MODULE 2

VOUCHERS IN TALLY AND ITS ADVANCED USAGES

In accounting terms, a voucher is a document containing the details of a financial
transaction. For example, a purchase invoice, a sales receipt, a petty cash docket, a bank interest
statement, and so on. For every such transaction made, a voucher is used to enter the details into
the ledgers to update the financial position of the company. Tally follows the golden rules of
accounting for recording transactions.

Real Accounts Nominal Accounts Personal Accounts

Debit What comes in Expenses and losses The receiver
Credit What goes out Incomes and gains The giver

ACCOUNTING VOUCHERS
Tally is pre-programmed with a variety of accounting vouchers, each designed to perform
a different job. The standard Accounting Vouchers are:

 Contra Voucher (F4)

 Payment Voucher (F5)
 Receipt Voucher (F6)
 Journal Voucher (F7)
 Sales Voucher/Invoice (F8)
 Credit Note Voucher (Ctrl+F8)
 Purchase Voucher/Invoice (F9)
 Debit Note Voucher (Ctrl+F9)
 Reversing Journals (F10)
 Memorandum Voucher (Ctrl+F10)

CONTRA VOUCHER (F4)

Contra entry refers to transactions involving cash and bank account. In other words, any
entry which affects both cash and bank accounts is called a contra entry. Contra in Latin means
the opposite. It is more popularly known as contra voucher. To make the definition further
simpler, any transactions involving a transfer of cash between one cash a/c to another or one cash
a/c to another bank a/c or one bank account to another is called as a contra entry.

Examples: Cash deposited into bank.

Cash withdrawn from bank.

To use the contra voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > F4: Contra.

PAYMENT VOUCHER (F5)

Payment voucher is used to record all payments made by the company. You can classify
payments in two ways i.e Bank payments and cash payments. You can use payment voucher to
record both payments. Both single entry mode and double entry mode is available in the payment
voucher.

To use the payment voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > F5: Payment.

RECEIPT VOUCHER (F6)

We use receipt voucher in tally to record the transactions when someone pays us a
certain some of money towards the consideration of sale, service or any other repayment &
Payments like loan ,advances etc. Both single entry mode and double entry mode is available in
the receipt voucher.

To use the receipt voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > F6: Receipt.

JOURNAL VOUCHER (F7)

Journal voucher in Tally is an important voucher which is used to make all kind of
adjustment entries. This voucher is used for all adjustment or due entries in tally software, or in
other words entry which is not made by other accounting vouchers are made by this voucher. The
use of adjusting entry is to get accurate financial result of a company. Some of the entries entered
using the journal vouchers are:

 For journalising Outstanding Expenses.

 To record prepaid expense.
 To recognize accrued income.
 For correcting wrong entries passed in the books of accounts.
 For recording the credit purchase and sales of fixed assets.

To use the journal voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > F7: Journal.

SALES VOUCHER/ INVOICE (F8)

The sales voucher in tally is used to record both cash sales and credit sales. The sales
voucher can be used in both voucher format and invoice format. The shortcut key for changing
from voucher mode to invoice mode and from invoice mode to voucher mode is Ctrl+V. In
the Invoice mode, you can print and provide a copy of the invoice to your customers.
The Voucher mode can be used when you want to basically record transactions for statutory
purpose only, and when you don't necessarily have the need to print and share the information
with your customer. The invoice mode is further divided into item invoice and accounts invoice.

To use the sales voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > F8: Sales.

CREDIT NOTE VOUCHER (CTRL+F8)

The credit note voucher in tally is used to record sales returns transactions in tally. The
credit note voucher is not available by default in tally, we have to enable the option “ use
debit/credit notes” inorder to activate the credit note voucher. The credit note voucher can be
used in both invoice mode and voucher mode.

To use the credit note voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > Ctrl+ F8: Credit Note.

PURCHASE VOUCHER (F9)

The purchase voucher in tally is used to record both cash purchases and credit purchases.
The purchases voucher can be used in both voucher format and invoice format. The shortcut key
for changing from voucher mode to invoice mode and from invoice mode to voucher mode is
Ctrl+V.

To use the purchase voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > F9: Purchases.

DEBIT NOTE VOUCHER (CTRL+F9)

The debit note voucher in tally is used to record purchase returns transactions in tally.
The debit note voucher is not available by default in tally, we have to enable the option “ use
debit/credit notes” inorder to activate the credit note voucher. The debit note voucher can be
used in both invoice mode and voucher mode.
 To use the debit note voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > Ctrl+ F9: Debit Note.

REVERSING JOURNALS (F10)

Reversing Journals are special journals that are automatically reversed after the date of
the journal. They exist only for a day and are effective on the date of the reversing journal. This
Voucher type is available only if the feature Use Reversing Journals & Optional Vouchers is
set to Yes in the F11: Features (F1: Accounting Features).

To use the reversing journal voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > F10: Reversing journals.

MEMORANDUM VOUCHERS (Ctrl+ F10)

Memo Voucher is a non-accounting voucher and the entries made using it will not affect
your accounts. In other words, Tally does not post these entries to ledgers but stores them in a
separate Memo Register. You can alter and convert a Memo voucher into a regular voucher
when you decide to bring the entry into your books. This Voucher type is available only if the
feature Use Reversing Journals & Optional Vouchers is set to Yes in the F11: Features (F1:
Accounting Features).

To use the memo voucher in tally:

Go to the Gateway of Tally > Accounting Vouchers > Ctrl+ F10: Memo voucher.

Memo vouchers are used for the following purposes :

1. Making suspense payments

For example, the company gives an employee cash to buy office supplies, the exact nature and
cost of which are unknown. You could have entered a voucher stating petty cash advance, a
voucher to record the actual expenditure details when they are known, and another voucher to
record the return of surplus cash. However, a simpler way is to enter a Memo voucher when the
cash is advanced, and then turn it into a Payment voucher for the actual amount spent, when
known.
2. Vouchers not verified at the time of entry

Sometimes it so happens that you do not understand the details of a voucher you are entering. In
such cases, enter it as a Memo voucher and amend it when you get the details.

3. Items given on approval

Usually, entries are made into the books only after a sales transaction is completed. Items given
on approval, can be tracked by using a Memo voucher. It can either be converted into a proper
Sales voucher or be deleted depending on the outcome.

CREATION OF VOUCHER TYPES

Tally allows the user to create different vouchers under the already available accounting
vouchers. This feature enables the user to create new vouchers to make the recording of his
transactions easier. For example if the user has both credit sales and cash sales he can create a
separate credit sales voucher under the already available sales voucher in order to enter all his
credit sales transactions. Following are the steps for creating a new voucher type in tally:-

Gateway of Tally > Accounts Info >Voucher Type > Create

The voucher type creation screen is displayed. Enter the necessary details in that screen and press
enter to accept and create the new voucher type.

Name: Enter the name of new voucher type.

Type of voucher: Tally has been provided predefined voucher types, here you have to select
related voucher type from the list.

Method of voucher numbering: There are three methods are available for voucher numbering
they are : Automatic, Manual, Multi user Auto, here you have to select “Automatic”, if you
select automatic method then Tally numbers the vouchers automatically.

Use effective dates for vouchers: Set to yes or no as required.

Use common narration: Set to yes or no as required.

DISPLAYING AND ALTERING VOUCHER TYPES

DISPLAYING VOUCHERS

Just like any other item tally enables the user to display the available vouchers. The steps
to display the different voucher types are:-

Gateway of Tally > Accounts Info > Voucher Types > Display.

The list of vouchers will be displayed.

ALTERING VOUCHER TYPES

In order to delete voucher types you have to follow the steps given below:-

Gateway of Tally > Accounts Info > Voucher Types > Alter.

The list of vouchers will be displayed. From this list select the voucher that you want to
alter and press enter. The voucher alteration screen will be displayed. Make required changes and
press enter to save. You can also delete a voucher by pressing “Alt+D from the voucher
alteration screen.

INVENTORY VOUCHERS

Tally’s inventory vouchers perform the same function in the inventory system as
accounting vouchers do. They are the means by which you enter transactions relating to the
Inventory. The vouchers record transactions relating to the issue and receipt of stock, the transfer
of stock between godowns, and physical stock adjustments. The following inventory vouchers
are available in Tally:

 Purchase Order (Alt+F4)

 Sales Order (Alt+F5)
 Rejections Out (Alt+F6)
 Rejections In (Ctrl+ F6)
 Stock Journal (Alt+F7)
 Delivery Note (Alt+F8)
 Receipt Note (Alt+F9)
 Physical Stock (Alt+F10)
PURCHASE ORDER (Alt+F4)

A Purchase order entry has to be made in the books of the company to assist them in
checking whether the goods have been received or not. The Purchase Order number can be used
as a reference. For example, the company wishes to place an order with the supplier for some
goods. The purchase order voucher is not available by default in tally we have to enable it
inorder to use the voucher. To use the purchase order voucher in tally we have to enable the
option “Allow purchase order processing” from the F11: Inventory features.
To use the purchase order voucher in tally

Go to Gateway of Tally> Inventory vouchers> Alt+F4 Purchase order.

SALES ORDER VOUCHER (Alt+F5)

A Sales order entry has to be made in the books of the company to assist them in
checking whether the goods have been delivered to a customer or not. The Sales Order number
can be used as a reference. For example, the customer places an order with the company for
some goods. The sales order voucher is not available by default in tally we have to enable it
inorder to use the voucher. To use the sales order voucher in tally we have to enable the option
“Allow sales order processing” from the F11: Inventory features.

To use the sales order voucher in tally

Go to Gateway of Tally> Inventory vouchers> Alt+F5 Sales order.

REJECTIONS OUT (Alt+F6)

A Rejections Out entry is passed to record the rejected goods. This is a pure inventory
voucher. A pure inventory voucher means that transactions entered using such vouchers will only
effect the inventory values and the accounts books will not be affected. The rejections out
voucher is not available by default in tally we have to enable it in order to use the voucher. To
use the rejection out voucher in tally we have to enable the option “Use Rejection
inward/outward orders” from the F11: Inventory features.

To use the rejections out voucher in tally

Go to Gateway of Tally> Inventory vouchers> Alt+F6 Rejection out.

REJECTIONS IN (Ctrl+F6)

A Rejections In entry is passed to record the goods rejected inwards i.e. the goods
returned by the customers to the company. This is a pure inventory voucher. The rejections in
voucher is not available by default in tally we have to enable it in order to use the voucher. To
use the rejection out voucher in tally we have to enable the option “Use Rejection
inward/outward orders” from the F11: Inventory features.

To use the rejections in voucher in tally

Go to Gateway of Tally> Inventory vouchers> Ctrl+F6 Rejection out.

STOCK JOURNAL (Alt+F7)

The Stock journal is a journal in which all types of stock adjustments are entered.
The stock adjustment may be due to the following reasons:
 Inter-Godown Transfer: This is useful to transfer the goods from one location to
another. The quantity of stock remains the same, but the location changes.

 Additional Cost/Expenses involved in the Transfer of goods: You can also account
the additional cost incurred in connection of transfer of materials from one location to
another.

 Accounting for Wastage of stock or shortage of stock: There may be a shortage or

wastage of stock items, the quantity may have got changes. In such cases, you have to
enter a stock journal to account for the increase or decrease in the Stock Item.
To use the stock journal voucher in tally

Go to Gateway of Tally> Inventory vouchers> Alt+F7 Stock Journal.

DELIVERY NOTE (Alt+F8)

The delivery note voucher is used to record the goods delivered to customers. The details
entered in delivery note voucher includes Reference, ledger account, supplier’s name and
address, Order & dispatch details, name of stock item, Tracking details, Order details, Godown,
Quantity Rate(optional), Amount(optional), narration. The delivery note voucher is not available
by default in tally we have to enable it in order to use the voucher. To use the delivery note
voucher in tally we have to enable the option “Use Tracking Numbers(Delivery/receipt
Notes)” from the F11: Inventory features.

To use the delivery note voucher in tally

Go to Gateway of Tally> Inventory vouchers> Alt+F8 Delivery Note.
RECEIPT NOTE (Alt+F9)

The receipt note voucher is used to record the goods delivered to the company by the
suppliers. The details entered in receipt note voucher includes Reference, ledger account,
supplier’s name and address, Order & dispatch details, name of stock item, Tracking details,
Order details, Godown, Quantity Rate(optional), Amount(optional), narration. The receipt note
voucher is not available by default in tally we have to enable it in order to use the voucher. To
use the delivery note voucher in tally we have to enable the option “Use Tracking
Numbers(Delivery/receipt Notes)” from the F11: Inventory features.

To use the receipt note voucher in tally

Go to Gateway of Tally> Inventory vouchers> Alt+F9 Receipt Note.

PHYSICAL STOCK (Alt+F10)

Physical Stock Voucher is used for recording actual stock physically verified or counted.
For example, Physical Stock is the stock found on conducting a stock check. It is not unusual
that the company finds a discrepancy between actual stock and computer stock figure. Physical
vouchers will be useful for recording purposes only if you have configured inventory vouchers to
ignore physical stock differences.

To use the physical stock voucher in tally

Go to Gateway of Tally> Inventory vouchers> Alt+F10 Physical stock.

PURE INVENTORY TRANSACTIONS

Pure inventory Transactions (vouchers) are those that do not affect financial records.
They affect only the stocks. There will be a rise or fall in the stock when such vouchers are
entered.
The different pure inventory vouchers are:
 Rejections Out (Alt+F6)
 Rejections In (Ctrl+F6)
 Stock Journal (Alt+F7)
 Delivery Note (Alt+F8)
 Receipt Note (Alt+F9)
 Physical Stock (Alt+F10)

TRACKING NUMBERS

A Tracking number is the reference to have a link between transactions. For example, if
Tracking Number is selected in the Delivery Note, this will help you to automatically display the
details of the items in the Sales Invoice. The tracking number pop-up list appears after you have
entered the name of the item.
Note: To get the Tracking number in the Item Allocation screen, enable Use tracking numbers
(enables delivery and receipt notes) in F11: Features > F2: Inventory Features.

BILL WISE DETAILS

The details of all the sales and purchase transactions made with the debtors and creditors
have to be maintained at the invoice level. In order to maintain these details Tally provides a
feature called as Bill-wise details for bill-wise accounting.

ACTIVATING BILL WISE DETAILS

Bill wise details is not available by default in tally, we have to enable it in order to
maintain bill wise details for our transactions. To enable bill wise details: Go to Gateway Of
Tally> F11 Accounting features. Set the option “Maintain Bill wise Details” to yes.

On activation of this feature, all the ledgers previously created under the Groups Sundry
Debtors and Sundry Creditors will automatically have their Bill-wise details set to Yes.

In the ledger creation screen, the option Maintain balances bill-by-bill is displayed. This
option helps to maintain details of our debtors and creditors at the invoice level. An additional
option termed Default Credit Period is displayed when the option Maintain balances bill-by-
bill is set to Yes. This allows us to keep a track of the credit period allowed to sundry debtors
and reminds us of our payables to the sundry creditors.

Tally provides the user with mainly four types of adjustments for the maintenance of bill
wise details, they are:
 New Ref - This is selected for new financial transactions.
 Advance - This is selected when you receive or pay money in advance. Typically, when
a bill is raised, part of the bill is adjusted against the advance (using Agst Ref) and the
balance amount is carried as New Ref while making the sale or purchase entry.
 Against Ref - This is selected to set-off payments against the previously entered New
Ref.
 On Account - This is used when you are not instructed about the bill against which the
money should be adjusted.

COST CENTERS AND COST CATEGORIES

COST CENTERS
A Cost Centre is any unit of an organization to which transactions (generally, revenue)
can be allocated. When only costs or expenses are allocated to these units, they are referred to as
Cost Centres. When profits are also allocated to these units, they become Profit Centres. Profit
and Loss account of each such Profit Centre can be obtained. By providing Cost Centres, a
transaction can be allocated to it, which would then enable extraction of all transactions for a
Cost Centre. Tally gives the Cost Centre break-up of each transaction as well as details of
transactions for each Cost Centre, Cost Centres can be classified just as how classification has
been done in the case of Group/ Ledger accounts. There are Primary Cost Centres and several
levels of Cost Centres under each Primary Cost Centre.

Some examples of Cost Centres are:

 Departments of an organisation Finance, Manufacturing, Marketing, and so on.

 Products of a company.
 Individuals such as Salesman A, Salesman B.

CREATING A COST CENTRE

To create a Cost Centre, set Maintain Cost Centres to Yes in F11:Features. It is

advisable not to set More than ONE Payroll/Cost Category to Yes, unless required. By default,
Tally activates the Cost Centre feature for Ledger accounts under Sales Accounts, Purchase
Accounts, Expense and Income groups.

Gateway of Tally> Accounts Info.> Cost Centres> Create (Single/Multiple Cost

Centre)

DISPLAYING A COST CENTER

Gateway of Tally> Accounts Info.> Cost Centres> Display (Single/Multiple Cost

Centre)

ALTERING AND DELETING A COST CENTER

Gateway of Tally> Accounts Info.> Cost Centres> Alter (Single/Multiple Cost

Centre)
Make the necessary changes and press enter to save. To delete a cost centre press Alt+D
from the cost centre alteration screen.
A cost center can only be deleted if:
 It does not have any Cost centres created under it.
 it has not been used in any transactions.

COST CATEGORY

Cost Categories are useful for organisations of resources to parallel sets of Cost Centres.
Such organisations would usually be project oriented. Most organisations would not need Cost
Categories. The proper use of Cost Centres itself would offer the same benefits. Cost Categories
could increase data entry work and make it more complicated. Hence, before opting for Cost
Categories, evaluate whether it is actually needed. Always attempt to first use Cost Centres.
 By using Cost Categories you may allocate, in parallel, a transaction to more than one set
of Cost Centres. The following example illustrates the use of Cost Categories. The Primary Cost
Centres such as Marketing, Finance and Manufacturing can now belong to a category -
Departments. The Salesmen A, Band C can be Cost Centres under a Category - Executives.
Similarly, you can create a new Cost Category ‘Projects' under which Cost Centres such as
Airport construction, Road construction and Buildings may be created.

CREATING A COST CATEGORY

To create a Cost Category, set Maintain Cost Centres to Yes in F11: Features and then
set More than ONE Payroll/Cost Category to Yes. The path to create a Cost Category is as
follows.

Gateway of Tally → Accounts Info. Cost Categories → Create (under Single/Multiple

Cost Category)

DISPLAYING A COST CATEGORY

Gateway of Tally→ Accounts Info.> Cost Categories → Display (under Single/Multiple
Cost Category)

ALTERING AND DELETING A COST CATEGORY

Gateway of Tally→ Accounts Info.> Cost Categories → Alter (under
Single/Multiple Cost Category)

Make the necessary changes and press enter to save. To delete a cost centre press Alt+D
from the cost category alteration screen. A cost category cannot be deleted if any cost centres has
been created under it.

ACTUAL AND BILLED QUANTITY

Different actual and billed quantity The need for different actual and billed quantities
arises in many times when an extra inventory is sent to cover up for any stock that reaches in a
damaged condition or inventory sent as extra samples or the stock is sent to the customer as
quantity discount or rounding off the billing quantity. The following are the procedures to enter
different actual and billed quantity.

 Go to Gateway of Tally> F11:Features

 Under: Storage and Classification

 Set yes to Use different actual and billed quantity

Once this option is enabled, two columns will be provided during voucher entry to record actual
and billed quantity.
INTEREST CALCULATION IN TALLY

Interest is a legitimate return on money invested and chargeable in the business world on
loans and also on delayed payments. Interest can be calculated on the basis of simple or
compound interest. Interest amount are typically desired in the following situations.

 On outstanding balance amounts

 Outstanding bills/invoices/transactions (Receivables and Payables)

To do the interest calculation in the ledger and voucher, the following items in F11: Features
is set to be yes.

 Active Interest Calculation: Yes

 Maintain bill-wise details: Yes

 Use Debit note and credit note: Yes

To view the interest calculation report:

Go to Gateway of Tally> Display> Statements of Accounts> Interest Calculations>
Interest Receivables/Payables.
PAYROLL IN TALLY
The payroll feature in Tally.ERP 9 is fully integrated with accounting to streamline
payroll processing. The term Payroll refers to a series of accounting transactions involved in the
process of paying employees for the services rendered after taking all the statutory and non-
statutory deductions into account, in conformance with the terms of employment, company
policy and the law of the land i.e., payment of payroll taxes, insurance premiums, employee
benefits and other deductions. An efficient payroll system facilitates an error-free, accurate and
timely employee payment while ensuring that the employment is well within the valid work
permit.
Organizations can set up and process payroll using simple and complex criteria. A
collection of predefined processes in Tally.ERP 9 enable error-free automation of payroll
process. The payroll feature also provides management related information, statutory forms and
reports in the prescribed formats such as:
 Pay Slip, Payroll Statements, Attendance and Overtime Registers.
 Gratuity, Provident Fund (PF), Employee State Insurance (ESI), National Pension
Scheme (NPS).
 Professional Tax (PT) and Income Tax (IT).
 Expat Reports.

FEATURES OF PAYROLL IN TALLY

The key features of the Payroll functionality in Tally.ERP 9 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.
This may be related to the employees, employee groups, pay components, departments
etc.
 It provides the facility to create user-defined earnings and deductions Pay Heads
 It allows flexible and User-definable criteria for simple or complex calculations
 It allows unlimited grouping of Payroll Masters.
 It supports user-defined production units i.e., attendance/ production/ time based
remuneration units.
 It provides a flexible payroll processing period.
 It provides comprehensive Cost Centre as well as employee-wise costing reports.
 It ensures an accurate & timely Salary Processing, Employee Statutory Deductions &
Employer Statutory Contributions with the help of predefined processes.
 It provides auto-fill facility to expedite the Attendance, Payroll & Employer
Contributions processes.
 It facilitates an accurate computation and deduction of ESI, EPF, Professional Tax,
Gratuity etc.
 It helps in the generation of Statutory Forms & Challans for EPF & ESI, as prescribed.
 It allows drill-down facility to voucher level for any kind of alteration.
 It facilitates computation of arrears pertaining to prior period(s).
 It helps in tracking employee loan details.
CONFIGURING PAYROLL IN TALLY.
Payroll in is easy to use and can handle all the functional, accounting and statutory
requirements of the payroll department.

ENABLING PAYROLL:

Go to Gateway of Tally > Press F11: Features > press F1: Accounting Features
In the F11: Accounting Features screen:
 Set Maintain Payroll to Yes
 Set More than ONE Payroll / Cost Category to Yes

ENABLING PAYROLL STATUTORY FEATURES

Go to Gateway of Tally > press F11: Company Features > press F3: Statutory &
Taxation
In F11: Statutory & Taxation Features screen:
 Set Enable Payroll Statutory to Yes
 Set Set/Alter Payroll Statutory Details to Yes

A Payroll Statutory Details screen appears:

In the Payroll Statutory Details screen, Enter the Provident Fund & Employee State
Insurance details of the company as necessary:

COMPONENTS OF PAYROLL INFO MENU

When the payroll features are enabled in tally a new option, i.e. Payroll Info will appear
under masters in the gateway of tally. The main components of the payroll info menu are:
 Employee categories
 Employee groups
 Employees
 Units (work)
 Attendance/production types
 Pay heads
 Salary details
 Income tax details
 Voucher types

EMPLOYEE CATEGORY
Employee Category provides an additional level of employee classification. An employee
category can be used to track the salaries paid to employees working in specific projects or
locations such as Head Office and Regional Offices. The Employee Categories option is
available only if the option Maintain more than one payroll or cost category is enabled in F11:
Accounting features.
CREATE SINGLE EMPLOYEE CATEGORY
1. Go to Gateway of Tally > Payroll Info. > Employee Category > Create (under Single
Category).
2. Specify the name of the category to be added, in the Name field.
3. Set the option Allocate Revenue Items to Yes to allocate revenue related transaction
values for employees created under this category.
4. Set the option Allocate Non-Revenue Items option to Yes to allocate non-revenue
related transaction values for employees created under this category.
5. Press Enter to save the employee category.

CREATE MULTIPLE EMPLOYEE CATEGORIES

1. Go to Gateway of Tally > Payroll Info. > Employees
Categories > Create (under Multiple Categories ).
2. Enter the employee category name in the Name of Category field.
3. Enable the options Allocations for Revenue Items and Non-Revenue Items , if
required.
4. Press enter to save.

EMPLOYEE GROUPS
Creating Employee Groups helps to classify employees based on different parameters,
such as their job function, department, location, cadre/designation, and so on. You can also
define salary structures at the Employee Group level to apply a common salary structure for an
entire department such as Marketing, R&D, Sales, and Accounts.

CREATING A SINGLE EMPLOYEE GROUP

To create a single Employee Group
1. Go to Gateway of Tally > Payroll Info. > Employee Groups > Create (under Single
Group ).
2. Select the Employee Category from the List of Categories .
3. Enter the Name of the Employee group.
4. Select the group under which the employee group is to be added.
5. Set the option Define Salary Details to Yes .
6. Press Enter to view the Salary Details Creation screen.
7. Specify the salary details applicable to the employee group in this screen.
8. Press enter to save.

CREATING MULTIPLE EMPLOYEE GROUPS

To create multiple Employee Groups
1. Go to Gateway of Tally > Payroll Info. > Employees
Groups > Create (under Multiple Groups ).
2. Select the employee group under which you want to add the new employee group, in
the Under Employee Group field. If you want to create an independent group, select All
Items in this field.
3. Select the employee category into which you want to add the new group, in
the Category field.
4. Enter the group name in the Name of Employee Group field.
  Select the employee group under which you want to categorise the new group, in
the Under field.

EMPLOYEE
The Employee option can be used record all employee-related information. In addition to
general information, you can also enter Payment, Statutory, Expat and Contract details of
employees. To enter Statutory related information in the Employee Master, enable the
option Show Statutory Details in the Payroll Configurations screen.

CREATING SINGLE EMPLOYEE

To create an Employee under the Employee group
 Go to Gateway of Tally > Payroll Info. > Employees > Create (under Single
Employee).
 Enter the Name of the employee. By default, the system displays the same value in
the Display name in reports as .
 Modify the Display name in reports as , if required.
 Select the Employee Group in the field Under.
 Enter the Date of joining.
(Note: The Date of resignation/retirement option is available only on
the Employee Alteration screen. After you enter the Date of resignation/retirement , you can
also select a Reason for leaving .)
 Set the Define salary details? Option to Yes , and press Enter to
open Salary Details Creation screen.
In the Salary Details Creation screen, you can specify salary details of an employee.
 The EPS Account Number, PF Account Number and ESI Number should be provided
under Statutory Details, as this information is required for printing Employee Count (No.
of Employees) in the PF and ESI Challans and other Statutory Reports.
 Date of Birth will be used to find if the Employee is a senior citizen
 Gender will be used for the correct Income Tax computation (based on the slab)
 Press enter to save.

PAYROLL UNITS
A Payroll Unit is similar to Unit of Measure used in the Inventory module. In Payroll, on
the basis of Payroll Units, Pay components are calculated for a given period. In Tally, there are
two types of payroll units namely Simple as well as Compound. Payroll Units measured on
Attendance/ Production Types such as Time, Work or Quantity. However, new Payroll Units can
be created based requirements of the business.

CREATING SIMPLE PAYROLL UNITS

Go to Gateway of Tally> Payroll info> Units (Work)> create

ATTENDANCE / PRODUCTION TYPE

The Attendance / Production Type is used to record the attendance and production data.
Based on the component (Pay head) structure, it is needed to define multiple attendance /
production types. Examples for attendance/ production types are No. of days present or No. of
days absent, and production based such as hours worked, number of pieces produced.

CREATING ATTENDANCE / PRODUCTION TYPE

Go to Gateway of Tally> Payroll info> Attendance/production type> create.

 Attendance/Leave with Pay: It should be used to record the positive attendance and
Leave with (alas) Pay (e.g. Present, Leave, Sick Leave etc.)
 Leave Without Pay: It should be used to record the negative attendance (e.g. Absent,
Leave without pay etc.)
 Production type: It should be used to record the Production details (e.g. Piece
Production, Overtime Hours, and so on.) It creates Overtime Production Type to record
the Overtime details.
 User Defined Calendar Type: This option is used to create the User Defined Calendar
which can be later used to specify the variable number of days for each month. e.g. 25
days in Jan, 24 days in Feb, 26 days in Mar and so on. The User Defined Calendar Type
created above can be used in the Attendance based Pay Heads to compute the per day
salary. The value for the number of days in each month (period) should be captured
before recording the attendance details using an Attendance Voucher.

PAY HEADS
The salary components constituting Pay Structures are called Pay Heads. A Pay Head
may be an earning, which is paid to an employee, or a deduction, which is recovered from his
/her salary. A Pay Head is categorized as Allowances, Deductions or Reimbursements. Each pay
head is to be created as individual ledger a/c. All earnings grouped under indirect or direct
expenses and all deductions pay heads are grouped under current liabilities. The preset Pay Head
Types in Tally are as shown below:
Earnings for Employees, Deductions from Employees, Employees' Statutory Deductions,
Employer's Statutory Contributions, Employer's Other Charges, Bonus, Gratuity, Loans and
Advances, Reimbursements to Employees etc. Some examples of pay heads include:
 Basic pay: under indirect expenses
 Dearness allowance: under indirect expenses
 House rent allowance: under indirect expenses
 Conveyance allowance: under indirect expenses
 Variable pay: under indirect expenses
 Overtime: under indirect expenses
 Bonus: under indirect expenses
 Canteen deduction: under current assets
 Salary advance deduction: under loans and advances (assets)
 Income tax: under current liabilities
 Employees PF deduction: under current liabilities
  Employees ESI deduction: under current liabilities
 Professional tax: under current liabilities
 Employer’s EPS: under indirect expenses
 Employer’s PF: under indirect expenses
 Gratuity: under provisions

PAYROLL VOUCHERS
The Payroll Vouchers consists of Payroll Vouchers and Attendance Vouchers.

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, 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.

Gateway of Tally → Payroll Vouchers → Press Ctrl+F4 (if Payroll Vouchers screen is
not activated)

ATTENDANCE VOUCHER
You can use the attendance voucher to enter attendance, overtime, leave, or production
details. You can enter separate vouchers every day or a single voucher for a given pay period,
say a month, with aggregated values. One voucher can store data on all employees, and multiple
attendance types.
Gateway of Tally → Payroll Vouchers → Press Ctrl+F5 (if Payroll Vouchers screen is
not activated)

PAYROLL REPORTS
The different payroll reports available in tally are:
 Statements of payroll
 Attendance sheet
 Attendance register
 Expat reports
 Statutory reports
STATEMENTS OF PAYROLL
Statements of payroll consist of the following items:

PAY SLIP
A Pay Slip is a document issued to an employee that lists each component of earnings
and deductions, and the net amount paid to an employee for a given pay period. It provides
details on how the net amount has been arrived at.
Gateway of Tally> Display> Payroll Reports> Statements of Payroll> Pay slip

PAY SHEET
A Pay Sheet is a columnar report which displays the Group/ Department-wise break-up
of employees' earnings and deductions for the selected month. It is a matrix report with category,
groups and employees cascading in rows, and Pay Heads appears as columns. The default report
contains all earnings and deduction details for a given month or period with a number of options
to re-configure the appearance of rows and columns.

Gateway of Tally > Display > Payroll Reports > Statement of Reports > Pay Sheet

PAYROLL STATEMENT
A Payroll Statement is a columnar report which displays Group/ Department-wise
employees' break-up of selected earnings or deductions, for a specified month or period.

Gateway of Tally → Display → Payroll Reports → Statements of Payroll → Payroll

Statement

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.

Gateway of Tally → Display → Payroll Reports → Statements of Payroll → Payment

Advice

PAYROLL REGISTER
A Payroll Register is a month-wise transaction summary report which displays the
number of payroll vouchers passed during a particular month.

Gateway of Tally → Display → Payroll Reports → Statements of Payroll → Payroll

register
EMPLOYEE PAY HEAD BREAKUP
An Employee Pay Head Breakup report is a columnar report which displays the
Group/Department-wise employees' breakup of a selected earnings or deductions pay head for a
specified month/period.

Gateway of Tally → Display → Payroll Reports → Statements of Payroll → Employee pay

head breakup

PAY HEAD EMPLOYEE BREAK UP

This report displays the sum of transactions and closing balance of the transacted groups
for the selected employee.

Gateway of Tally → Display → Payroll Reports → Statements of Payroll → pay head

employee breakup

Select the required employee and press enter.

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.
Gateway of Tally → Display → Payroll Reports → Attendance Sheet

ATTENDANCE REGISTER
An Attendance Register is a month-wise transactions summary report which displays the
number of attendance vouchers passed during the month.

Gateway of Tally → Display → Payroll Reports → Attendance Register