Contents
1. Introduction to Tally.............................................................................................................. 3
1.1 What is Tally? .................................................................................................................. 3
1.2 Importance in Accounting and Business ........................................................................ 3
1.3 Versions of Tally (Tally ERP 9, Tally Prime) .................................................................... 4
1.4 Installation and Basic Setup ............................................................................................ 4
Installation Steps (Procedure) .............................................................................................. 4
2. Company Creation and Configuration .................................................................................. 6
2.1 Starting Tally and Creating a Company .......................................................................... 6
2.2 Currency, Security, and Other Configurations (F11) ...................................................... 6
3. Masters in Tally (Ledgers, Groups, Inventory, Godowns) ................................................... 8
3.1 Ledger Creation ............................................................................................................... 8
3.2 Group Creation ................................................................................................................ 9
3.3 Stock Items and Units of Measure................................................................................ 10
3.4 Godown (Location) Creation ......................................................................................... 10
3.5 Cost Centres and Cost Categories ................................................................................. 10
4. Accounting Vouchers .......................................................................................................... 12
4.1 Payment Voucher (F5) - Example ................................................................................. 13
4.2 Journal Voucher (F7) - Example .................................................................................... 14
5. Inventory Vouchers (Movement of Goods) ....................................................................... 15
5.1 Sales and Purchase Order Processing ........................................................................... 15
5.2 Delivery Note and Receipt Note (Challans) .................................................................. 15
6. Statutory Compliance (GST & TDS) ..................................................................................... 17
6.1 Enabling GST and Recording Transactions ................................................................... 17
6.2 Enabling and Setting up TDS (Tax Deducted at Source) .............................................. 18
7. Banking Features (BRS and Cheque Management) ........................................................... 19
7.1 Cheque Printing and Management............................................................................... 19
7.2 Bank Reconciliation (BRS) ............................................................................................. 19
8. Payroll in Tally ..................................................................................................................... 20
8.1 Employee and Salary Structure Creation ..................................................................... 20
8.2 Generating Payroll Reports ........................................................................................... 21
9. Reports in Tally .................................................................................................................... 22
10. Advanced Features ............................................................................................................ 23
10.1 Budgets and Controls .................................................................................................. 23
10.2 Scenario Management ................................................................................................ 23
10.3 Multi-Currency ............................................................................................................ 24
10.4 Import/Export of Data ................................................................................................ 24
11. Tips & Shortcuts ................................................................................................................ 25
Conclusion ............................................................................................................................... 26
1. Introduction to Tally
1.1 What is Tally?
Tally is a robust, integrated, and feature-rich accounting software designed to
manage all the critical financial aspects of a business. It acts as a
comprehensive Enterprise Resource Planning (ERP) system for small and
medium businesses (SMBs). It is not just limited to accounting; it handles
inventory management, statutory compliance (like GST/VAT, TDS), payroll,
banking, and more, all within a single application.
1.2 Importance in Accounting and Business
Tally's importance stems from its ability to provide real-time, accurate financial
reporting and operational efficiency.
• Automation: It automates complex processes like ledger posting,
calculation of tax liabilities, trial balance generation, and final account
preparation.
• Compliance: It ensures statutory compliance by accurately calculating
taxes (GST, TDS) and generating required reports for filing.
• Decision Making: Managers can quickly access critical reports like Profit
& Loss Account, Balance Sheet, and Stock Summary to make informed
business decisions.
• Scalability: It can manage simple cash-based accounting for a small sole
proprietorship or complex inventory and multi-branch operations for a
mid-sized corporation.
1.3 Versions of Tally (Tally ERP 9, Tally Prime)
Version Focus Key Features
Traditional interface, robust features,
Tally. ERP 9 Older, reliable system.
widely used for stable operations.
Go To feature (Alt+G) for quick navigation,
Modern user
Tally Prime improved look and feel, multi-tasking,
experience (UX) and
(Current) better reporting. This guide focuses on
data management.
Tally Prime steps.
1.4 Installation and Basic Setup
System Requirements
• CPU: 64-bit architecture (x64)
• OS: Microsoft Windows 7 or later
• RAM: 4 GB or more (recommended)
• Disk: SSD is recommended for better performance.
Installation Steps (Procedure)
1. Download the setup file from the official Tally Solutions website.
2. Run the setup file and choose Install New.
3. Select the desired installation path (e.g., C:\TallyPrime).
4. Click Install.
5. After installation, start the application and activate your license or
continue in Educational Mode.
2. Company Creation and Configuration
This is the foundational step that defines the accounting and statutory
parameters for your books.
2.1 Starting Tally and Creating a Company
Steps to Create a Company in Tally Prime
1. Start Tally Prime.
2. From the Gateway of Tally (or the initial screen), select Create
Company.
3. Enter the required details in the fields provided.
Example: Creating "The Daily Grind Cafe"
Field Input Description
The Daily
Company Name Full legal name of the business.
Grind Cafe
The Daily
Mailing Name Name used in reports and invoices.
Grind Cafe
CRUCIAL for state-specific tax (GST/VAT)
State Delhi
compliance.
Financial Year
1-Apr-2024 Start date of the financial year.
Beginning From
Books Beginning Date when you start recording transactions. Can
1-Apr-2024
From be later than the financial year start.
2.2 Currency, Security, and Other Configurations (F11)
Immediately after creation, you should press F11 (Features) to configure the
company.
Feature Menu Location Configuration Steps
Enable Maintain Accounts (Yes). Enable
Maintain Bill-wise Details (Yes, for
Accounting F11 -> Accounting
tracking outstanding
receivables/payables).
Enable Maintain Inventory (Yes). Enable
Inventory F11 -> Inventory Integrate Accounts with Inventory (Yes)
to link stock and financial impact.
Enable Goods and Services Tax (GST)
Taxation F11 -> Taxation and Tax Deducted at Source (TDS) as
required. (See Section 6).
Company -> Alter -> Use
Security Control (Yes) to
Security
enable user roles and
passwords.
3. Masters in Tally (Ledgers, Groups, Inventory, Godowns)
Masters are the semi-permanent data elements that are used repeatedly in
vouchers.
3.1 Ledger Creation
A Ledger is an account title used to identify a transaction (e.g., Cash, Rent
Expenses, Sales, SBI Bank Account).
Steps to Create a Ledger
1. From Gateway of Tally, press Create.
2. Select Ledger under the Accounting Masters.
3. Enter the Name (e.g., Rent Paid, Suresh – Customer).
4. Select the appropriate Group (This is the most critical step—the Group
defines the ledger's behaviour in financial statements, e.g., 'Indirect
Expenses', 'Sundry Debtors').
5. Save (Press Ctrl+A).
Example: Creating a Customer Ledger
Step Action Key Detail
Go to Gateway of Tally ->
1. Access the Master creation menu.
Create -> Ledger.
2. Name: Vikas Retail Store. The name that appears on the invoice.
Crucial: Ensures the balance appears under
3. Under: Sundry Debtors.
Current Assets on the Balance Sheet.
Maintain Bill-wise Details: Essential for tracking which invoice is
4.
Yes. outstanding.
5. Save using Ctrl+A.
3.2 Group Creation
Groups classify ledgers (e.g., Sales Accounts, Sundry Debtors, Current Assets).
Tally provides 28 default groups. Always try to use the default groups before
considering a custom group.
3.3 Stock Items and Units of Measure
Used for businesses trading goods.
Creating a Stock Item (Procedure)
1. Create Unit of Measure: Go to Create -> Unit. (E.g., Nos - Numbers, Kgs -
Kilograms).
2. Create Stock Item: Go to Create -> Stock Item.
o Name: E.g., Coffee Beans (Arabica).
o Units: Select the created Unit of Measure.
o Statutory Details: Configure GST rates and HSN/SAC codes here.
3. Save (Press Ctrl+A).
3.4 Godown (Location) Creation
Godowns or Locations are used to track where the inventory is physically kept
(e.g., Main Warehouse, Shop Floor).
Steps to Create a Godown
1. Press F11 (Features) -> Inventory -> Enable Maintain Multiple
Godowns/Locations (Yes).
2. Go to Create -> Godown.
3. Enter the Name (e.g., City Outlet Storage) and select if it is Primary or
under another Godown.
4. Save.
3.5 Cost Centres and Cost Categories
Cost Centres track expense allocation by department, project, or employee.
Cost Categories group similar cost centres.
Steps to Enable and Use
1. Press F11 (Features) -> Accounting -> Enable Maintain Cost Centres
(Yes).
2. Go to Create -> Cost Centre.
3. In the voucher entry, Tally will prompt you to allocate the expense
amount to the relevant Cost Centre.
4. Accounting Vouchers
Vouchers are the transaction entry forms. Correct selection of the voucher
type is mandatory for accurate bookkeeping.
Voucher
Type Use Case Example
(Shortcut)
Payment Paying Rent by
Monetary Cash or bank payments.
(F5) Cheque.
Receipt Receiving Cash
Monetary Cash or bank receipts.
(F6) from a customer.
Cash deposited into/withdrawn Depositing Cash
Contra (F4) Monetary
from the bank. into SBI Bank.
Recording
Journal Non-cash, non-inventory
Adjustment Depreciation or
(F7) adjustments.
provision entries.
Selling Coffee to
Sales (F8) Inventory/Service Goods/Services sold. Vikas Retail
Store.
Buying Coffee
Purchase
Inventory/Service Goods/Services bought. Beans from a
(F9)
supplier.
Entries passed on a specific date
Reversing and automatically reversed on a
Memo/Special
Journal subsequent date (e.g., Provision
for Expenses).
Recording uncertain transactions
Memo (e.g., Petty cash withdrawal for
Memo/Special
Voucher future use) that do not affect the
main accounts until confirmed.
4.1 Payment Voucher (F5) - Example
Used for recording cash or bank payments.
• Transaction: Paid monthly salary of ₹25,000 to an employee via SBI Bank
on 01-May-2024.
Image
Step Action
Placeholder
1. Press F5 (Payment). Change date to 1-May (F2).
2. Account: Select SBI Bank A/c (Payment mode is Bank).
Particulars (Credit): Select Salary Payable ledger (Credit the
3.
liability/expense). Amount: 25,000.
Press Enter to open the Bank Allocation screen. Enter the
4.
cheque/EFT details.
5. Save (Press Ctrl+A).
4.2 Journal Voucher (F7) - Example
Used for non-cash adjustment entries, provisioning, and rectifications.
• Transaction: Recording annual depreciation of ₹10,000 on Machinery.
Credit
Step Debit (Dr) Amount
(Cr)
1. Press F7 (Journal).
Debit: Depreciation Expense (Under Indirect
2. 10,000
Expenses)
3. Credit: Machinery (Under Fixed Assets) 10,000
Narration: Being annual depreciation charged on
4.
machinery.
5. Save (Press Ctrl+A).
5. Inventory Vouchers (Movement of Goods)
These vouchers track the physical movement of stock, which may or may not
affect the accounts immediately.
5.1 Sales and Purchase Order Processing
This is the non-accounting cycle of generating orders before goods/invoices are
exchanged.
Voucher
Shortcut Purpose Followed By
Type
Records a customer's confirmed Delivery Note -> Sales
Sales Order Alt+F5
order. Voucher
Purchase Records our confirmed order to Receipt Note -> Purchase
Alt+F4
Order a supplier. Voucher
5.2 Delivery Note and Receipt Note (Challans)
These track the movement of physical goods without affecting the financial
accounts until the final bill is raised.
• Delivery Note (Alt+F8): Used when goods are delivered to the customer
(outward stock movement).
• Receipt Note (Alt+F9): Used when goods are received from the supplier
(inward stock movement).
Steps to Pass a Receipt Note (Receiving goods against a Purchase Order)
1. Press Alt+F9 (Receipt Note).
2. Select the Party A/c Name (Supplier).
3. In the Order No(s) field, select the pending Purchase Order reference.
4. In the Name of Item table, ensure the Godown is correctly selected
(e.g., Main Location).
5. Check the received quantity and save. (This increases Stock quantity).
6. Statutory Compliance (GST & TDS)
Tally is designed to handle key compliance features automatically once
enabled.
6.1 Enabling GST and Recording Transactions
1. From the Gateway of Tally, press F11 (Features) -> Taxation -> Set
Enable Goods and Services Tax (GST) to Yes.
2. Enter mandatory details: State, Registration Type, and GSTIN.
3. GST Ledgers: Ensure you have created the following ledgers under the
Group Duties & Taxes:
o CGST: Central Goods and Services Tax
o SGST: State Goods and Services Tax
o IGST: Integrated Goods and Services Tax
Example: Local Sales with GST (5%)
• Transaction: Sold 10 units of Stock Item X (5% GST) to Vikas Retail Store
for ₹100 each.
Step Action (In Sales Voucher - F8) Effect
Party A/c Name: Vikas Retail
1. Sundry Debtor is debited.
Store.
Select Stock Item X. Quantity:
2. Sales Account is credited by ₹1,000.
10. Rate: 100.
Tally calculates ₹25 (2.5% of 1,000) and
3. Select: CGST @ 2.5%
credits the CGST Ledger.
Tally calculates ₹25 (2.5% of 1,000) and
4. Select: SGST @ 2.5%
credits the SGST Ledger.
Save (Total Invoice Value =
5.
1,050).
6.2 Enabling and Setting up TDS (Tax Deducted at Source)
TDS is crucial for services and professional payments.
1. Press F11 (Features) -> Taxation -> Set Enable Tax Deducted at Source
(TDS) to Yes.
2. Create a TDS Ledger (e.g., TDS Payable) under Duties & Taxes.
3. Configure Payee Ledgers: In the ledger of the service provider, enable
the TDS option and link the appropriate nature of payment (e.g.,
"Payment to Contractors").
4. Tally automatically deducts and calculates TDS in the payment voucher.
7. Banking Features (BRS and Cheque Management)
7.1 Cheque Printing and Management
1. Go to Gateway of Tally -> Banking -> Cheque Printing.
2. Select the relevant Bank Ledger.
3. Select the pending transactions and click Print. Tally uses pre-configured
cheque formats.
7.2 Bank Reconciliation (BRS)
BRS is the process of matching the company's books (Cash/Bank Ledger) with
the bank's statement.
Steps for BRS
1. Go to Gateway of Tally -> Banking -> Bank Reconciliation.
2. Select the Bank Ledger (e.g., SBI Bank).
3. A list of un-reconciled transactions appears.
4. For each transaction, enter the Bank Date (the date the transaction
cleared and appeared in the bank statement). Leave the Bank Date blank
if the transaction is still outstanding.
5. Save (Press Ctrl+A). The difference shown is the amount of outstanding
cheques/deposits.
8. Payroll in Tally
Tally's Payroll is a complete solution for employee management, salary
processing, and statutory deductions.
8.1 Employee and Salary Structure Creation
Steps to Configure Payroll Masters
1. Press F11 (Features) -> Accounting -> Enable Maintain Payroll (Yes).
2. Pay Heads: Go to Create -> Pay Head (e.g., Basic Salary, HRA-Earnings,
PF Contribution-Deduction).
3. Employee: Go to Create -> Employee (Enter personal and statutory
details).
4. Salary Structure: Go to Alter -> Define Salary for the employee and
assign the relevant Pay Heads and calculation methods.
8.2 Generating Payroll Reports
1. Voucher: Use the Payroll Voucher (Ctrl+F4) for attendance recording
and salary processing.
2. Reports: Go to Display More Reports -> Payroll Reports. You can
generate:
o Pay Slip: Detailed monthly income/deduction statement.
o Payroll Statement: Summary of salary payments.
o PF/ESI/TDS Reports: Statutory compliance reports.
9. Reports in Tally
Reports are instantly generated in Tally, providing real-time data analysis.
Report Path Purpose Key Shortcut
Display More Lists all transactions recorded on
Day Book Reports -> Day a given date. Essential for daily F2 (Change Date)
Book review.
Display More Summary of all ledger balances to
Trial
Reports -> Trial check the arithmetical accuracy Alt+F1 (Detailed)
Balance
Balance of records.
Shows financial performance
Profit & F12
Gateway of Tally (Income - Expenses = Profit/Loss)
Loss (Configuration)
for the selected period.
Balance Shows financial position (Assets =
Gateway of Tally Ctrl+A (Detailed)
Sheet Liabilities + Capital).
Stock Real-time stock quantity, inward,
Gateway of Tally F5 (Item-wise)
Summary and outward movement.
Display More
GST GSTR-1, GSTR-3B, etc., for Alt+V (View in
Reports -> GST
Reports compliance filing. GSTR format)
Reports
10. Advanced Features
10.1 Budgets and Controls
Tally allows you to create financial budgets for various groups, ledgers, and
cost centres, enabling variance analysis.
Steps to Create a Budget
1. Go to Create -> Budget.
2. Set the budgeted amount for specific ledgers or groups (e.g., Marketing
Expenses: ₹50,000 for April 2024).
3. Reporting: View the Budget Variance Report (Display More Reports ->
Statements of Accounts -> Budget) to compare actual spending vs. the
budgeted amount.
10.2 Scenario Management
This feature is used for creating and analysing provisional (what-if)
transactions without changing the actual books of account. This is useful for
predicting year-end results or tax liabilities.
10.3 Multi-Currency
For international trade, Tally supports multiple currencies. You must:
1. Create the foreign currency (e.g., USD).
2. Define the Rate of Exchange.
3. Tally automatically calculates the Foreign Exchange Fluctuation on the
Balance Sheet based on exchange rate differences.
10.4 Import/Export of Data
Tally supports importing and exporting data in various formats (XML, JSON,
Excel, PDF). This is used for data migration, statutory filing, or sharing reports
with auditors.
11. Tips & Shortcuts
Common Shortcuts
Shortcut Action Description
The most useful shortcut in Tally Prime. Search for any
Alt+G Go To
report or master from anywhere.
Ctrl+A Accept/Save Saves any screen (Ledger, Voucher, Configuration).
Creates a new Master (Ledger, Stock Item, etc.) from within
Alt+C Create Master
any voucher screen.
Opens configuration options for the current report or
F12 Configure
screen.
Select Used to close or open another company without exiting
Ctrl+F3
Company Tally.
Best Practices for Data Management
1. Use Narrations: Always write clear, descriptive narrations for every
voucher, especially Journal Vouchers, to easily understand the
transaction later.
2. Regular Reconciliation: Perform Bank Reconciliation and GST
Reconciliation (GSTR-2A vs. GSTR-3B) at least weekly to minimize errors.
3. Data Security: Always use Security Control (User Roles and Passwords)
to prevent unauthorized access and maintain data integrity.
4. Regular Backup: Very Important! Backup your Tally data daily to an
external storage location (USB drive or cloud service) using the Backup
option in the Data menu to prevent data loss.
Conclusion
This document provides a highly structured and detailed guide for mastering
Tally Prime, fulfilling the need for a comprehensive, procedural, and
informative resource. The key to proficiency is practice. Use these steps to
manually enter transactions and immediately observe their impact on the Trial
Balance, Profit & Loss Account, and Balance Sheet.