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Manage GST on Tobacco Products with Ease in TallyPrime

Enable this plug-in to calculate GST on MRP and stay compliant with GST changes on tobacco products.

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* Compatible from TallyPrime 7.0 onwards

How TallyPrime helps you manage GST on tobacco products

From 1st February 2026, GST on tobacco products shifts to MRP-based which implies that tax should now get calculated on inclusive basis considering MRP/RSP and independent of sale price. The change also means the withdrawal of Compensation Cess that was applicable on the tobacco products. TallyPrime helps you stay compliant with these changes through a dedicated GST on MRP on Tobacco plug-in, designed for businesses dealing with these products.

  • Calculate GST automatically on MRP/RSP (inclusive basis)
  • Works for Order (Sales/Purchase) and inventory vouchers (Delivery/Receipt note, Material-in/out), POS, Debit/Credit Notes
  • Effective date : 1-Feb-2026

Quick guide to enable GST on tobacco products

1
Enable the Plug-in
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2
Configure Stock Item Master
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3
Define MRP Correctly
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01. Install the plug-in

1

Enter your TallyPrime serial number (compatible with TallyPrime 7.0 onwards)

2

Click on Check Eligibility

3

Enter the OTP received to your administrator e-mail Id

5

The plug-in will be added automatically to your TallyPrime license

6

Once the plug-in is enabled, you are all set to configure the stock items.

02. Configure GST rate in stock item master

For each applicable tobacco product:

1

Open Stock Item Master

2

Update the GST configuration:

  • Set the GST Rate to 40%
  • Remove GST Compensation Cess (not applicable from 1-Feb-2026)
  • Unit of Measure is defined (not ‘Not Applicable’)

03. Define MRP in stock item

Enable the option: “Calculate GST on Tax-inclusive MRP (Effective from 1-Feb-26): Yes” (This option appears only when the plug-in is active with TallyPrime 7.0)

1

Set MRP at item level (state-wise, if applicable)

2

MRP must be defined against the correct UoM (Pack, Carton, etc.)

3

GST will be reverse-calculated using:

  • Assessable Value = Qty × MRP / (1 + GST Rate / 100)
  • Example (40% GST): Assessable Value = Qty × MRP / 1.4

Now, when you record sales or other transactions, TallyPrime will automatically calculate the GST on MRP.

Key considerations

Supported Scenarios
  • 1Sales & Purchase invoices (Item Invoice mode)
  • 2Sales POS
  • 3Debit & Credit Notes
  • 4Sales & Purchase Orders
  • 5Inventory vouchers (Delivery, Receipt, Material In/Out)
Not Supported Scenarios
  • 1Accounting Invoice mode
  • 2Voucher mode
Things to Note
  • 1If MRP is not defined or is zero, taxable value will be zero
  • 2Once taxable value is overridden, it will not auto-refresh on item, MRP, or quantity changes
  • 3GST Compensation Cess is ignored from 1-Feb-2026 even if configured
  • 4IGST rate is used for back-calculation where applicable

Disable GST on MRP plug-in

  • 1Enter the TallyPrime Serial Number
  • 2Click Disable Plug-in
  • 3Verify with OTP
  • 4Add-on will be disabled automatically

FAQ

No. There is no change in GST return formats. Transactions created using the plug-in will flow directly into GSTR-1 and GSTR-3B as usual.

Invoices where the taxable value is auto-overridden will appear under Exceptions → Transactions Accepted as Is, ensuring transparency without blocking return filing.

This plug-in is required for traders, wholesalers, and retailers dealing in tobacco products where GST must be calculated on MRP (tax-inclusive basis) from 1st February 2026. Manufacturers are governed by separate excise and capacity-based levy rules.

The MRP-based, tax-inclusive GST calculation is applicable for vouchers dated on or after 1st February 2026, as notified by the Government.

From 1st February 2026, GST @ 40% applies to most tobacco products such as cigarettes, pan masala, and tobacco.

For biris, the applicable GST rate remains 18%.

No. GST Compensation Cess is withdrawn with effect from 1st February 2026. Even if a cess rate is configured, it will be ignored for tax calculation under this plug-in.

TallyPrime back-calculates the taxable value from MRP using the formula:

Taxable Value = Quantity × MRP ÷ (1 + GST Rate / 100)

For example:

  • 40% GST → divide by 1.40
  • 18% GST → divide by 1.18

No. Once the plug-in is enabled and configured at the stock item level, TallyPrime automatically overrides the taxable value during voucher entry for eligible transactions.

No. Composition dealers do not charge GST on sales or claim ITC. Hence, this plug-in is not applicable for Composition registrations.

If MRP is not defined or is zero, the taxable value will be calculated as zero, and GST will not be applied for that line item.

Yes. You can manually edit the overridden taxable value. The edited value will be used for tax calculation, and the voucher will remain marked as Accepted as Is.

No. Once the taxable value is overridden (by the plug-in or manually), it does not auto-refresh if quantity, MRP, or GST rate is changed. You must clear the overridden value to recalculate it.

The plug-in is supported only on TallyPrime Release 7.0. Both lower and higher versions are not supported.

When you create a transaction dated on or after 1-Feb-2026:
  • MRP is automatically picked from the item master
  • Taxable value is auto-overridden based on inclusive MRP
  • Modify GST Details (F12) opens automatically
  • Voucher is marked as “Override – Accept as is”

This ensures:

  • Correct tax calculation
  • Seamless participation in GST returns
  • Transparent audit trail