tax: GST

2.5 Fix Inter-State/Intra-State Conflicts

If Tally doesn’t know which tax to apply, check:

Company State vs. Party State

• Same state = CGST + SGST
• Different state = IGST

Steps:

• Go to Company F11 Settings → GST → Company Information
• Confirm state is correct

2.6 For Exempt or NIL Rated Items

If an item attracts 0% GST, you must mark it correctly:

Steps:

1. Open item
2. GST Details → Taxability = NIL Rated / Exempt
3. Tax rate = 0%

Otherwise, Tally will assume missing tax rate.

3. Troubleshooting Guide (Quick Fix Table)

4. What If You Still Don’t Know the Correct Tax Rate? (Practical Advice)

If the item’s GST rate is unknown, do this:

Step 1: Temporarily set it to 0%

This lets you save the voucher.

Step 2: Add remark in narration

Example: “GST rate pending confirmation.”

Step 3: Check official sources later

GST rate finder websites
GST portal
HSN list
Supplier invoice

Step 4: Update rate properly once confirmed

TallyPrime will recalculate automatically.

5. How to Prevent Future Tax Rate Errors

✔ Create items with correct GST when setting up new stock

✔ Maintain a GST rate sheet (Excel or printed copy)

✔ Copy GST details from supplier invoices

✔ Use Tally’s GST Rate Setup Report

✔ Review items quarterly to avoid old items with missing tax

✔ Train staff to always check GST details while creating ledgers/items

Conclusion

When TallyPrime displays “Tax rate not specified”, it means GST configurations are incomplete in either the item, ledger, party, or tax setup. By correcting GST details step-by-step—stock items, ledgers, party information, and state details—you can ensure proper tax calculation, accurate reports, and error-free GST filing.

TallyPrime’s GST features are powerful, and once everything is configured correctly, you will experience smooth and automated tax handling across all transactions.

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