Interest Calculation
Interest is a legitimate return on money invested and chargeable in the
business world on loans and also on delayed payments. Interest can be
calculated on the basis of Simple or Compound Interest. With [Link] 9
you can obtain reports on interest calculated based on the configurations
made. Interest is calculated on outstanding receivables or payables.
Enable interest calculation
1. Click F11 > F1(Accounting Features) .
2. Set the option Activate interest calculation to Yes .
3. Press Ctrl+A to save the Company Operations Alteration .
Calculate interest in simple mode
Interest calculation on outstanding balances is allowed for any ledger
account. Configure the interest rate and style of calculation in the ledger
master to start calculating interest on outstanding amounts. Interest on
outstanding balances can also be calculated transaction-by-transaction .
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Alter
(Single) > XY Bank (bank account)
2. Set Activate interest calculation? to Yes .
The Interest Parameters screen appears.
3. In the Calculate Interest Based On? field select the Date Type , as
required.
4. Set Include transaction date for interest calculation . This can be
enabled For Amounts added and/ or For Amounts Deducted .
5. Enter the Rate of interest.
6. Select the Interest Style , as required. The rate of interest will be
calculated on the basis of the interest style applied.
Note: If the interest style selected is 365-day Year , then the interest will be
calculated for 365 days irrespective of the number of days in the
calendar year. If Calendar Year is selected as the interest style, then the
rate of interest will be calculated on 365 days or 366 days, depending
on the number of days as per the calendar.
7. Select required details in other fields of Ledger Creation screen.
8. Press Ctrl+A to save.
Calculate interest transaction-by-transaction
Interest calculation can be done bill-by-bill for accounts grouped
under Sundry Debtors and Sundry Creditors .
1. In the party ledger alteration screen, set Activate interest
calculation? to Yes . The Interest Parameters screen appears.
2. Set Calculate Interest Transaction-by-transaction? to Yes .
3. Set Override Parameters for each Transaction? to Yes to change the
parameters during voucher or invoice entry.
4. Enter the rate of interest in the field Rate .
5. Select the Interest Style , as required. The rate of interest will be
calculated on the basis of the interest style applied.
Calculate interest in advanced mode
The advanced parameters are used when interest rates change periodically.
Number of days, balance type, and applicable from date to be considered for
interest calculation can be configured using advanced parameters.
Enable advanced parameters
1. Go to Gateway of Tally > F11: Features > Accounting Features
2. Set Activate interest calculation? to Yes .
3. Set Use advanced parameters? to Yes .
4. Press Ctrl+A to accept the changes.
Set advanced configuration for a party
1. In the party ledger master set Calculate Interest
Transaction-by-Transaction? to Yes to calculate interest for each
transaction.
2. Set Override Parameters for each Transaction? to Yes t o display
the Interest Parameters screen while recording the transaction. The
defined parameters can be modified during voucher entry.
3. Set Override advanced parameters? to Yes.
4. Enter the Rate of interest.
5. Select the Interest Style , as required. The rate of interest will be
calculated on the basis of the interest style applied.
6. Select the balance on which the interest has to be calculated. Interest
can be calculated on credit balance, debit balance or both credit and
debit balances.
7. Select the Applicability of the interest as required. If Past Due Date is
selected, then the number of days after which interest has to be applied
can be specified.
8. Select the date from which interest is applicable in the Calculate
From field.
9. Select the rounding method applicable in the Rounding field. Select Not
Applicable for saving values as is without rounding off.
10. Define multiple slabs with different rates and applicability.
The Interest Parameters screen with multiple slabs appears as shown
below:
11. Press Ctrl+A to accept the configuration.
12. Press Ctrl+A to save the ledger.
In case of the above configuration, interest will be calculated at 5% starting
from 10th day after due date and at 10% starting from 60th day after due
date. Similarly, multiple slabs can be configured with different interest style,
applicability, calculate from and rounding.
Calculate interest on Group
The Group Interest Calculation statement is a list of all accounts and
sub-groups belonging to the selected group that displays the current
balance in each account or sub-group and the total interest.
1. Go to Gateway of Tally> Display > Statements of Accounts > Interest
Calculations > Group
2. Select a Group , E.g. Loans (Liability)
Note: The Cr in the interest amount indicates that it is a liability.
3. Press Enter to drill down to the Ledger level Interest report.
Calculate interest on Ledger Balances
You can get a report on the Ledger balances for the interest calculated.
1. Go to Gateway of Tally > Display > Statements of Accounts > Interest
Calculations > Ledger
2. Select an Account, for example, Bank Loan Account . The Ledger
Interest report appears as shown below:
View interest amount on invoices
You can calculate interest on each invoice for the period it is outstanding,
wholly or partly. Transaction by transaction or bill-by-bill interest
calculation is permitted for party accounts like accounts under the groups
sundry debtors and sundry creditors. For interest calculation on each bill,
Bill-wise details should be enabled for the company and the party.
The Ledger Interest report displays the interest calculated for the ledger
selected. If a part of the amount is settled, then interest is calculated only on
the amount pending to be repaid.
1. Go to Gateway of Tally > Display > Statements of Accounts > Interest
Calculations > Ledger .
2. Select the required ledger. The Ledger Interest report appears as
shown below:
3. Click F1 : Detailed to view the calculation and period.
Note: In case if part of the amount is settled, the interest is calculated on the
remaining balance.
Now check the interest amount due.
Note: The Cr in the interest amount indicates that it is a liability.