Payroll in Tally 9

©Tally (India) Pvt. Ltd. 2006

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Ltd.
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Tally, POWER OF SIMPLICITY are registered trademarks of Tally Solutions FZ-LLC.

Version: Payroll in Tally 9/ 1.0/ Training/November 2006

________________________________________
Processing, typesetting and composing at Tally Press,
a division of Tally (India) Pvt. Ltd.
 Preface
The primary purpose of this book is to educate you on Payroll, its features and advantages. This is a step-by-
step guide which takes you through the various functions of a payroll department, payroll processing and helps
you to generate comprehensive payroll reports. It provides an effective tool to management to handle day-to-
day payroll operations and analyse employee related cost reports and records.
 Contents
Lesson 1: Introduction to Payroll
1.1 Introduction ..................................................................................................................................................... 1

Lesson 2: Configuring Tally for Payroll

2.1 Features of Tally’s Payroll Functionality ................................................................................................... 3
2.2 Enabling Payroll in Tally .............................................................................................................................. 4

Lesson 3: Creation of Payroll Masters

3.1 Payroll Units .................................................................................................................................................... 7
3.1.1 Creation of Payroll Units ......................................................................................................................... 8
3.2 Attendance/Production Types ...................................................................................................................... 9
3.3 Pay Heads....................................................................................................................................................... 11
3.3.1 Earnings Pay Head Setup ....................................................................................................................... 12
3.3.2 Deductions Pay Head Setup ................................................................................................................... 27
3.3.3 Gratuity Pay Head Setup ........................................................................................................................ 33
3.4 Employee Setup ............................................................................................................................................ 36
3.4.1 Employee Group Master......................................................................................................................... 36
3.4.2 Employee Master .................................................................................................................................... 37
3.5 Salary Details ............................................................................................................................................... 39

Lesson 4: Transactions
4.1 Attendance Vouchers ................................................................................................................................... 45
4.2 Payroll Vouchers .......................................................................................................................................... 52
4.2.1 Cash Remittance ..................................................................................................................................... 52
4.2.2 Bank Transfer ......................................................................................................................................... 56
4.2.3 Salary Disbursement............................................................................................................................... 62

Lesson 5: Payroll Reports

5.1 Pay Slip........................................................................................................................................................... 65
5.2 Pay Sheet ........................................................................................................................................................ 74
5.3 Payroll Statement .......................................................................................................................................... 83
5.4 Payment Advice ............................................................................................................................................ 86
5.5 Payroll Register ............................................................................................................................................. 88
5.6 Employee Pay Head Breakup ..................................................................................................................... 90
5.7 Pay Head Employee Breakup ..................................................................................................................... 94
5.8 Attendance Sheet .......................................................................................................................................... 97
5.9 Attendance Register ..................................................................................................................................... 99
5.10 Gratuity Report ......................................................................................................................................... 101

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Contents

5.11 Expat Reports ............................................................................................................................................ 103

5.11.1 Passport Expiry .................................................................................................................................. 103
5.11.2 Visa Expiry.......................................................................................................................................... 106
5.11.3 Contract Expiry .................................................................................................................................. 107

ii
Lesson 1: Introduction to Payroll

Lesson Objectives
On completion of this lesson, you will be familiar with
‡ Features of Payroll

1.1 Introduction
Payroll refers to a series of accounting transactions involved in the process of paying employees
for the services rendered after taking into account all statutory and non-statutory deductions in
conformance with terms of employment, company policy and law of the land i.e., payment of
payroll taxes, insurance premiums, employee benefits and other deductions.

An efficient payroll system facilitates error-free, accurate and timely employee payments while
ensuring that the employment is well within the valid work permit.

1
Lesson 2: Configuring Tally for Payroll

Lesson Objectives
On completion of this lesson, you will learn
‡ The features of Tally’s Payroll
‡ How to enable Payroll in Tally

Payroll in Tally is easy to use and can handle all the functional, accounting and statutory require-
ments of the payroll department.

2.1 Features of Tally’s Payroll Functionality

The key features of the Payroll functionality in Tally are as follows.

‡ It is fully integrated with accounts to give you the benefits of simplified Payroll processing
and accounting
‡ It has user defined classifications and sub-classifications for comprehensive reporting
such as, employees, employee groups, pay components, departments and so on
‡ It has the facility to provide user-defined earning and deduction heads
‡ It has flexible user definable criteria for simple or complex calculations
‡ It allows an unlimited grouping facility of employees
‡ It supports user-defined production units i.e., attendance/ production/ time based remu-
neration units and so on
‡ It provides a flexible payroll processing period
‡ It provides comprehensive cost centre and employee-wise cost reports
‡ It has an auto-fill facility to expedite the Payroll process
‡ It supports the computation and deduction of ESI, EPF, Gratuity and so on
‡ It allows drill-down to the voucher level for any kind of alteration
‡ It computes arrears for the prior period
‡ It tracks employee loan details

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Configuring Tally for Payroll

2.2 Enabling Payroll in Tally

It takes a one-time configuration in Tally for the Payroll functionality to be activated. Create a new
company in Tally 9. Follow the steps given below to enable Payroll for a new company.

Illustration
M/s. Spectrum Software Solutions is engaged in the business of Customised Software. It is a
Bangalore-based company with three major departments.
1. Sales
2. Administration
3. R & D

Step 1: Company Setup

Go to Gateway of Tally > Company Info. > Create Company
In the Company Creation screen,
1. Select India in the Statutory compliance for field from the List of Countries
2. Type 1-4-2006 as Financial Year from date and press Enter

The completed Company Creation screen displays as shown.

Figure 2.1 Company Creation

3. Press Enter to accept the completed Company Creation screen

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 Configuring Tally for Payroll

Step 2: F11: Accounting Features

4. Set Maintain Payroll to Yes
5. Set More than ONE Payroll/Cost Category to Yes (This option is set to ‘Yes’ when sepa-
rate cost categories are created to allocate Employee cost. In cases where only one cost
category i.e., primary cost category is used to allocate multiple cost centres, this option
may be set to No)
6. Specify the Company Registration Number details

The completed Company Operations Alteration screen displays as shown.

Figure 2.2 F11: Company Operations Alteration

7. Press Enter to accept Company Operations Alteration screen

Note: The option Maintain Cost Centres may be set to Yes in cases where performance/ pro-
duction and staff advances are tracked using Cost Centres.

Summary
On completion of this lesson, you have learnt
‡ The features of Tally’s Payroll
‡ How to enable Payroll in Tally

5
Lesson 3: Creation of Payroll Masters

Lesson Objectives
On completion of this lesson, you will learn
‡ To create Payroll Masters in Tally

The Payroll information required to compute payments to employees are:

1. Units
2. Attendance/ Production Types
3. Pay Heads
4. Employee Masters

3.1 Payroll Units

A payroll unit refers to a unit of measurement based on which pay heads are calculated. Gener-
ally, payroll involves the calculation of amounts due to the employee on the following basis.
1. As hourly wages
2. Pay on a fixed basis such as certain amount per week, per month and so on
3. Pay to salespersons on commission
4. Reimbursement of expenses such as travel expenses, either as paid by the employee or
based on a per item rate
5. Pay on number of pieces produced/ manufactured/ sold

It is therefore essential to quantify payroll units for the purpose of computation of payments to
employees.

Sometimes an employee may be paid on the basis of a combination of two or more units. For
example, an employee is paid a regular salary and an hourly rate for the overtime hours that he/
she works. In this case, the two likely units are Calendar Month and Hours. In Tally, you can
create simple as well as compound units.

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Creation of Payroll Masters

3.1.1 Creation of Payroll Units

Tally Payroll contains four preset payroll units – Days, Fortnights, Months, and Weeks. You can
also create new units based on your business requirements.

Go to Gateway of Tally > Payroll Info. > Units (Work) > Create

In the Unit Creation screen,

1. Select Simple as the Type of Unit
2. Specify Hr as the Symbol
3. Type Hour as the Formal Name
4. Specify 2 as the Number of Decimal Places

The completed Unit of Measurement Creation screen displays as shown.

Figure 3.1 Unit Creation

5. Press Enter to accept the Unit Creation screen

Similarly, create Minutes as another Simple Unit.

Tips
Simple Units are individual units with no relationship with other units i.e., Hrs, Nos,
Pieces and so on.

Compound Units are a combination of two simple units, where the two units have an
arithmetical relationship with each other. For example, an Hour of 60 Minutes.

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 Creation of Payroll Masters

Create Hr of 60 Min as a Compound Unit.

In the Unit Creation screen,
1. Select Compound as the Type of Unit
2. Specify Hr as the First Unit
3. Enter 60 as the Conversion
4. Specify Min as the Second Unit

The completed Compound Unit screen displays as shown.

Figure 3.2 Compound Unit Creation

5. Press Enter to accept the Unit Creation screen

3.2 Attendance/Production Types

Attendance/Production Type masters are used to record the nature of attendance/ production i.e.,
time and work rate. In Tally, you can create Attendance types based on time such as Present and
Absent or based on work based production units such as piece productions, sales performance
and so on.

Create the following Attendance Types for M/s. Spectrum Software Solutions.

Name Under Attendance/Production Type Period Type

Present Primary Attendance/ Leave with Pay Days
Absent Primary Leave without Pay Days
Overtime Primary Production Hr of 60 Min

Go to Gateway of Tally > Payroll Info. > Attendance / Production Types > Create
In the Attendance Type Creation screen,
1. Type Present as the Name of the Attendance type
2. Specify the group as Primary in the Under field

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Creation of Payroll Masters

3. Select Attendance/Leave with Pay as the Attendance Type and the Period Type
appears as Days, by default

The completed Attendance/Production Type Creation screen displays as shown.

Figure 3.3 Attendance/Production Type Creation

4. Press Enter to accept the Attendance/Production Type Creation screen

Similarly, create another Attendance type with Absent as Name and Leave without Pay as
Attendance Type.

The completed Attendance/Production Type Creation screen displays as shown.

Figure 3.4 Attendance/ Production Type Creation

5. Press Enter to accept the Attendance/Production Type Creation screen.

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 Creation of Payroll Masters

In the same way, create Overtime as Name and Production as Attendance Type.

The completed Overtime Production Type Creation screen displays as shown.

Figure 3.5 Overtime Production Type Creation

‡ Press Enter to accept the Production Type Creation screen

Tips
Present Attendance Type may be used when the pay value is measured on the basis
of positive attendance units, i.e. number of days present.

Absent Attendance Type may be used when the pay value is measured on the basis
of negative attendance units, i.e. number of days absent.

Production Attendance Type may be used when the pay value is measured on the
basis of units produced, i.e. number of boxes.

3.3 Pay Heads

Pay Heads may be broadly considered as Earnings and Deductions from an employee’s point of
view. However, these pay heads would still be Expense and Liability from the employer’s view
point.

Some examples of Earnings Pay Heads are Basic Salary, Dearness Allowance, City Compensa-
tory Allowance, House Rent Allowance, Night Shift Allowance, Uniform Allowance, Sales Com-
mission and so on. Some examples of Deductions pay heads are Employee’s Provident Fund
(EPF), Employee’s State Insurance (ESI), Professional Tax, Income Tax, TDS, Advance (if any).

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Creation of Payroll Masters

In Tally Payroll, each pay head is to be created as an individual ledger account and grouped under
its respective group i.e., all Earnings pay heads under Indirect Expenses group or Direct
Expenses group and all Deductions pay heads under Current Liabilities group.
The Pay Head types in Tally Payroll are
1. Earnings for Employees
2. Deductions from Employees
3. Employee’s Statutory Deductions
4. Employer’s Statutory contributions
5. Gratuity
6. Loans and Advances
7. Reimbursement to Employees
The pay heads marked with the above pay head types are available during payroll processing.

Create the following Earnings & Deductions pay heads for M/s. Spectrum Software Solutions.

3.3.1 Earnings Pay Head Setup

Create the following Earnings Pay Heads.

Ledger Pay Head Under Appears Name Use for Calcu- Calcula-
Type in to Gratu- lation tion
Payslip Appear ity Type Period/
in Pay- Produc-
slip tion Type
Basic Earnings for Indirect Yes Basic Yes On Months
Salary Employees Expenses Pay Attend-
ance
House Earnings for Indirect Yes HRA No As —
Rent Employees Expenses Com-
Allow- puted
ance Value
Convey- Earnings for Indirect Yes Con- No Flat Months
ance Employees Expenses vey- Rate
ance
Over- Earnings for Indirect Yes Over- No On Pro- Overtime
time Pay Employees Expenses time duction
Variable Earnings for Indirect Yes Varia- No As —
Pay Employees Expenses ble Pay User
Defined
Value

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 Creation of Payroll Masters

Go to Gateway of Tally > Payroll Info. > Pay Heads > Create

In the Pay Heads Creation screen,

1. Type Basic Pay as the Name of the Pay Head
2. Select Earnings for Employees in the Pay Head Type field

The Basic Pay Head Creation screen displays as shown.

Figure 3.6 Basic Pay Head Creation

3. Specify the group as Indirect Expenses in the Under field and press Enter
4. Set Appears in Payslip to Yes
5. Specify Basic as the Name to appear in Payslip field
6. Set Use for Gratuity to Yes
7. Select On Attendance in the Calculation Type field and press Enter

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Creation of Payroll Masters

The Pay Head Creation screen with List of Calculation displays as shown.

Figure 3.7 Pay Head Creation with List of Calculation

Tips: Calculation Type refers to the method of computation of pay components. In Tally,
there are basically 5 calculation types.

As Computed Value – This method is used when the pay value is computed based on
certain predefined factors i.e., slab rates, pay heads and so on.

As User-Defined Value – This method is used when the value of pay is not fixed and
does not depend upon any pay components.

Flat Rate – This method is used when the value of the pay heads is fixed for the given
month. This calculation type is not dependant upon attendance/production. For
example, conveyance of Rs. 700 per month.

On Attendance — This calculation type depends upon Attendance records and is

used along with rate per unit of attendance. For example, Overtime of Rs. 25 per hour.

On Production — This method is used when the pay value is measured based on
work done i.e., pieces or numbers produced/manufactured.

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 Creation of Payroll Masters

8. Select Present in the Attendance/ Leave with Pay field.

The Pay Head Creation screen with List of Attendance Types displays as shown.

Figure 3.8 Pay Head Creation with List of Attendance Types

9. Select Months in the Calculation period field and press Enter

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Creation of Payroll Masters

The Pay Head Creation screen with List of Calculation Periods displays as shown.

Figure 3.9 Pay Head Creation with List of Calculation Periods

Note: Tally contains 4 predefined Calculation periods – Days, Fortnights, Months, and Weeks.

10. Select User defined in the Calculation Basis field

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 Creation of Payroll Masters

The Pay Head Creation screen with Calculation Basis displays as shown.

Figure 3.10 Pay Head Creation with Calculation Basis

11. Press Enter

Tips: Calculation Basis refers to the periodicity of the given calculation period.
As per Calendar Period refers to the perpetual calendar month, i.e. if the payroll
process is carried out for the month of March, then the attendance records will be
entered for 31 days.

User Defined Value refers to the consistent payroll period irrespective of calendar
month, i.e. If an employee’s salary is based on a standard month of 30 days irrespec-
tive of the calendar month, then you can select User Defined as the Calculation
Basis and define the periodicity of the specified period or month.
For example, an employee’s monthly salary is Rs. 3,000 and the calculation basis is
defined as a month of 30 days. If he takes 3 days leave in January (which consists of
31 days), then the salary per day is computed as (Rs. 3000/30 days, i.e. 100). The net
salary after deducting the leave salary [i.e. Rs. 300 (3 days x Rs. 100)] amounts to Rs.
2,700.

12. Specify Months of 26 Days and press Enter

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Creation of Payroll Masters

The Pay Head Creation screen with Months of 26 Days displays as shown.

Figure 3.11 Pay Head Creation with Months of 26 Days

13. Select Normal Rounding as the Rounding Method and press Enter

Tips: There are 4 methods of rounding off in Tally.

Not Applicable – Decimal points will be taken into consideration, amount will not be
rounded off.

Downward Rounding – Decimal points will not be taken in to consideration, the

amount will be rounded off to the lower value.

Normal Rounding – The amount will be rounded off to the nearest currency value.

Upward Rounding – The amount will be rounded off to the higher value.

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 Creation of Payroll Masters

The Pay Head Creation screen with Rounding Method displays as shown.

Figure 3.12 Pay Head Creation with Rounding Method

14. Specify 1 as the rounding Limit (The Rounding limit allows the value to be in multiples of
the limit specified and is based on the rounding method selected)
The completed Basic Pay Ledger Creation screen displays as shown.

Figure 3.13 Completed Basic Pay Ledger Creation

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Creation of Payroll Masters

15. Press Enter to accept the completed Basic Pay Ledger Creation screen

Create House Rent Allowance ledger.

In the Pay Heads Creation screen,
1. Type House Rent Allowance as the Name of the Pay Head
2. Select Earnings for Employees in the Pay Head Type field
3. Specify the group as Indirect Expenses in the Under field and press Enter
4. Set Appears in Payslip to Yes
5. Specify HRA as the Name to appear in Payslip
6. Set Use for Gratuity to No
7. Select As Computed Value in the Calculation Type field and press Enter

The Pay Head Creation screen with List of Calculation displays as shown.

Figure 3.14 Pay Head Creation with List of Calculation

8. Select Normal Rounding as the Rounding Method

9. Select 1 as the rounding Limit and press Enter

In the Computation Info screen,

10. Select On Specified Formula as the Compute method

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 Creation of Payroll Masters

The Pay Head Creation screen with Compute displays as shown.

Figure 3.15 Pay Head Creation with Compute

Tips
On Current Deductions Total – This calculation type is used when the value of a pay
head depends upon the total of the deductions pay heads previously defined.

On Current Earnings Total – This calculation type is used when the value of a pay
head depends upon the total earnings pay heads previously defined.

On Current Sub Total – This calculation type is used when the value of a pay head
depends upon the nett totals of earnings and deductions previously defined.

On Specified Formula – This calculation type is used when the pay head value is
computed based on the value of one or more pay heads already defined in the pay
structure. (Tally allows addition and subtraction of pay heads already defined in the
pay structure and multiplication and divisions using attendance types. For example,
HRA as 40% of basic.)

11. Press Enter and the Compute sub-screen displays

12. Select Basic Pay as the Add Pay Head function and press Enter

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Creation of Payroll Masters

The Compute sub-screen displays as shown.

Figure 3.16 Compute sub-screen

The pay head drop-down box contains pay heads already created. If any pay head(s) is a
component for the given pay head, you may create the same and make the necessary alterations
in the required pay head.

13. Select End of List

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 Creation of Payroll Masters

The Compute sub-screen with Additional Computation For displays as shown.

Figure 3.17 Compute sub-screen with Additional Computation For

14. Press Enter to accept the screen

15. Specify 1-4-2006 as the Effective From date (in case of a revision in pay structure, you
can define revised computation information for the given pay head)
16. The From Amount column is automatically skipped, assuming it to be zero. Press Enter
to skip Amount Upto column
17. Select Percentage as the Slab Type from the List of Slabs

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Creation of Payroll Masters

The Pay Head Creation screen with List of Slabs displays as shown.

Figure 3.18 Pay Head Creation with List of Slabs

Tips
Percentage – This Slab rate is used when an amount is stated as a proportion of a
whole.

Value – This Slab rate is used when an amount is stated as absolute value.

18. Specify 40% as the Value Basis Percentage and press Enter

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 Creation of Payroll Masters

The Pay Head Creation screen with Value Basis displays as shown.

Figure 3.19 Pay Head Creation with Value Basis

19. Press Enter twice

The completed House Rent Allowance (HRA) Pay Head Creation screen displays as shown.

Figure 3.20 Completed HRA Pay Head Creation

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Creation of Payroll Masters

20. Press Enter to accept the completed HRA Pay Head Creation screen

Similarly, create other Pay Heads in the manner as discussed above.

The completed Conveyance Pay Head Creation screen displays as shown.

Figure 3.21 Completed Conveyance Pay Head Creation

‡ Press Enter to accept the Conveyance Pay Head Creation screen

26
 Creation of Payroll Masters

The completed Overtime Pay Head Creation screen displays as shown.

Figure 3.22 Completed Overtime Pay Head Creation

‡ Press Enter to accept the Overtime Pay Head Creation screen

Similarly, create Variable Pay Head with Calculation Type as User Defined Value.

3.3.2 Deductions Pay Head Setup

Create the following Deductions Pay Heads.
Ledger Pay Head Under Appears Name to Calcula- Computa-
Type in Appear in tion Type tion
Payslip Payslip Method
EPF – Employees’ Current Yes EPF As On
Employ Statutory Liabilities Computed Specified
ee’s Deductions Value Formula
Contri-
bution
ESI - Employees’ Current Yes ESI As On
Employ Statutory Liabilities Computed Current
ee’s Deductions Value Earnings
Contri- Total
bution
Profes- Deductions Current Yes Profession Tax As On
sion Tax from Liabilities Computed Current
Employees Value Earnings
Total

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Creation of Payroll Masters

Go to Gateway of Tally > Payroll Info. > Pay Heads > Create

In the Pay Head Creation screen,

1. Type EPF – Employee’s Contribution as the Name of the Pay Head
2. Select Employees’ Statutory Deductions in the Pay Head Type field
The EPF Pay Head Creation screen displays as shown.

Figure 3.23 EPF Pay Head Creation

3. Specify the group as Current Liabilities in the Under field and press Enter (In Tally, only
relevant groups appear during selection, to reduce erroneous data inputs)
4. Set Appears in Payslip to Yes
5. Specify EPF as the Name to appear in Payslip field
6. Select As Computed Value in the Calculation Type field and press Enter
7. Select Normal Rounding as the Rounding Method and press Enter
8. Specify 1 as the rounding Limit and press Enter
9. Select On Specified Formula as the Compute method
10. Press Enter and the Compute sub-screen displays
11. Select Basic Pay as the Add Pay Head function and press Enter
12. Press Enter to accept the screen
13. Specify 1-4-2006 as the Effective From date
14. The From Amount column automatically skips, assuming it to be zero
15. Specify 6500 in the Amount Upto column and press Enter

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 Creation of Payroll Masters

The Pay Head Creation screen with Computation Info displays as shown.

Figure 3.24 Pay Head Creation with Computation Info

16. Select Percentage as the Slab Type from the List of Slabs
17. Specify 12% as the Value Basis Percentage and press Enter

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Creation of Payroll Masters

The Pay Head Creation screen with From Amount displays as shown.

Figure 3.25 Pay Head Creation with From Amount

18. Press Enter to accept the upper stratum as 0 and select Value as the Slab Type from the
List of Slabs
19. Specify Rs. 541 the Value Basis Value and press Enter

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 Creation of Payroll Masters

The Pay Head Creation screen with Value Basis displays as shown.

Figure 3.26 Pay Head Creation with Value Basis

20. Press Enter twice

The completed EPF – Employee’s Contribution Pay Head Creation screen displays as shown.

Figure 3.27 Completed EPF Pay Head Creation

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Creation of Payroll Masters

21. Press Enter to accept the completed EPF Pay Head Creation screen

Similarly, create Employee’s State Insurance (ESI) Pay Head as discussed.

In the Pay Head Creation screen,
1. Type ESI – Employee’s Contribution as the Name of the Pay Head
2. Select Employees’ Statutory Deductions in the Pay Head Type field
3. Specify the group as Current Liabilities in the Under field and press Enter
4. Set Appears in Payslip to Yes
5. Specify ESI as the Name to appear in Payslip field
6. Select As Computed Value in the Calculation Type field and press Enter
7. Select Normal Rounding as the Rounding Method
8. Specify 1 as the rounding Limit and press Enter
9. Select On Current Earnings Total as the Compute method and press Enter
10. Specify 1-4-2006 as the Effective From date
11. The From Amount column automatically skips, assuming it to be zero
12. Specify 7500 in the Amount Upto column and press Enter
13. Select Percentage as the Slab Type from the List of Slabs
14. Specify 4.75% as the Value Basis Percentage and press Enter
15. Press Enter to accept the upper stratum as 0 and select Percentage as the Slab Type
from the List of Slabs
16. Press Enter to accept 0% as the Percentage Value Basis
The completed ESI – Employee’s Contribution Pay Head Creation screen displays as shown.

Figure 3.28 Completed ESI – Employee’s Contribution Pay Head Creation

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 Creation of Payroll Masters

17. Press Enter to accept the completed ESI-Employee’s Contribution Pay Head Creation
screen

In the same way, create Professional Tax Pay Head ledger with the required Slab rates.

The completed Professional Tax Pay Head Creation screen displays as shown.

Figure 3.29 Completed Professional Tax Pay Head Creation

‡ Press Enter to accept

3.3.3 Gratuity Pay Head Setup

Apart from the above Pay Heads, create Gratuity Expenses (Provisional) Account in order to get
provisional Gratuity liability report for the employer at any given period.

Gratuity refers to the monetary benefit given by the employer to the employee at the end of the
employment for the services rendered over a period of employment either by law or otherwise. It
is calculated provisionally at the end of each financial period to assess the possible liability of the
company towards its employees. A Gratuity Provisional Account is created to capture the details
required for the calculation of gratuity. Gratuity is calculated based on select salary components.

33
Creation of Payroll Masters

The formula used for Gratuity calculation is as follows.

* Eligible salary refers to the sum of pay heads covered in the employee’s latest pay structure,
for the relevant period. The pay heads must be set to Yes for use for gratuity and the Gratuity
ledger should be part of the pay structure.

# Served period is computed from the date of joining to the end date of calculation period.
Served period may be proportionate such as 11 years 10 months and 5 days.

When Served period covers more than one slab, the total of calculation of all slabs will constitute
the gratuity provisional amount of the employee.
Ledger Pay Head Type Under
Gratuity Expenses Provisional Gratuity Current Liabilities

In the Pay Head Creation screen,

1. Type Gratuity Expenses (Provisional) as the Name of the Pay Head
2. Select Gratuity in the Pay Head Type field and the Slab Rate details for Gratuity Calcu-
lation screen displays.
3. Specify the following details.

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 Creation of Payroll Masters

The Slab Rate Details for Gratuity calculation screen displays as shown.

Figure 3.30 Slab Rate Details for Gratuity Calculation

4. Press Enter to accept the Slab Rate Details for Gratuity Calculation screen

Tips
Gratuity days in a Month – The number of days per calendar month varies from 28 to
31. In this case, you can apply a consistent period for all employees irrespective of
their month of leaving. It can also be fixed by law.

Number of months From and To – The months until which the eligible days are appli-
cable in the Slab system, beginning from the date of joining.

Eligibility days for Gratuity Calculation per year – Number of days’ pay given as
gratuity for the entire slab. If the slab period has not ended, then the slab is applied
based on the number of months covered in the previous slab. If the number of days
eligible is zero (0), then the eligible days mentioned in the next slab are considered.

5. Specify the group as Current Liabilities in the Under field and press Enter

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Creation of Payroll Masters

The completed Gratuity Expenses (Provisional) Pay Head Creation screen displays as shown.

Figure 3.31 Gratuity Expenses (Provisional) Pay Head Creation

6. Press Enter to accept the completed Gratuity Expenses (Provisional) Pay Head Creation
screen

3.4 Employee Setup

The Employee Master records employee information – department, date of joining, date of
leaving, ID number, designation, location, function, employee bank details, passport and visa
details and so on.

In Tally, Employee Masters may be created in two ways

‡ Set up as an Employee Group
‡ Set up as an Employee Master

3.4.1 Employee Group Master

Businesses with multiple departments, divisions, functions or activities may create the required
employee groups and classify individual employees under a specified group i.e., Production,
Sales, Marketing, Stores, Support or a particular group of employees such as managers, supervi-
sors, sub-staff and so on.

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 Creation of Payroll Masters

To create Sales as an Employee Group,

Go to Gateway of Tally > Payroll Info. > Employee Groups > Create

In the Employee Group Creation screen,

1. Select Primary Cost Category as the Category (You can also create a separate cost cat-
egory for the Employee Cost)
2. Type Sales as the Name of the Employee Group
3. Select the group as Primary (Tally allows an unlimited grouping of Employee Groups)

The Employee Group Creation screen displays as shown.

Figure 3.32 Employee Group Creation

4. Press Enter to accept the Employee Group Creation screen

Similarly, create other Employee Groups such as Administration and R&D.

3.4.2 Employee Master

After creating Employee Groups, create individual employee masters, with or without grouping
them, under Employee Group master.

In Tally, you can record all the necessary information of the employees in the Employee Masters.
Tally also allows you to enter statutory, expat and contract details of the employees.

Go to Gateway of Tally > F12:Configuration > Payroll Configuration

1. Set Show Statutory Details to Yes
2. Set Show Passport & Visa Details to Yes
3. Set Show Contact Details to Yes

37
Creation of Payroll Masters

The F12: Payroll Configuration screen displays as shown.

Figure 3.33 F12: Payroll Configuration

Note: Tally also allows you to configure the above settings in the Employee Creation screen by
pressing F12: Configure. The information to be printed in the payment advice is automatically pre-
filled in Tally. However, you can also modify the same as per your requirement.

Create the following Employee Masters.

Employee Name Department Date of Joining

Vijay Kumar Administration 1-4-2006
Rahul R&D 2-4-2006
Mahesh Sales 5-4-2006
Ajay Sales 7-4-2006

Go to Gateway of Tally > Payroll Info. > Employees > Create

In the Employee Creation screen,
1. Select the Primary Cost Category as the Category
2. Type the Name of the Employee
3. Specify the Name of the Employee Group as Administration in the Under field
4. Specify the Date of Joining

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 Creation of Payroll Masters

5. Type the following details of an employee as shown.

Figure 3.34 Employee Creation

Note: The Date of Leaving option will be available only in the Alteration mode.

6. Press Enter to accept

Similarly, create Employee Masters of other employees, in their respective departments.

3.5 Salary Details

The Salary Details masters contain information on the Employee Group/ individual employee pay
structure, comprising both earnings and deductions pay components for the applicable period.

Businesses having a common pay structure for a particular department or division or set of
employees can define salary details for an employee group and classify individual employees
under the specified group to inherit the parent pay values. The Employee Group master prefills
the parent group values to the individual employee masters created under them. It reduces the
possibility of erroneous data entry and expedites data entry. This categorisation also helps in gen-
eration of Group-wise reporting.

Pay structure constituting the Pay Heads and basis of calculation should be similar for the
employees falling under the same group, but pay values need not be same.

39
Creation of Payroll Masters

Tally also allows you to set up individual employee salary details with all parameters applicable for
Employee groups. The individual employee masters with separate pay structure are usually
created on a case-to-case basis.

To define Salary details for employees,

Go to Gateway of Tally > Payroll Info. > Salary Details > Create
1. Select Vijay Kumar from the List of Employees and press Enter

The List of Groups/ Employees screen displays as shown.

Figure 3.35 List of Groups/ Employees screen

2. Select Basic Pay as the Pay Head from the List of Pay Heads
3. Specify 10,000 as Rate
4. The Attendance units, Pay Head Type and Calculation Type appear by default, based on
the pay head definitions.

40
 Creation of Payroll Masters

The Salary Details Creation screen displays as shown.

Figure 3.36 Salary Details Creation

5. Select House Rent Allowance as the second Pay Head and press Enter
6. Select Conveyance as the next Pay Head
7. Specify 800 as Rate and press Enter
8. Select Overtime Pay as Pay Head
9. Specify 55 as Rate and press Enter
10. Select Variable Pay as Pay Head and press Enter
11. Select Gratuity Expenses (Provisional) ledger and press Enter (only for reporting pur-
poses)
12. Select EPF & ESI - Employee’s Contribution as Pay Head and press Enter
13. Select Profession Tax as Pay Head and press Enter (in case of revised pay structure
for any period, define the same by pressing Enter in the defining Effective from date)

41
Creation of Payroll Masters

The completed Salary Details Creation screen of Mr. Vijay Kumar displays as shown.

Figure 3.37 Completed Salary Details Creation

Note: Tally also allows you to modify the pre-defined Slab rates by pressing F12: Configure and
setting Allow to Override Slab Percentage to Yes.

Similarly, create pay structure of the other employees as per the details given in the following
table.

Pay Head Rahul Mahesh Ajay

Basic Pay 20,000 45,000 10,000
House Rent Allowance 40% 40% 20%
Conveyance — 1,000 2,000
Overtime Pay — — 100
Variable Pay User — defined
Gratuity Expenses (Provi- Only for reporting purpose
sional)
EPF – Employee’s Contribution Applicable as Slab Rates
ESI – Employee’s Contribution Applicable as Slab Rates
Profession Tax Applicable as Slab Rates

42
 Creation of Payroll Masters

To define salary details for Mr. Ajay,

1. Press F12: Configure
2. Set Allow Override Slab Percentage to Yes, as the HRA calculation percentage is 20%.
The Salary Details Configuration screen displays as shown.

Figure 3.38 Salary Details Configuration

3. Press Enter to accept

4. Now, you will be able to enter user-defined pay rates for computation of HRA, type 20%
and press Enter
5. Define other salary detail parameters as explained above

43
Creation of Payroll Masters

The completed Salary Details screen of Mr. Ajay displays as shown.

Figure 3.39 Completed Salary Details

6. Press Enter to accept the completed Salary Details screen

Note: In F12:Configure, when Allow to Override Slab Percentage is set to Yes, then pre-
defined slab rates for the pay heads can be modified as per user requirements.

Summary
On completion of this lesson, you have learnt
‡ To create Payroll Masters in Tally

44
Lesson 4: Transactions

Lesson Objectives
On completion of this lesson, you will learn
‡ To record attendance voucher
‡ To process Payroll voucher

Introduction
Payroll processing comprises the following transactions.
‡ Recording of attendance (on time and work)
‡ Preparation of a payroll voucher, based on attendance
‡ Preparation of a payment voucher

There are three types of Payroll Vouchers namely Attendance Voucher, Payroll Voucher and
Payment Voucher, which are by default preset in Tally to record above Payroll transactions.

Payroll Vouchers are used for the purposes of operating your payroll and also records the attend-
ance of the employees for a given period. These vouchers are basically used to input data into
Tally Payroll.
.

4.1 Attendance Vouchers

An Attendance Voucher is used to record employees’ attendance data, based on Attendance/
Production types (i.e., present or absent days, overtime hours and so on).

An Attendance Voucher allows you to record the attendance/ production units for employees. Tally
gives you the flexibility to enter the attendance records through a single attendance voucher for a
payroll period, or through multiple attendance vouchers as and when required within a payroll
period. You also have the option of recording one attendance/ production voucher per employee
per day or collectively for a month or any other variation thereof for all the employees.

In Tally, the auto-fill facility (Alt+A) is used to prefill the required attendance/Production types data
for the selected employee group/ employee for the specified period.

45
Transactions

Enter the following attendance records of M/s. Spectrum Solutions for April 2006.

Attendance/ Produc- Vijay Kumar Rahul Mahesh Ajay

tion Types
Present Days 26 22 15 17
Overtime hours 900 Min 720 Min
(15hr x 60min) (12hr x 60min)
Variable Pay 1500 1000

In this case, you have to pass separate attendance vouchers for Present days and Overtime
hours.

Go to Gateway of Tally > Payroll Vouchers

1. Press Ctrl+F5 for Attendance Voucher

The Attendance Voucher Creation screen displays as shown.

Figure 4.1 Attendance Voucher

2. Press F2 and specify the date as 30-4-2006

3. Press Enter
4. Press Alt+A (Attendance Auto Fill) to prefill employee payroll details

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 Transactions

The Attendance Auto Fill screen displays as shown.

Figure 4.2 Attendance Auto Fill

In the Employee Filters screen,

5. Select Primary Cost Category as Cost Category (If separate cost categories are used to
capture employee cost, then select the respective cost category)
6. Select All Items as Employee/ Group (if you want to generate payroll voucher for individ-
ual employee/ group, select the respective employee or group)

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Transactions

The Attendance Auto Fill with Employee Filters screen displays as shown.

Figure 4.3 Attendance Auto Fill with Employee Filters

7. Select Present as Attendance Type to be recorded (You have to maintain separate

attendance vouchers for attendance and production)

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 Transactions

The completed Attendance Auto Fill screen with List of Attendance Type displays as shown.

Figure 4.4 Attendance Auto Fill with List of Attendance Type

8. Press Enter to accept the screen

Note: If you opt for Absent as Attendance Type, then you need to record the negative attend-
ance of the employees. This minimises data entry time and manages the data entry by exception.

Employee masters pertaining to the respective groups display by default.

9. Enter the attendance details as given in the table above

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Transactions

The Attendance Voucher Creation screen displays as shown

Figure 4.5 Attendance Voucher

10. Press Enter and type the details of the transaction in the Narration field
The completed Attendance Voucher Creation for Present days displays as shown.

Figure 4.6 Attendance Voucher

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 Transactions

11. Press Enter to accept the completed Attendance Voucher screen

Note: Days with Loss of Pay (LOP) are treated as a Deductible with respect to the Earnings Pay
Head type and as a Payable with respect to the Deductions Pay Head type. For example, LOP is
deducted from the Basic salary (Earnings Pay Head) and Canteen expenses (Deductions Pay
Head) are treated as a payable.

In the same way, create an Attendance Voucher for Overtime hours.

The completed Attendance Voucher for Overtime Hours displays as shown.

Figure 4.7 Attendance Voucher for Overtime Hours

‡ Press Enter to accept the completed Attendance Voucher for Overtime Hours

Note: You can also record Overtime in hours, provided the payroll unit is defined as Hrs.

After creating the Attendance Voucher, you can change any attendance value for a particular
employee, if required, in the Voucher Alteration mode.

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Transactions

4.2 Payroll Vouchers

A payroll voucher is used to record all employee-related transactions. It enables you to compute
all the values for the respective Pay Heads (Earnings and Deductions).

The calculations are made on the basis of the definitions specified in the pay head masters, pay
structure and attendance entries. In Tally, you can pass payroll vouchers manually for individual
employee as well as for the entire group/ organisation by using the Auto Fill facility (Alt+A).

In Tally, the disbursement of salaries can be effected in any of the following modes.
‡ Direct Remittance – in cash or by cheque
‡ Bank Transfer – a direct transfer is made to an employee’s bank account and the list of
disbursement is printed separately

4.2.1 Cash Remittance

Go to Gateway of Tally > Payroll Vouchers

1. Press Ctrl+F4 for Payroll Voucher

2. Press F2, specify the date as 30-4-2006 and press Enter
3. Press Alt+A (Payroll Auto Fill) to prefill employee payroll details

In the Employee Filters screen,

4. Specify 1-4-2006 as From period
5. Specify 30-4-2006 as To period
6. Select Primary Cost Category as Cost Category
7. Select All Items as Employee/Group
8. Select Cash in the Payroll Ledger field

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 Transactions

The Employee Filters screen displays as shown.

Figure 4.8 Employee Filters

9. Press Enter to accept the screen

All the pay values are calculated for the applicable pay heads for each employee belonging to the
selected group.

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Transactions

The Payroll Voucher Creation screen displays as shown.

Figure 4.9 Payroll Voucher

10. Press Enter and specify the pay values for the pay heads opted for user-definable values
against each employee (in this case, Variable Pay)

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 Transactions

The Payroll Voucher Creation screen displays as shown.

Figure 4.10 Payroll Voucher Creation

Note: Press Alt+S to pass the above voucher in the Voucher mode.

11. Press Enter and specify the pay values for the pay heads, which have been opted for
user-definable values against each employee

55
Transactions

The completed Payroll Voucher for April 2006 displays as shown.

Figure 4.11 Payroll Voucher

12. Press Enter to accept the completed Payroll Voucher

Note: A single payroll voucher can be used to pass entries for upto 100 employees, efficiently. For
companies having more than 100 employees, create multiple payroll vouchers – one for every
100 employees.

4.2.2 Bank Transfer

When salaries are disbursed through bank transfers and intimated through payment advice,
create a Voucher Class and a Salary Payable ledger.

A Voucher Class is created to automate the Payroll process, reduce the possibility of errors during
voucher entry and expedite the process. By defining a Voucher Class, you can exclude/ include
groups or accounts to be applicable for selection.

In Payroll voucher Class, you may exclude the selection of inapplicable groups which are not
related to employees such as Fixed Assets, Sundry Debtors/ Creditors, Sales/ Purchases etc.,
and include applicable groups like Indirect Expenses, Current Liabilities, Loans & Advances
(Assets) and so on.

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 Transactions

Before creating a Payroll Voucher Class, create a Salary Payable ledger as shown.
Ledger Pay Head Type Under
Salary Payable Not Applicable Current Liabilities

Go to Gateway of Tally > Payroll Info. > Payheads > Create

The Pay Head Creation screen displays as shown.

Figure 4.12 Pay Head Creation

‡ Press Enter to accept the Pay Head Creation screen

To create a Voucher Class,

Go to Gateway of Tally > Accounts Info. Payroll Info. > Voucher Types > Alter

1. Select Payroll Voucher Type and press Enter

2. Tab down to the Voucher Class field
3. Type Salary Process as Name of the Voucher Class and press Enter

In the Voucher Class sub-screen,

4. Select End of List in the Exclude & Include groups field and press Enter
5. Select Salary Payable ledger as the Ledger to Use

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Transactions

The Voucher Class Creation screen displays as shown.

Figure 4.13 Voucher Class

6. Press Enter to accept the screen

The completed Salary Process Voucher Class displays as shown.

Figure 4.14 Salary Process Voucher Class

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 Transactions

7. Press Enter to accept the completed Salary Process Voucher Class screen

Note: If the above Ledger and Voucher class are created from the Accounts Info. menu, you
have to set Use for Payroll to Yes in the masters, in the Alteration mode, for use in payroll.

Create Attendance Vouchers for Present days and Overtime hours for May 2006 as per the
details given in the following table.

Attendance/Production Vijay Kumar Rahul Mahesh Ajay

Types
Present Days 25 20 26 21
Overtime Hours - 120 Min
(2hr x 60min)
Variable Pay 500 - 1200

The completed Attendance Voucher for Present days displays as shown.

Figure 4.15 Attendance Voucher for Present days

‡ Press Enter to accept the screen

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Transactions

In the same way, create an Attendance Voucher for Overtime Hours.

The completed Attendance Voucher for Overtime Hours displays as shown.

Figure 4.16 Attendance Voucher for Overtime Hours

‡ Press Enter to accept the screen

After recording the Attendance Vouchers, enter the Payroll Voucher.

Go to Gateway of Tally > Payroll Vouchers
1. Press Ctrl+F4, select Payroll as the Voucher Type and Salary Process as the Payroll
Voucher Class

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 Transactions

The Change Voucher Type screen displays as shown.

Figure 4.17 Change Voucher Type

2. Press F2, specify the date as 31-05-2006 and press Enter

3. Press Alt+A (Payroll Auto Fill) to prefill employee payroll details

In the Employee Filters screen,

4. Specify 01-05-2006 as From period
5. Specify 31-05-2006 as To period
6. Select Primary Cost Category as Cost Category
7. Select Employee/Group for All Items
8. Press Enter and specify the pay values for the pay head, which you have opted for user-
definable values, against each employee (in this case, Variable Pay)

The total Payroll amount is transferred automatically to Salary Payable ledger.

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Transactions

The completed Payroll Voucher for May 2006 displays as shown.

Figure 4.18 Payroll Voucher

9. Press Enter to accept the screen

4.2.3 Salary Disbursement

In Tally, a payment voucher can be used to effect salary disbursement to employees. The
payment voucher for the salaries payable may be passed through regular payment voucher or
automated using a voucher class under Payment Voucher type. Tally offers the auto-fill facility to
ensure error-free data input during payroll payment entry.

Pass a payroll payment entry on 31/05/06 for the salaries payable for May 2006. Create the
necessary Bank Accounts before passing the payroll payment entry.

Go to Gateway of Tally > Accounting Vouchers

1. Press F5 for Payment Voucher
2. Press F2, specify the date as 31-05-2006 and press Enter
3. Press Alt+A (Payroll Auto Fill) to prefill employee payroll details

In the Employee Filters screen,

4. Select Primary Cost Category as Cost Category
5. Select Employee/Group for All Items
6. Select Salary Payable in the Payroll Ledger field

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 Transactions

The Employee Filters screen displays as shown.

Figure 4.19 Employee Filters

7. Press Enter and the employee payroll details appear by default.

8. Select HDFC Bank in the Account field and press Enter
9. Enter the details of the transactions in the Narration field

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Transactions

The completed Payroll Payment Entry screen displays as shown.

Figure 4.20 Payment Voucher

10. Press Enter to accept the screen

If a partial payment of salaries is made to a particular group of employees, then generate a

separate payroll voucher for their payables and pass a separate payment entry based on the set-
tlement.
Note:
‡ If any cash disbursements are made prior to the payment voucher entry, after using the
Auto-Fill facility, select the unpaid salaries and enter zero (0) in the amount payable.
‡ The unpaid salary will remain as outstanding in the Salary payable account and can be
auto-filled in the payment voucher as and when the actual payments are made.
‡ If salaries are disbursed by cheque, select individual employee in the Auto Fill Employee
Filter and print the cheque for the payment voucher. You have to create separate payroll
payment entries for each employee.

Summary
On completion of this lesson, you have learnt
‡ To record attendance voucher
‡ To process Payroll voucher

64
Lesson 5: Payroll Reports

Lesson Objectives
On completion of this lesson, you will learn
‡ To generate Payroll Reports

Introduction
Payroll Reports help you to ascertain the payroll expenses for a specified month or for year-to-
date transactions for a particular employee/ group.

In Tally, you can generate the following payroll related reports.

1. Pay Slip
2. Pay Sheet
3. Payroll Statement
4. Payment Advice
5. Payroll Register
6. Employee Pay Head Break-up
7. Pay Head Employee Break-up
8. Attendance Sheet
9. Attendance Register
10. Gratuity Report
11. Expat Reports

5.1 Pay Slip

A Pay Slip refers to a document issued to an employee, which itemises each component of his/
her earnings and deductions and the net amount paid for a given pay period. It provides particu-
lars on how the net amount has been arrived at i.e., how much money has been earned and how
much tax/ deductions have been taken away.

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Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payslip
1. Select the required Employee and press Enter

The Pay Slip for the selected employee displays as shown.

Figure 5.1 Pay Slip

In Tally Payroll, a pay slip can be configured to vertically display the details of attendance, in terms
of attendance or production, with Year to Date Values (YTD).

2. Press F12: Configure from the pay slip display

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 Reports

The F12: Configure screen displays as shown.

Figure 5.2 F12: Configuration

Tips: The F12:Configuration options in a pay slip are explained as follows.

Show Vertical Payslip – Set this option to Yes to view/ print the pay slip in vertical
format, i.e. align Deductions pay heads below Earnings pay heads.

Show Employee Details – Set this option to Yes to display employee information as
entered in the employee master.

Show Passport Details – Set this option to Yes to display an employee’s passport
details.

Show Visa Expiry Date – Set this option to Yes to display an employee’s visa expiry
date.

Show Attendance/Production Details – Set this option to Yes to display Attendance/

Production information.

Show Attendance/Production Groups – Set this option to Yes to display the

grouping of the Attendance/Production data as defined during the creation of Types.

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Display Attendance/Production Type in Tail Units – For compound units used in

Attendance/Production Type, set this option to Yes, to display the value of the Attend-
ance/Production details in the Tail unit. If this option is set to No, the Production units
will display in primary units.

Show Year To Date values – Set this option to Yes to display the cumulative value of
Attendance/Production records and Earnings /Deductions for any given period.

Remove Zero Entries – Set this option to Yes to remove the Earnings/Deductions
components with Zero value from the pay slip.

For Attendance/Production also – Set this option to Yes to remove Attendance/ Pro-
duction records with zero values from the pay slip.

Appearance of Name – Select the appropriate name style to appear in the pay slip
(i.e., Alias (Name), Alias only, Name (Alias), Name only).

Set the F12: Configure screen as shown.

Figure 5.3 F12: Configuration for Pay Slip

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 Reports

The configured Pay Slip displays as shown.

Figure 5.4 Configured Pay Slip

3. To view the details of individual Attendance and Pay Heads entered through different doc-
uments, press Alt+F1 from the above screen.

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The detailed Pay Slip displays as shown.

Figure 5.5 Detailed Pay Slip

The voucher number, date and the number of attendance or payroll records used now display.
This is very useful where multiple attendance/payroll vouchers are entered for the same payroll
period. You can drill down to the voucher level for reference or to effect an alteration by pressing
Enter on the required record.

Tips
Period Button – By default, the pay slip for the current month displays. However, you
can change the period by pressing F2: Date and defining the required date. This
button can be used to display multiple period payroll information to view/print a consol-
idated pay slip.

Employee Button – From the existing pay slip of an employee, you can toggle
between employees by pressing F4: Employee.

Printing Single Pay Slip

4. Press Alt+P from the Pay Slip screen

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 Reports

The printed Pay Slip of Mr. Vijay Kumar displays as shown.

Figure 5.6 Printed Pay Slip

Printing Multi-Payslip
By using the Multi-Payslip Printing option, you can print multiple pay slips of all the of employees
or employees in a particular group/department for a select period.

Go to Gateway of Tally > Multi Account Printing > Multi-Payslip Printing

In the Printing Payslip screen,

5. Press Backspace and enter the details as shown

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The Printing Configuration for Multi-Payslip displays as shown.

Figure 5.7 Printing Configuration for Multi-Payslip

6. Press Enter to print multi pay slips of employees

The printed pay slips of employees display in separate sheets.

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The Printed Multi Payslip displays as shown.

Figure 5.8 Printed Multi Payslip

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5.2 Pay Sheet

A Pay Sheet is a columnar report which displays the Group/Department-wise employees’ breakup
of earnings and deductions for the selected month.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Sheet

The Pay Sheet displays as shown.

Figure 5.9 Pay Sheet

Configure the Pay Sheet to display the net amount, column subtotals, Category/Group subtotals,
user-defined payslip names, Employee names and sort it by Employee number.
1. Press F12: Configure from the Pay Sheet display.

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The F12: Configure screen displays as shown.

Figure 5.10 F12: Configuration

Tips: The F12:Configuration options in the Pay Sheet are explained as follows.
Show Net Amount Column – Set this option to Yes to display the Net Payable
Column.

Show Column SubTotals – Set this option to Yes to display the subtotals of Earnings/
Deductions pay head columns.

Remove Zero Entries – Set this option to Yes to eliminate Earnings/Deductions pay
heads with Zero values.

Show Payslip Names for Ledgers – Set this option to Yes to display the Name
defined in the Appear in Payslip field in the pay head master.

Include Employee Groups & Categories – Set this option to Yes to display
Category-wise/ Group-wise pay sheet. If this option is set to No, the Pay Sheet will
appear Employee-wise.

Show Category/Group Total – Set this option to Yes to display Category and Group-
wise columnar pay head totals.

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Show Grand Total – Set this option to Yes to display the sum of all pay head columns
appearing in the report.

Format – Select Detailed mode to view Pay Sheet information of employees with their
respective category and group. Select Condensed mode when only sum totals are
required for each category and group.

Show Employee Number – Set this option to Yes to display employee numbers.

Expand all levels in Detailed Format – Set this option to Yes to expand all levels and
display Employee details.

Appearance of Names – Select the appropriate name style to appear in the paysheet
(viz., Alias (Name), Alias only, Name (Alias), Name only).

Sorting Method – Sort the Pay Sheet either by either Employee number or by the
Default method.

Set the F12: Configure screen as shown.

Figure 5.11 F12: Configuration - Pay Sheet

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The configured Pay Sheet displays as shown.

Figure 5.12 Configured Pay Sheet

To view the Pay Sheet till date with Category and Group Totals,
2. Press Alt+F2 and change period as 01-04-2006 to 31-05-2006
3. Press F12: Configure and set Yes to Show Category/Group Total

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The F12: Configure screen displays as shown.

Figure 5.13 F12: Configuration

The Pay Sheet with Category and Group Totals displays as shown.

Figure 5.14 Pay Sheet with Category and Group Total

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Tips
Detailed/Condensed Button – This button (Alt+F1) is used to toggle between the
detailed and condensed modes of reporting.

Period button – This option (F2) is used to define the periodicity of the report, i.e. for
a day, week, fortnight, month, quarter, half-year, year or any given period.

To view the Pay Sheet for a particular Employee Group,

4. Press Ctrl+F7 from the Pay Sheet display
5. Select Sales as the Employee group

The Employee Filters screen displays as shown.

Figure 5.15 Employee Filters

6. Press F12: Configure and set Show Category/Group Total to Yes

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The Pay Sheet for the selected Employee Group displays as shown.

Figure 5.16 Pay Sheet for Sales group

You can also drill down from the above report to the voucher level by highlighting the pay heads
column of the required employee and pressing Enter.

Tips
Employee Filter Button – By using the Employee Filter button (Ctrl+F7), view the
individual employee/ Employee group pay sheet report.

F4: Change Currency – This option is available when the multi-currency feature is
enabled in F11:Accounting Features. It is used to view the report in any other existing
foreign currency.

New Column – This option (Alt+C) is used to add a new column for any other Pay
Head, which is not part of the pay structure.

Alter Column – This option (Alt+A) is used to replace an existing column in the report
with another Pay Head column.

Delete Column -– This option (Alt+D) is used to delete an existing column in the
report.

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To print the Pay Sheet,

7. Press Alt+P from the display.

The Printed Pay Sheet displays as shown.

Figure 5.17 Printed Pay Sheet

While printing the Pay Sheet, you can choose to Increase the Line Height (for each employee
line) if you want to create space for the employee’s signature or to affix a stamp. Such a Pay
Sheet can also be used as a salary disbursement register.

8. Press Alt+F2 and specify the date as 01-05-2006 to 31-05-2006

9. Press Alt+P to print Pay Sheet

In the Printing Pay Sheet screen,

10. Press Backspace and set the Increase Line Height for Signature/ Stamp? field to Yes

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The Printing Pay Sheet screen displays as shown.

Figure 5.18 Printing Configuration for Pay Sheet

11. Press Enter to Print

The Printed Pay Sheet with space for signature/ stamp is as shown.

Figure 5.19 Printed Pay Sheet with space for Signature/ Stamp

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Page 2 of the Printed Pay Sheet displays as shown.

Figure 5.20 Printed Pay Sheet with space for Signature/ Stamp – Page 2

5.3 Payroll Statement

A Payroll Statement is a columnar report which displays Group/Department-wise employees’
breakup of selected earnings or deductions, for a specified month or period.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payroll
Statement
‡ Select the required pay head and press Enter
The Payroll Statement displays as shown.

Figure 5.21 Payroll Statement

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You can configure the Payroll Statement to display the Employee groups and categories,
category/group subtotals, grand totals, user-defined pay slip names, employee names, employee
bank details; and to sort by Employee number.

‡ Press F12: Configure from the Payroll Statement display.

The F12: Configure screen displays as shown.

Figure 5.22 F12: Configuration

Note: The button bar functionalities of the Pay Sheet are also available in this report.

Tips: The F12:Configuration options in Payroll Statement Report are as follows.

Remove Zero Entries – Set this option to Yes to remove Earnings/Deductions pay
head information with Zero values.

Show Payslip Names for Ledgers – Set this option to Yes, to view the names of pay
heads as specified in the Name to Appear in Payslip field in the Pay Head master
creation.

Include Employee Groups & Categories – Set this option to Yes to display Category
and Group-wise Employee information.

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Show Category/Group Total – Set this option to Yes, to display Category and Group-
wise Totals.
Show Grand Total – Set this option to Yes, to display the sum of all the pay head
columns in the report.

Format – Select the Detailed mode to view payroll information of employees with their
respective categories and groups. Select the Condensed mode when only sum totals
are required for each category and group.

Show Employee PF Account Number – Set this option to Yes, to display the
Provident Fund Account number of an employee.

Show Employee I.T. PAN – Set this option to Yes, to display the Income Tax
Permanent Account Number (PAN) of an employee.

Show Employee Bank Details – Set this option to Yes, to display the Bank Account
Number of an employees

Show Employee Number – Set this option to Yes, to display the Employee Number
of an employee.

Show Employee ESI Number – Set this option to Yes, to display the State Insurance
Number of an employee.

Show Employee Passport Details – Set this option to Yes, to display an employee’s
passport details.

Show Employee Visa Expiry Date – Set this option to Yes, to display an employee’s
visa expiry date.

Expand all levels in Detailed format – Set this option to Yes, to expand all levels and
display Employee details.

Appearance of Names – Select the appropriate name style to appear in the Payroll
Statement (Alias (Name), Alias only, Name (Alias), Name only).

Sorting Method – Sort the Payroll Statement using Bank details, Employee IT Pan
Number, Employee Number, ESI Number, PF Account Number, or by the default
method.

Note: The Employee PF Account Number, IT PAN Number, ESI Number, Passport Details, Visa
Expiry Date options will be available in F12: Configure only when the options, Show Statutory
details and Passport & Visa details, are set to Yes in F12: Payroll Configuration.

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5.4 Payment Advice

A Payment Advice is an intimation letter containing the details of employees with their bank
account numbers issued to the banker to transfer a specified sum (salaries earned) to the
employees’ bank accounts.
As discussed earlier, the contents of the Payment Advice can be altered in F12: Payroll Configu-
ration as per the employer’s requirements.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payment
Advice

The Printing Configuration for Payment Advice displays as shown.

Figure 5.23 Printing Configuration for Payment Advice

‡ Press Backspace and enter the details as shown above

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The printed Payment Advice for May 2006 displays as shown.

Figure 5.24 Printed Payment Advice

‡ Press Enter to print

Note: Only when a payment voucher is passed for the salaries payable for the given month/
period, will the Payment Advice be available.

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5.5 Payroll Register

A Payroll Register is a month-wise transaction summary report which displays the number of
payroll vouchers passed during a particular month. Additional information can be appended into
the Payroll Register, by inserting a new column with the required voucher type i.e., Attendance,
Journal, Purchases, Sales and so on.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll >Payroll
Register
The Payroll Register displays as shown.

Figure 5.25 Payroll Register

Tips: The F12: Configuration options in the Payroll Register are as follows.
Press F12: Configure to set the Appearance of Names and the Periodicity to use
as shown.

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The F12: Configure screen displays as shown.

Figure 5.26 F12: Configuration

Tally allows you to drill down to the voucher level from the above display for any kind of verifica-
tion.

The Payroll Register voucher level screen displays as shown.

Figure 5.27 Payroll Register – Voucher level

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5.6 Employee Pay Head Breakup

An Employee Pay Head Breakup report is a columnar report which displays the Group/Depart-
ment-wise employees’ breakup of a selected earnings or deductions pay head for a specified
month/period. This report also displays the opening balance, debit and credit transactions and the
closing balance for a specified period.
This report is also beneficial in tracking loan outstanding and instalments deducted till date or for
any specified period.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll >Employee Pay
Head Breakup

The Employee Breakup of Pay Head screen displays as shown.

Figure 5.28 Employee Breakup of Pay Head

To drill down to Employee summary report from the above display,

1. Select Cost Category and press Enter

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The Employee Summary screen displays as shown.

Figure 5.29 Employee Summary

To drill down to the Monthly Employee Summary report from the Employee Summary report,
2. Highlight the required employee and press Enter

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The Employee Monthly Summary screen displays as shown.

Figure 5.30 Employee Monthly Summary

To further drill down to Employee Voucher level screen from the Employee Monthly Summary
report,
3. Press Enter on the required month

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The Employee Summary voucher level screen displays as shown.

Figure 5.31 Employee Summary – Voucher level

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5.7 Pay Head Employee Breakup

A Pay Head Employee Breakup report displays the sum of transactions and closing balance of
the transacted groups for the selected employee.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll >Pay Head
Employee Breakup
The Employee Selection screen displays as shown.

Figure 5.32 Employee Selection

To view the ledger breakup,

‡ Select the required Employee from the List of Employees

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The ledger-wise Breakup of Employee screen displays as shown

Figure 5.33 Pay Head Employee Breakup – Ledger wise

To further drill down to view the Breakup of Employee report for each ledger from the above
displayed report.
‡ Select the required ledger and press Enter

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The Breakup of Employee screen for a selected ledger (Current Liabilities) displays as shown.

Figure 5.34 Pay Head Employee Breakup for Current Liabilities

You can drill down further to view the Monthly Summary of the selected ledger and the Employee
Voucher report.

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5.8 Attendance Sheet

An Attendance Sheet is a columnar report which displays the details of Attendance/ Production
types with the number of attendance/ production units achieved during a particular month or
period.

Go to Gateway of Tally > Display > Payroll Reports > Attendance Sheet

The Attendance Sheet displays as shown.

Figure 5.35 Attendance Sheet

Tips: The F12:Configuration options in Attendance Sheet Report are as follows.

The F12: Configure button in the Attendance Sheet provides a configuration sub-
form using which you can customise the display/print layout and content of the Attend-
ance Sheet report.

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The F12: Configuration screen displays as shown.

Figure 5.36 F12: Configuration screen

Remove Zero Entries – Set this option to Yes, to remove Attendance/Production

information with Zero values.

Include Employee Groups & Categories – Set this option to Yes, to display
Category and Group-wise Employee information.

Show Category/Group Total -– Set this option to Yes, to display Category and
Group-wise Totals.

Include Group Attendance/Production Types – Set this option to Yes to include

Group Attendance/Production Types in Attendance Sheet report.
Display Attendance/Production Types in Tail Units – Set this option to Yes, to
display the Attendance/Production Types in Tail Units.

Format – Select the Detailed mode to view the payroll information of employees with
their respective categories and groups. Select the Condensed mode when only sum
totals are required for each category and group.

Expand all levels in Detailed Format – Set this option to Yes, to expand all levels
and display Employee details.

Show Employee Number – Set this option to Yes, to display employee numbers of
employees.

Appearance of Names – Select the appropriate name style to appear in the payroll
statement (Alias (Name), Alias only, Name (Alias), Name only).

Sorting Method – Sort the Attendance Sheet, either by Employee Number or by the
Default method.

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5.9 Attendance Register

An Attendance Register is a month-wise transactions summary report which displays the number
of attendance vouchers passed during the month. You can append additional information by
inserting a new column with the required voucher type, i.e. Payroll, Journal, Purchases, Sales and
so on.
Go to Gateway of Tally > Display > Payroll Reports > Attendance Register

The Attendance Register displays as shown.

Figure 5.37 Attendance Register

Tips: The F12:Configuration options in Attendance Register are as follows.

Press F12: Configure to set the Appearance of Names and the Periodicity to use
as shown.

Figure 5.38 F12: Configuration for Attendance Register

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Tally allows you to drill down to the voucher level, from the Attendance Register screen for any
kind of verification.

The Voucher level screen from Attendance Register displays as shown.

Figure 5.39 Attendance Register – Voucher level

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5.10 Gratuity Report

A Gratuity Report displays the provisional liability of an employer towards his employee in respect
of gratuity payable at the time of cessation of employment either by resignation, death, retirement
or termination.
The Gratuity Summary Report displays the gratuity amount payable in accordance with the pay
components and formulae discussed earlier. In Tally, the Gratuity amount is calculated proportion-
ately for eligible days in a year to the extent of completed months of service.

Go to Gateway of Tally > Display > Payroll Reports > Gratuity Report

The Gratuity Summary for all Employees displays as shown.

Figure 5.40 Gratuity Summary

Note: In order to ascertain the Gratuity payable amount, set Use for Gratuity to Yes in the Pay
Head master (i.e. Basic Pay, Dearness Allowance and so on).

The above report displays the details of all employees' along with the Date of Birth, Date of
Joining and the Gratuity Eligible Salary, besides commenting on the total Gratuity liability as on
date.

Tally allows you to drill down to the Gratuity Details report from the above display.
‡ Select the required employee and press Enter

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The Gratuity Details screen displays as shown.

Figure 5.41 Gratuity Details

Note: Once the employee is deactivated (i.e., when the date of leaving is filled in the Employee
master), Tally stops computing gratuity for the deactivated employee. If the tenure of service of
such an employee falls below the eligible slab for gratuity calculation, he/she will not be entitled
for any gratuity amount. However, in cases where the tenure of service is spread over more than
one eligible slab(s), he/she will be entitled to the sum total of all the slabs.

Tips: The F12:Configuration options in Gratuity Report are as follows.

Show Employee Number – Set this option to Yes, to display the employee number of
each employee.

Figure 5.42 F12: Configuration for Gratuity Report

Show Date of Birth – Set this option to Yes, to display the Date of Birth of employees
in the report.

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Show New Joinees only – Set this option to Yes, to display the gratuity summary of
all new employees whose date of joining lies between the From Date and To Date of
the report.

Show Deactivated Employees – Set this option to Yes, to display the gratuity
summary of employees whose date of resignation (date of leaving) falls between the
From Date and To Date of the report. When this option is set to Yes, the details of the
Date of Deactivation, along with the existing information, are displayed.

Note: When Show New Joinees only is set to Yes, the Show Deactivated
Employees option will not be available and vice versa.

Tips: Button functions in the Gratuity Report

F4: Change Currency – Allows you to display the report in any other foreign currency
other than base currency.

F5: Employee Wise – Allows you to display the Employee-wise Gratuity report.

F7: Employee Filters – This option (Ctrl+F7) allows you to display the Gratuity report
for a particular Cost Category with the required Group or Employee.

5.11 Expat Reports

Expat Reports provide information about regular as well as contractual employees, working
abroad on a short/ long tenure or on assignment. They capture all the relevant information in
respect of passport, visa and contract details along with the date of joining, the issuing country
and the expiry date.

In Tally, the following Expat reports are available.

1. Passport Expiry
2. Visa Expiry
3. Contract Expiry

5.11.1 Passport Expiry

It provides information on the passport details of employees, such as passport number, country of
Issue, passport expiry date and other details such as the employee's date of joining and email id.

Go to Gateway of Tally > Display > Payroll Reports > Expat Reports > Passport Expiry

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The Passport Expiry Report displays as shown.

Figure 5.43 Passport Expiry Report

Tips: The F12: Configuration options in Passport Expiry Report.

Show All Employees – Set this option to Yes, to view the passport details of all
employees. It includes information on expired and unexpired passport details. If this
option is set to No, Show Expiry in days will be available.

Figure 5.44 F12: Configuration for Passport Expiry Report

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Show Expiry in days – Set this option to Yes, to enter the expiry days. When Show
All Employees and Show Expiry in days options are set to No, Tally filters only those
employee passport details, which are nearing the expiry date. If this option is set to
Yes, Expiry in next n days will be available.

Expiry in next n days – Set this option to Yes, to get the passport expiry details for
the next specified number of days. On entering the number of days, Tally filters the
employee passport details which are likely to expire within the specified period
(number of specified days). If this option is left blank, the report will denote the current
date (last date of voucher entry).

Show Employee Number – Set this option to Yes, to display the employee number of
employees in the report.

Appearance of Names – Select the appropriate name style to appear in the Passport
Expiry Report (Alias (Name), Alias only, Name (Alias), Name only).

Sorting Method — Sort employee details based on Employee Number, Passport

Expiry Date (Ascending/Descending), or by the default method.

Show Employee Email Id – Set this option to Yes, to view the email ids of employees.

Show Deactivated Employees – Set this option to Yes, to view all the employees
along with the deactivated employees.

Tips: Button Functions in a Gratuity Report

F2: Change Period – Allows you to change the period of the report.

F5: Employee Wise – Allows you to display the Employee-wise Passport Expiry
report.

F7: Employee Filters – This option (Ctrl+F7) allows you to display the Passport
Expiry Report for a particular Cost Category with the required Group or Employee.

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5.11.2 Visa Expiry

A Visa Expiry Report provides information on the visa details of employees i.e., visa number, visa
Expiry date and other details such as the employee's date of joining and email id.

Go to Gateway of Tally > Display > Payroll Reports > Expat Reports > Visa Expiry

The Visa Expiry Report displays as shown.

Figure 5.45 Visa Expiry Report

Note: The F12: Configuration and button functionality are the same as shown in Passport Expiry
Report.

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5.11.3 Contract Expiry

A Contract Expiry Report provides information on the contract details of employees on assign-
ment/ contract. It displays the contract particulars such as work permit number, contract start and
expiry date along with the employee’s date of joining and the email id.

Go to Gateway of Tally > Display > Payroll Reports > Expat Reports > Contract Expiry

The Contract Expiry Report displays as shown.

Figure 5.46 Contract Expiry Report

Note: The F12: Configuration and button functionality are the same as shown in Passport Expiry
Report.

Summary
On completion of this lesson, you have learnt
‡ To generate Payroll Reports

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