Tally Study Mats

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Introduction
At the outset, we introduce you with Gateway of Tally screen , the control center of Tally.
The Gateway of Tally screen contains 5 major areas :

Product Info .
Current Status .
Tally Menu .
Button Bar .
Tally Calculator / Command line .
Brief details of each area of the Gateway of Tally screen are explained below :
Product Info
At the top part of Gateway of Tally screen, you get the following general particulars regarding
Tally software just loaded :
Copyright Notice : Shows the Copyright Notice ( like Tally Solutions FZ -LLC , 1988-2006 ) .
Version & Release : Tally Ver (like 9.0) and Release Number (like 1) .
System Date : Shows the current system day & date (like Saturday , October 6, 2007).
User Version : Shows the user version (like Tally Silver – Single User) .
User Serial Number : Shows the Registration Serial Number (or EDUCATIONAL when
unregistered).
System Time : Shows the current system time in HH:MM:SS format (like 18:00:31).
Current Status
At the left part of Gateway of Tally , you get the following information about current status .
Current Period : Shows the current period selected through ALT+F2 button.
Current Date : Shows the current date set through F2 button.
Active Company : Shows the last selected company (the company you are currently working
with ).
Selected Company : All the companies selected.
Tally Menu
At right part of the Gateway screen , the Gateway of Tally Menu appears showing the list of
Menu Options. Select a Menu Item to invoke a task . You may have to drill down several levels of
Menu till you reach the menu option to invoke the desired task .
Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

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Button Bar
At rightmost part of the Gateway , the Button Bar shows several buttons (the buttons vary
according to screen in work area). Depending on various option set, some buttons may be
inactive(the inactive button are dimmed). These Buttons provide quick and direct access to
various options & tasks.
Tally Calculator / Command Line
While working with Tally , press Ctrl+N to activate Calculator / Command line area to make an
arithmetical calculation and also paste the result in any numerical input field.

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Creation of a New Company

In Tally the term Company represents any entity for which an independent set of Accounts is
maintained. It may be a company, Partnership Firm, H.U.F, Individual, N.G.O, or even a Branch
Office for which a set of Account is maintained. So in Tally, the Term Company is a profile of
any entity for which you keep a Set of Accounts.
Gateway of Tally > Company Info > Create .
Directory : Tally shows the full pathname where the Tally software is located and skips this
field (as normally data is also stored in the same folder ). To keep Company data in any
other folder, press backspace to move cursor to Directory field and enter the Path where you
wish to keep data files for the Company, at Directory field .
Name : Enter the Name of the company at Name field . The Name is displayed at all
Company selection lists and internal Reports .
Mailing Name : Enter the Company Legal name which is printed in all external documents
(like Invoice, Money Receipt) etc.
Address : Enter the complete mailing address line by line.
Statutory Compliance for : Enter the Country name .
State : Enter the State name .
Maintain : To maintain Financial Accounts only , select “Accounts only” , or only Inventory
or both select “Accounts with Inventory” from the popup list.
Financial Year from : Enter the beginning date of Financial Year .
Books beginning from : Enter the books beginning date .
Then press Ctrl + A for saving the company profile , press Y for Yes or N for No.

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Alteration of Existing Company
Gateway of Tally > Company Info ( Alt+F3) > Alter .

At company alteration screen you may carry out necessary alteration (or fill up any blank field
left earlier). Press Ctrl+A to save the modified information .
Deletion of a Company
To delete a company, press Alt + D, at company alteration screen . A confirmation ‘Delete?’
Yes or No appears . Type Y to confirm deletion . The data files of the company deleted .
Selection of Company
When the company is created it gets loaded automatically the first time . However , we must
select the company to load it .
Click F1: Select Cmp button ( or press F1 key). The list of companies on disk at the current
directory appears. Now select the company from the list.
Accounts Info Menu

Select Accounts Info at Tally main menu to get Accounts Info menu, which contains options for
all Accounts Masters.

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Account Group Creation

At Accounts Info menu, select Groups to get Account Group Menu.
At Account Group menu, select Create under Single Group to get Account Group creation
screen. Now enter as follows.
Accounts Info > Groups > Single Group > Create .
Name : At Name field enter unique Account Group Name .

Alias : Here you give an alias to allow access the group using the Alias in addition to its name
; or leave it blank .
Under : At Under field , select the parent Group from the list of Groups . The new Group
would be placed under the selected parent group and will inherit its properties .
Group behaves like a Sub-Ledger : It is used to display Sundry Debtors without Ledger
break-up statements . Normally Sundry Debtors would have a large number of ledger
accounts under it and it can be exploded during display to show ledger balances. To avoid
this detailed display, choose Yes.
Net Debit/Credit Balances for Reporting : When you set to Yes , report will show Net
Balance ( Net of Debit or Credit ) of the instead of both Debit Balance and Credit Balances in
separate columns.
Used for Calculation (e.g. taxes, discounts)? : Yes if ledgers under this group would have
percentages for discounts/taxes to be used for invoice entry. Remember that only voucher
entry in 'invoice' mode uses the automatic calculation capability (for example, it would be
fruitless to specify a group 'Depreciation of Assets', and created ledgers such as 'Depreciation
10%', 'Depreciation 25%' in the hope of getting them used for automatic calculation
purposes).
Method to Allocate when used in Purchase Invoice : If you want to appropriate the ledger
account under this group to stock item but either quantity or value , you must select this
option .

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Account Ledger Creation
Tally automatically creates two ledgers, Cash (under Cash-in-hand Group) & Profit or Loss
Account (under Primary). You have to create all other Ledger Accounts.
Accounts Info > Ledger > Single Ledger > Create.
Name : enter the unique Ledger Name of the Ledger.

Under : Select the Parent group of the Ledger from List of Group.
Opening Balance : Enter Ledger opening balance as at the Books Beginning From date.
Alteration / Deletion of Account Groups / Account Ledgers
Accounts Info > Groups / Ledgers > Alter > Groups / Ledger.
You are allowed to alter any information of the ledge master with the exception of the Closing
Balance of a ledger account, if any, other than closing balance of accounts under the group
'Stock-in-hand'.
You can delete a ledger from the alteration mode by pressing <Alt>+<D>. Tally does not allow
deletion of accounts that have transactions. Therefore, should you wish to delete an account,
which has transactions, you must first delete all its voucher entries.
Advance Usage
Assuming that you have set up your configuration and features as below.
[F12] Configure

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[F11] Features
…And that you have also activated bill wise details and interest calculation in features.
Your ledger creation screen would now require/allow additional information.
Maintain Balances Bill-by-bill (Yes/No)

Yes, if you wish to give a bill-wise break-up of the ledger balance including the opening balance.
You may give any number of bills here. The option here would also determine the ability to
track transactions according to bill references. The bill-by-bill concept in transactions would be
discussed in detail under the Vouchers chapter.
The following information for all pending bills of the previous accounting period would be
required when entering the Opening Balance:
Date
Since you are giving the break-up of the opening balance, the date of the bill would naturally be
prior to the accounting period. Tally defaults to the last date of your previous accounting
period, e.g., 31 March 2001. Change it, if necessary, to the actual date. To end your list of
entries, leave the Date or Name blank.
Name
Give a name to which you can later refer when adjusting the bill. Typically, you would give the
bill no or document number. Remember, the purpose of the break-up is to enable you to adjust
it later when the relevant transaction is squared off.

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Due date (or credit days)
Give the credit period or the date when the bill is due. You may give either. Tally automatically
calculates the other. Another of those small conveniences that make life easier.
Note: During transaction entry, there would be another concept-that of effective date. If you
opt for "using effective dates" instead of "bill dates" the due date would be calculated
accordingly.
Amount
For the amount of the bill due.
You would give particulars of all the pending bills one by one. Tally fills in the difference
between your Opening Balance, and the sum of the Bills, and reflects it as 'On Account' at the
bottom of the screen. If all your bills exactly cover the Opening Balance, the On Account
becomes NIL. You may have Bills totalling beyond the opening balance, in which case the On
Account will accumulate aversely. In the example below, we have shown two bills 1000 and
1100 of 5000/- each. Now if the balance brought forward is 12000/- , the On Account amount
will reflect 2000/-. If you obtain the bill particulars at a later date, you can always alter the
ledger to put in the details, which will nullify the On Account.
Inventory values are affected?

This is applicable only in case your accounts are integrated with inventory. Accounts like sales
and purchases would normally affect inventory values in which case set this field to Yes. For
other accounts, set it to No. Tally does not restrict you to particular accounts as you may have
the need to affect inventory with accounts like Customs Duty, and perhaps, direct expenses
related to purchases such as Freight Inwards.
Inventory Info Menu

Creation of Stock Group
What is a Stock Group?

Stock items can be grouped together under Stock Groups to reflect their classification based on
some commonality. Grouping would enable easy location and reporting of stock items in
statements. Hence, items of a particular brand can be grouped together so that you can extract
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stock of all items of that brand. For example, create Stock Groups like Sony, Maxell, Verbatim.
Your stock items could then be Sony 3.5" disks, Maxell 3.5" disks, Sony tapes, Maxell tapes, etc.
Classify the Sony products under the Stock Group Sony. Now you have ready details of all Sony
products suitably classified. You may even group items as Raw materials and Finished Goods.
Single Stock Group

Gateway of Tally > Inventory Info > Stock Groups > Create .
Name : Give the name of the stock group.
Under : At Under field , select the parent Stock Group for the Stock Group being created
. Select Primary to create top level Group .
Can quantities of items be ADDED? : At this field set Yes to get Total Stock Quantity of the
child Stock Items under the stock Group (if all child stock Items are measured in same
UOM), else set No (Stock Group Quantity is not computed).
Multiple Stock Group
Gateway of Tally > Inventory Info > Stock Group > Multiple Stock Group >
Create .
Under Group : At Under Group field , select the parent to place the new Stock Group under
one Stock Group .
Creation of Stock Category

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Like Stock Group, Stock Categories are also used to organize Items in a parallel and independent
manner. Stock Categories are used only when you require an additional way of classifying the
Stock Items apart from stock Group.
Stock Group helps to classify Stock Items in one dimension. Stock Categories are used to
classifying an Item in another independent dimension. For instance, a medicine dealer organizes
Stock Items under Stock Group based on manufacturer (like Glaxo, Pifzer etc). It makes stock
Category according to type of medicine (e.g. , Cough Syrup, Vitamin-C etc) and categories Stock
items as shown below .
Stock Item Stock Group Stock Category
Cougho Glaxo Cough Syrup

Vitadel Glaxo Vitamin C
Coughexo Pifzer Cough Syrup
Vitex Pifzer Vitamin C
Click F11 : Features and set Yes at “Maintain Stock Categories” under Inventory Features .
Single Stock Category
Gateway of Tally > Inventory Info > Stock Categories > Create .
Name : Enter the name of the Stock Category.

Under : select the Parent Stock Category from List of Categories (Select Primary to create
top level stock Category).
Multiple Stock Category
Gateway of Tally > Inventory Info > Stock Category > Multiple Stock Categories >
Create.
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Fill the above field as Stock Group.
Creation of Units of Measure

Simple Units
Gateway of Tally > Inventory Info > Units of Measure > Create .
Type : At Type field , cursor normally skips showing Simple as selected to create a Simple
Unit.
Symbol : At Symbol field, enter the symbol to denote the Unit (e.g., Kg. Ltr. ) .This is
normally printed in all reports to indicate the UoM .
Formal Name : At this field , enter full Name of the Unit ( e.g., Kilogram , Litre etc )
different from Uom Symbol .
Number of Decimal Places : At this field specify maximum number of decimal places
(between 0 to 4) in which the quantity for the Unit may be specified (like 3 to show 1.234 MT
, 0 to show 29 Pcs).
Compound Units
Compound unit is composed of 2 simple units like Yd – ft , Lb – Oz , Box – Pc , Strip – Tabs .

Conventionally , the quantity is expressed in two components , the Main & Tail unit separated
by a hyphen (-). The following table shows some examples :
1st Unit 2nd Unit Compound Uom Relationship Quantity Representing

(Basic unit) (Tail unit)
Yard Ft Yard of 3 Ft 1 Yd=3 Ft 1-2 1 Yd 2 Ft = 5 Ft.

2-0 2 Yd = 6 Ft.
0-2 2 Ft
Strip Tab Strip of 12 Tabs 1 Strip = 12 tab 1-9 1 Strip 9 Tab
= 21 Tab

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2-0 2 Strip = 24 Tab
0-11 11 Tab
So , you may create your own compound unit . you may even create several compound units
composed of same simple unit , like Bottle of 100 tabs , Bottle of 20 Tabs etc.
Creation of Stock Item
Single Stock Item
Gateway of Tally > Inventory Info > Stock Item > Single Stock Item > Create .
Name : Enter a unique Name of the Stock Item .

Under : Select the Parent Stock Group .
Category : Select the category name if applicable .
Units : Select the Units of Measurement in which the Stock Item would be measured . If no
UoM is applicable select Not Applicable.
Opening Balance : At Opening Balance field enter the Opening Stock details as on the Books
Beginning From Date.
Multiple Stock Items
Gateway of Tally > Inventory Info > Stock Item > Multiple Stock Item > Create .

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Under Group : At this field , select the parent to place the new Stock Item under one Stock
Items under one Stock Group else sect All Items to select parent Stock Group for each Stock
Item .
Alteration / Deletion of Inventory Master
To Alter / delete Inventory Masters as discussed above , select Alter from the respective Menu
in the same way . All the records will be displayed . Now select the record to Alter or Delete .
Note : However , in following cases , the Record cannot be Deleted . The record remains
visible (it does not get dimmed) and the deletion Confirmation screen does not appear.
Stock Group : The Group would not be deleted if it is parent of any stock Group or Stock
Item .
UoM : The Stock UoM cannot be deleted if it has been referred in any Stock item .
Stock Item : The stock Item cannot be deleted if it has been referred in any voucher .
Creation of Godown
You may want to distinguish between stock held on-site and at the warehouse, and this can be
done by creating two separate stock locations. You may even amend Tally's default location and
create a new location for the warehouse. Tally permits any number of locations that can be
grouped and sub-grouped to match the structure you need.
Click F12: Configuration to get Configuration Menu . Now select :

Accts / Inventory Info :
• Set Yes at “Allow Advanced Entries in Master”
• Set Yes at “Use Address for Godown”

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Click F11 : Features and set Yes at “Maintain Multiple Godowns” under Inventory Features .
Gateway of Tally > Inventory Info > Godowns > Create .
Name : Enter name of the Godown .

Address : You may enter the address in multiple lines , or leave it blank .
Allow Storage of materials : set No if no materials are stored in the Godown directly and the
Godown will not appear in the selection list during voucher entry , else set Yes when
materials are stored in the Godown.
Alteration / Deletion of Godown
Select Inventory Info > Godowns > Alter at Single Godown to view details of any Godown master
. Select the Godown from List to Alter . Carry out the Alteration and press Ctrl + A to save. To
Delete the Godown , press Alt + D , and click Yes at “Delete Yes or No?” to confirm deletion
(the godown cannot deleted if it has a child Godown or it has been referred in any Voucher or
Opening Stock details.
Reorder Levels
Reorder Level is the optimum level between Minimum & Maximum Level of stock to be
maintained to avoid stockouts and overstocking . It helps to take timely action for procurement
of materials (to prevent loss due to non – availability of the Item when required ). Re-Order
Quantity is the optimum purchase quantity of the Item at one time , considering the
requirements , purchase time , storage space , shelf life , obsolescence and other factors .
To activate Re-Order features , click F11 : Features , set Yes at “Allow Purchase Order
Processing”

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Gateway of Tally > Inventory Info > Reorder Levels
Voucher Entry
Accounting Voucher
As per classic accounting principle , all accounting transaction may be entered in Journal
Voucher. In fact , in old days , people used only one day book called journal to record all
transaction , cash or non-cash. But for sake of convenience , businessmen have classified the
Vouchers into various Voucher Types, according to nature of transaction .
The following are the basic voucher types , considered essential by all kinds of business ,
irrespective of its nature , size or book keeping methods .
Contra : To record transfer of funds between Cash & Bank Accounts .
Receipt : To record receipt of money by cash , cheque , bank transfers , etc.
Payment : To record payments of money by cash , cheque , bank transfers , etc.
Journal : To record all Non Cash transaction ( all accounting transactions not involving any
cash or bank ledger ).
You record a transaction through a voucher entry. To enter Accounting Voucher -
Gateway of Tally > Accounting Voucher

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For convenience, Tally provides a standard interface and operational process common to all
these voucher types. We first discuss these common elements and then discuss the details in
respect of each voucher types , separately.
Voucher No. : Tally displays voucher number , serially generated in chronological order , for
each voucher type.
Date : The current date is carried at this field to denote the Date of Voucher. To change
Date, Press F2 : Date button and enter the Voucher Date . Day of the voucher is displayed
just below the Voucher Date. This helps to trap if any voucher is being entered on weekly
holiday.
Particulars :
i. To/By - Tally defaults to To/By but this can be changed to ‘Dr’ and ‘Cr’ by selecting
F12: Configure in the Voucher Creation screen . Tab down to “Use Cr/Dr instead of
To/By during entry” and type Yes.
ii. Ledger Name & Amount – Select the ledger Account from pop-up & give the amount
of that ledger.
Narration : At this field enter Voucher Narration , describing the voucher transactions briefly
but writing the essential details for future reference ( long narration may get crumpled ).
Voucher Alteration, Deletion & Cancellation
You may perform Voucher Alteration , Deletion & Cancellation at Voucher in Alteration Mode, at
the following instances :
• Current Voucher : The voucher on the screen you are working with is called the Current
Voucher. Until you save , it is in Alteration mode .
• Other Voucher : You may get any other voucher (other than current voucher) in
alteration mode , in following 2 ways :
From Voucher Entry Screen

To get any voucher of current date in Alteration mode:
• Press PgUp to get previous voucher.
• Press PgDn to get next voucher.
To get a voucher on any other date:
• Press F2 and change the Voucher Date.
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• Now scroll through vouchers of the day by pressing PgUp/PgDn as explained above to
get the voucher in alteration mode in the screen.
From Display
You may also get a voucher in alteration mode by drilling down from Display.
In Alter mode , you may perform the following operation on the voucher :
• Voucher Deletion : Press Alt + D , and click Yes at Delete? Yes or No to confirm
deletion
• Voucher Cancellation : Press Alt + X , and click Yes at Cancel ? Yes or No to confirm
Cancellation.
• Voucher Alteration : Move the cursor to the desired field (or click at the field)and
modify as desired (in the same way as you have entered the data earlier).
Cost Categories & Cost Centre

Cost Centre is used to analyse Ledger figures. For example, to analyse Conveyance Expenses for
various departments, you may create Departments as Cost Centre and allocate the amount
entered for Conveyance Expenses Ledger in vouchers to the Cost Centres (i.e. Departments) .
Cost Centre Creation
Click F11: Features button to get the Company Operation Screen. Set Yes at “Maintain Cost
Centre” under Accounting Features.
Gateway of Tally > Accounts Info > Cost Centres > Create.
Name : Enter the Cost Centre Name.

Under : At Under field, select the parent Cost Category (or select Primary) under which you
like to place the Cost Centre (for the first Cost Centre created , you can select Primary only
).
Cost Allocable Ledger Accounts

At ledger Creation / Alter screen set Yes at “Cost Centre are Applicable” for Cost Allocable
Ledger Accounts.

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Cost Centre Allocation in Accounts Voucher
During Voucher entry , on entry of a Cost Allocable Ledger , you get Cost Allocation screen to
enter the Cost Centre Allocation for the Ledger Amount.
Cost Categories
Cost Categories are parallel sets of Cost Centre used to allocate to multiple parallel Cost
Centres. For example, to allocate Conveyance Expenses to Departments and also to Employees,
you may need to create Cost Categories (Departments & Employees). Now during voucher entry,
you will allocate the Conveyance Expenses to Cost Centres placed under Department Cost
Category and then again allocate Conveyance Expenses to Cost Centres placed under Employees
Cost Category.
Having activated Cost Centre, also set Yes “More than one Cost Categories” at Company
Operation screen.

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Creation of Cost Categories
Gateway of Tally > Accounts Info > Cost Categories > Create.
Name : At Name field, enter Cost Category Name .

Allocate Revenue Items : At this field, set Yes to make the Cost Category available at
allocation for transactions related to Nominal Ledger Accounts (i.e. Ledger Accounts of
Income / Expenses ), else set No.
Allocate Non-Revenue Items : At this field, set Yes to make the Cost Category available at
allocation for transactions related to Personal & Real Accounts (i.e. Ledger Accounts of
Assets / Liabilities), else set No.
Tax Deducted at Source ( TDS )
TDS (Tax Deducted at Source) is one of the mode of collection of Income Tax . While making
certain kinds of payment, the payer deducts Income Tax authority. The payer (i.e. Deductor),
later on issues a certificate to the payee (i.e. Deductee) , in respect of deduction of TDS and
deposit to the government. The TDS certificate is then treated as advance payment of Income
Tax by the deductee.
Activating TDS features in Company
Click F11: Features button to get the Company Operation Screen. Set Yes at “Enable Tax
Deducted at Source (TDS)” under Statutory & Taxation. Also set Yes at “Set/Alter TDS Details”
to get company TDS Deductor details & enter the following :

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Tax Assessment Number : Enter the Tax Assessment Number (TAN) in this field. The Tax
Assessment Number (TAN) is a ten-digit alphanumeric number, issued by the Income Tax
Department (ITD) to the deductors.
Income Tax Circle/Ward (TDS) : Enter the Income Tax Circle/Ward (TDS). The Income Tax
Department issues Income Tax Circle/Ward (TDS).
Deductor Type : Select the Deductor Type (Government or Others) depending on whether
your organization is a Government Organization or Others.
Name of the person responsible : Enter the name of the authorised person responsible to
file the TDS returns of your company.
Designation : Enter the designation of the authorised person filing the TDS returns.
Creation of TDS Ledger A/c
For TDS you create the TDS Ledger A/c on which the tax has been deducted. At TDS Ledger
creation screen enter the following details :

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Under : Select the group as Duties and Taxes from the list. On the selection of group Duties
and Taxes, you will get the option to select type of Duty/Tax.
Type of Duty/Tax : Select TDS from the list.
Nature of Payment : Select the appropriate TDS Nature of Payment as statutorily applicable,
given/ desired by the Govt. By default, Tally provides you with a List of TDS Nature of
Payment. You need to select the appropriate TDS Nature of Payment from the list.
Ignore TDS Exemption Limit : If the total transaction limit exceeds the actual limit you
need to set the Ignore TDS Exemption Limit field to Yes then the tax is not calculated up to
exemption.
Creation of Party Ledger A/c
You must create the Party Ledger from whom TDS is deducted . At the Party Ledger creation
screen enter the following details :
In the Is TDS Applicable field set Yes and you seen the following screen & enter the following :

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Deductee Type : Select the Deductee Type from the list.

Is Lower /No Deduction Applicable : If this field is set to Yes then the deduction is
applicable.
Ignore Surcharge Exemption Limit : If Ignore Surcharge Exemption Limit is set to Yes then
the exemption Limits will be ignored.
Expenses Booking
This voucher enables you to book the expenses directly and helps you to deduct the TDS and pay
the amount to the party for their services.
Select F7: Journal button to the right or press F7 to create a Journal Voucher.
Gateway of Tally > Accounting Vouchers > Journal Voucher
Or
Press F7 key at the Voucher Entry screen to make a Journal Voucher
This will open the Journal voucher creation screen.
Select Job Contract Charge (under Indirect Expense) from the list in the Particulars column and
enter the Amount in the Debit column.
Select the Party from the list (ABB Enterprise) and the Amount appears automatically in the
Credit column
Press Enter to view the Bill wise details sub form as displayed below:

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Select the Type of Ref as NewRef.
Enter the Name .
Select the TDS Ledger from the list to the right.
The Amount is automatically picked up by the system.

Accept the Billwise Details sub form .
Accept the screen to save the Journal voucher.
Note: Booking the TDS Expense can be done using the Purchase voucher available in default
Tally.
Journal Voucher Using TDS Deduction Button

Having booked the expenses , you should make a Journal Entry for TDS Deduction on the
Expenses booked.
At Journal voucher entry , click the TDS deduction button or press Alt + S . Select the Party
Ledger . You get TDS Computation screen as per standard Rates .
You are free to make any changes to the percentages of Income Tax, Surcharge or Additional
Surcharge with the help of F12: Configure screen by pressing F12 key or clicking on F12:
Configure button and set “Allow Alteration of TDS Rates” to Yes.
This will allow you to override the default TDS rates supplied by Tally.

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Gateway of Tally > Accounting Vouchers > F7: Journal button from the button bar on the
right- side of your screen or press the F7 key
1. Select TDS Deduction Button or Press ALT+S. You will get a list of TDS Ledgers for the
party selected
2. Select the TDS Party Ledger from the list (MBC Corporation).
3. Select the TDS Ledger from the list (TDS on Job Contract). The system calculates the Net
TDS to deduct amount.

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4. Select the TDS Applicable Bills from the list.

5. Accepting the TDS details sub form will post the Net TDS to Deduct amount in the Debit
column of the Journal Voucher screen. Press the Enter key to credit the Tax Ledger (TDS on
Job Contract). You may enter the New Reference Number for identification and accept
the screen to save the Journal Voucher.
Payment to Party after TDS Deduction
Now make payment to the Party after deduction of TDS.

The entry for the Payment to a party ledger is the same as in default Tally.
1. Select the Bank from the list.
2. Select the Party from the list.
3. Enter the Amount.

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4. On entering the amount you will get the Bill wise details sub form. Select the Agst Ref
from the list of pending bills. Accept the Billwise Detail sub form.
5. Accepting the Billwise sub form will display the screen shown below.
6. Accept the Payment voucher to save the entry.
Deposit of TDS to Government

The TDS transactions in payment voucher can be automatically entered one-time for a particular
deductee status, using the TDS Helper functionality of TDS available in Tally.
When a Payment Voucher entry is made for a Tax Ledger, click the button TDS Helper (ALT+S).
This takes you to the sub-form TDS filters and allows you to specify the criteria for Auto-filling
the voucher in association with the TDS ledgers.
Gateway of Tally > Accounting Vouchers > Payment Voucher > TDS Helper

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Press F5 at the Voucher Entry screen and Click on TDS Helper button or Press ALT+S to make a
TDS Challan Payment Voucher
This functionality of Tally gives you tremendous flexibility to generate the payment vouchers,
for any period and to any deductee.
Fields in TDS Filters sub form:
TDS Ledger : Select the TDS ledger from the list.

Deductee Status : Select the Deductee Status from the list. You have to do this because you
may require separate challan for different types of deductees.
To Date : In this field user may enter, the To date of the period for which the TDS values
should be computed and auto-filled.
Select the Bank ledger in which the payment to the Tax Ledger is made after the TDS
deduction. Shown below is the resulting payment voucher screen. The Tax amount is
automatically calculated.
Accept the payment voucher to save the entries made.

You can print this voucher as a TDS Challan. Click on the Print button or Press ALT+P from the
payment voucher. It will display the Voucher Printing dialog window. You can configure the
payment voucher as depicted in the screen below. If you wish to view the challan in a preview
mode, click on With Preview button or Press ALT+I

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Set Print As TDS Challan to Yes. Accepting the Voucher Printing sub form will display the
TDS Challan in Print Preview mode.
****
TDS on Advance
So far we have discussed TDS deduction on Expenses . Sometimes, Advance is paid to supplier of
service etc, before the expenses has been incurred . Normally this is in form of some lump sum
amount in advance . As per rules, TDS to be deducted on advance payment also . Later on when
the final payment is made , the balance TDS is deducted .
Advance Payment Voucher

At Payment Voucher in Single Entry mode, select the party Ledger Account whom advance
payment is made . Enter the amount paid to get the Bill Allocation screen .
At Bill allocation screen, select the TDS Ledger account for deduction of TDS. You get back the
main screen of the Voucher entry with the TDS Account selected at second entry .

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TDS Report
To get various TDS reports, select Display > Statement of Accounts to get Accounts Statement
Menu.
At Accounts Statement Menu, select TDS Outstanding to get TDS Outstandings Menu offering the
TDS Reports.

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TDS Computation Report
At TDS Outstanding Menu, select TDS Computations to get TDS Computation Report.
TDS Payables
At TDS Outstanding Menu, select TDS Payables to get TDS Outstanding Report.
This report shows the bill references for which TDS deducted but tax not yet deposited
Tax Collected at Source (TCS)

Tax has to be collected at source by the seller, while debiting the amount payable by the buyer
to buyer’s account (or) at the time of receipt of such amount from the buyer in cash or by issue
of cheque / draft or by any other mode, whichever is earlier. The rate of tax should be applied
as a percentage on the purchase price. Within 10 days from the date of debit or receipt of the
amount, the person collecting tax should issue a certificate of tax collected. The Certificate
shall be in Form No.27D.
Activating TCS features in Company

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Click F11: Features button to get the Company Operation Screen. Set Yes at “Enable Tax
Collected at Source (TCS)” under Statutory & Taxation. Also set Yes at “Set/Alter TCS Details”
to get company TCS Deductor details & enter the following :
Tax Assessment Number : Enter the Tax Assessment Number (TAN) in this field. The Tax
Assessment Number (TAN) is a ten-digit alphanumeric number, issued by the Income Tax
Department (ITD) to the deductors.
Income Tax Circle/Ward (TCS) : Enter the Income Tax Circle/Ward (TCS). The Income Tax
Department issues Income Tax Circle/Ward (TCS).
Collector Type : Select the Collector Type (Government or Others) depending on whether
your organization is a Government Organization or Others.
Name of the person responsible : Enter the name of the authorized person responsible to
file the TCS returns of your company.
Designation : Enter the designation of the authorized person filing the TCS returns.
Creation of TCS Ledger A/c
For TCS you create the TCS Ledger A/c on which the tax has been collected. At TCS Ledger
creation screen enter the following details :

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Under : Select the group as Duties and Taxes from the list. On the selection of group Duties
and Taxes, you will get the option to select type of Duty/Tax.
Type of Duty/Tax : Select TCS from the list.
Nature of Goods / Contract / License / Lease : Select the appropriate TCS Nature as
statutorily applicable, given/ desired by the Govt. By default, Tally provides you with a List
of TCS Nature. You need to select the appropriate TCS Nature from the list.
Creation of Party Ledger A/c
You must create the Party Ledger from whom TCS is collected. At the Party Ledger creation
screen enter the following details :
In the Is TCS Applicable field set Yes and you seen the following screen & enter the following :
Buyer / Lessee : Select the Buyer / Lessee Type from the list.
Is Lower /No Collection Applicable : If this field is set to Yes then the exemption is
applicable.
Creation of Sales Ledger
Then you create the Sales Ledger .

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Then you pass the Sales entry .

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You are free to make any changes to the percentages of Income Tax, Surcharge or Additional
Surcharge with the help of F12: Configure screen by pressing F12 key or clicking on F12:
Configure button and set “Allow Alteration of TCS Rates” to Yes.
This will allow you to override the default TDS rates supplied by Tally.
Payment of TCS
Normal Payment
Gateway of Tally > Accounting Voucher > F5

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Payment using TCS helper button
From Payment mode Press (Alt + R) to invoke TCS helper or click on TCS helper button.
TCS Report
Display > Statutory Report > TCS Report

There are three types of Statutory Reports 1) Print Form 27D. 2) Print Form 27B. 3) ETCS
Forms.
Service Tax
As Sales Tax is an indirect Tax on goods sold, Service Tax is indirect Tax on Services provided .
Service Tax is paid by buyer of service to seller of service, who in turn, deposits the tax with
government .
Activation of Service Tax in a Company
Click F11: button & set Yes at “Enable Service Tax” , also set Yes at “Set / Alter Service Tax
Details”
under Statutory & Taxation Features. Enter the required details .
Creation of Party Ledger
Gateway of tally > Accounts Info > Ledger > Create .

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At creation of Party Ledgers, enter the following details relating to Service Tax Ledger . If the
Company Provides services of multiple Category types, you should create a Ledger Account for
each major category of Service.
At “Is Service Tax Applicable” field set

Yes for Customer whom you charge Service Tax in your bills .
Yes for suppliers who charges you service tax that you claim for credit .
After set Yes you get another sub screen to specify the Exemption details,

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Service Category Profile
Gateway of Tally > Display > Statutory Info > Service Categories .
Select the Service category which you want to view .
Service Income / Expenses Ledger A/c Creation

At Service Income / Expenses Ledger Creation screen set
Yes for Income Accounts on which Service Tax is charged .
Yes for Expenses Account on which you claim Service Charge Credit .
At Is Service Tax Applicable field.
The Service Income Ledger account may be placed under Sales Group or under Direct Income .
Set Yes at Inventory Values are affected to get the Service Tax & Cess computed by Tally
(otherwise you will have to enter the service Tax & Cess Amount) in Sales Voucher .

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Service Tax Ledgers Creation
For calculating the service tax create a Service Tax Ledgers

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Sales Voucher Entry
Gateway of Tally > Inventory Voucher > F8 (Sales)

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On selection of Service Tax Ledger A/c , you get a sub screen to enter the details to compute
Service Tax .
Receipt Voucher Entry for Service Bills
On receipt of money against service bill , create a receipt voucher.

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Purchase Voucher Entry
Gateway of Tally > Inventory Voucher > F9 (Purchase)
On selection of Service Tax Ledger A/c , you get a sub screen to enter the details to compute
Service Tax .
Payment of Service Purchase Bill

On payment of money for service bill , create a payment voucher.

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Input Service Tax
We have discussed Service Tax in sales voucher for services provided and deposit of
proportionate tax on receipt of payment against service bills.
Some organization also buys services paying service tax . If the service is bought to render the
service sold , then the service tax paid on services purchased (called Input Credit) may be
adjusted from the service rendered .
Input credit Rate
At Company service Tax details , at Credit Adjustment Rate , enter the Rate of service Tax
credit.
Credit Adjustment (%)
Enter the Credit Adjustment % . Normally it is 20% (where the expenses relating to Tax Credit
are not solely attributed to service income) or 100% (where the expenses relating to tax Credit
solely attributed to service income).
To see the amount of Input Credit available which can be adjust , follow this steps
Gateway of Tally > Display > Statutory Reports > Service Tax Reports > Input Credit
form .
Adjustment of Input Credit and Payment of Balance Service Tax
Gateway of Tally > Accounting Voucher > F5 (Payment)

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At the time of doing the above entry we will face the following screen .
Here at the time of credit adjustment , Maximum Credit Adjustment Limit will be given
automatically, we will put that amount or less than that amount otherwise the following
“Error” will come.
Challan For Balance Tax Deposit

After adjustment of Input Tax , print the TR – 6 Challan to deposit the Tax with the authority .
Gateway of Tally > Display > Statutory Reports > Service Tax Reports > TR-6 Challan

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Purchase & Sales
Order
At first Click F11: button & set “Yes” the following options under Inventory Features
1. Allow Zero valued entries ..

2. Allow Purchase Order Processing .
3. Allow Sales Order Processing .
4. Allow Invoicing .
5. Enter Purchase in Invoice Format .
Creation of Purchase Order
Gateway of Tally > Inventory Voucher > Alt + F4
Then enter the following details :
Party’s A/c Name : Give the supplier's name. Type in the same manner as voucher entry and
select from list of Ledger Accounts. Use Alt + C to create a new account.
Order No. : Enter the Order Number . This Order Number will be used in all voucher entry
and Pending Order report .
Name of the Item :Give the name of the stock item for which the order is to be placed.
Once the name is given the Item Allocations sub-screen pops-up that needs to be filled in.
Due on :The due date for delivery of the item. This will enable monitoring of outstanding
deliveries. The order can be split for delivery on different dates.
Location :In case multiple location feature is active, this field is required to be given, else it
does not appear.
Quantity, Rate and Amount :Give the quantity of the item required, and its rate. The
amount is calculated but is modifiable to enable rounding off.
Additional Cost Details :Additional cost on the item may be incurred which can be
mentioned here. Give by way of percentage of the item cost or a flat amount. If not, select
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End of List. Additional costs increase the value of the item and do not independently appear
in the nominal ledger account or expense.
Next Item :The cursor then comes to the Item field once again and you can enter another
item to order. If no other item is required, press [enter] on the blank field to take the cursor
to the tax/expense field.
Narration :Optional. You may give some particulars about the order.
Creation of Sales Order
Gateway of Tally > Inventory Voucher > Alt + F5 .

Other options are same as Purchase Order
Alteration & Deletion of an existing Order
Gateway of Tally > Display > Day Book .

For deletion press Alt + D at alteration mode .
Invoice Entry
Invoicing or sales invoicing is not very different from sales voucher entry. In fact, you use the
same voucher but select 'As Invoice' option to turn it into a sales invoice. Purchase invoices are
recorded through normal Purchase Voucher entry and it does not have the provision of being
converted into an invoice format for entry purposes. However, you can print the purchase
voucher as a Purchase Invoice or even a Purchase Order.
The advantage of using the invoice format for sales invoice entry is that it enables automatic
calculations of taxes and duties accounts (those falling under the group 'Duties & Taxes' or those
groups for which the field 'Used for calculation' is enabled.
In recording both sales and purchase invoice details, you can adjust accounting and inventory
balances and account for VAT, all at the same time.
The default invoice formats have a variety of configuration options. Using them you may print
your invoices. You may not need to create new invoice formats. It is recommended that you
attempt to configure the default invoice itself. However, should you finally feel that the invoice
does not meet the needs, you can design a new invoice using Tally's Definition Language Report
Designer. The TDL is quite an advanced language with which you can create new reports and
screens. You may even modify existing reports and screens. However, it is a specialist's job and
would require advanced training.
Note: Check that you have activated Invoice Entry capability in F11:Company Features.
Ensure that:
In [F12]: Configure under Gateway of Tally, Voucher Entry, in the Accounting Vouchers
section of the screen, Show Inventory Details is set to Yes.
If you want a separate column for discounts in invoices, say Yes.
Also ensure that:
In Accounts Info. > Ledgers, ledgers of the type Purchases and Sales Accounts have Inventory
values are affected set to Yes.
If you want tax accounts like VAT or Sales Tax (under the group Duties & Taxes) to use
automatic calculation, ensure Percentage of calculation is entered (e.g. 17.5) and has

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appropriate Method of Calculation. If it is to use Tax based on Item Rate, then the stock item
must have the rate specified.
Note: Refer to the Accounts Info. > Ledgers chapter for details.
Gateway of Tally > F12:Configure > Invoice Entry/Delivery Note
Set the options as required.
Please note the last two options.
Complete Accounting Allocations in Order/Delivery notes?: Accounting allocations are not
normally made during order recording or delivery notes. Hence, it is set to No. However, it is
permitted and, should you want it, change it to Yes.
Allow modification of ALL fields during entry?.: Default order/delivery note entries appearing
in the invoice can be changed during invoice entry. To permit modification of all fields set it
Yes. Else No.
Purchase or Sales Invoice

Gateway of Tally > Inventory Voucher > F9 (for Purchase) / F8 (for Sales)
Now enter the following details :
Purchase / Sales Voucher number : This number is controlled by the settings in the
voucher type masters.
Date : Change date using [F2], when you need to.
Reference : This is an optional field. Give any reference particulars that can be later
picked up using the range or filter mechanism. This has, traditionally, been used for
tracking missing tax forms.
Party's A/c name : Select the customer's ledger account. This account will be debited by
the total invoice amount. You may select a party ledger (Falling under the groups Sundry
Debtors or Sundry Creditors) or even Cash or Bank Account (for cash sales).
Party's other details : This information is to be filled up in the secondary screen that pops
up.
You may have a different consignee name and address than the buyer. (if configured
for).
Delivery Note No(s) : Select the delivery note if there was any made for this shipment from
the Pop-up List of Tracking numbers. This way you reconcile goods despatched with the
invoice and financial records. Select Not Applicable if no separate delivery exists. The choice
is required only in case Tracking Numbers are active.
Order Details : The order particulars may be entered here. If a prior order was recorded for
the customer, a pop-up list of pending orders appears from which you select the relevant
order or orders. You may raise an invoice against a single order or even multiple orders.
Select New Number if no prior order exists for this invoice but you want to record the order
particulars. Select Not Applicable if not applicable. Select End of List to move to the next
item.
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Buyer's Details : The Buyer's Address as per the master records appear as default, but you
may alter it. If you have configured to have the Consignee address as well as Buyer address,
its details too appear. Accept or modify them as necessary.
Inventory allocations : Inventory items that are to be invoiced have to be entered. Once you
have selected the first item and the tracking number, if you have multiple locations set up, a
secondary screen pops up for accepting the item particulars:
Give the quantity rate and unit particulars. You may select more than one location from where
the goods have been despatched. Press [Enter] at the first blank location field to accept the
first item's allocation of location and other details. You now have to give the accounting ledger
that will be affected for the sale of this item.
Accounting details : This information is to be given in a secondary screen that pops up after
allocation of the each item. Select the relevant sales account to be debited for the first
item. The screen would be as below:
Sales A/c is a ledger account under the group Sales Account. It is the credit entry to the debit
effected by the Party A/c name.
Where you have more than one Stock Item

Each item will require item allocation and accounting allocation as above. You must repeat the
procedure till you have completed all the items for that invoice. Press [enter] on blank item or
select [end of list] to complete the cycle.

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VAT/Tax or other expenses : These accounts are entered after the total value of stock
items. Select relevant ledgers for the list. These are ledger accounts and would affect
accounting ledgers. For accounts like VAT/Sales Tax that are under the group Duties &
Taxes (or are otherwise specified as Calculate in invoice entry in their masters), the
amounts are calculated automatically. Press [enter] on blank item or select [end of list]
when you have completed.
Bill-wise details : After the cursor leaves the total amount field, you must give bill-wise
particulars, if the feature is activated for this particular party ledger.
You do this in the bill-wise details screen.
Type of Ref
Bill reference can be of four types:
Advance
New Ref
Against Ref
On account
You must select one or more of these to adjust the amount. The amount can be broken up and
different references given. E.g. the 15000 above could have been firstly 5000 where it is due on
1st May 2001 and then 10000 where it is due on, say, 31st May 2001.
Advance
This is relevant where you receive or pay monies in advance. You can adjust this advance when
making the sale or purchase entry. At that time, it will be available for adjustment.
New Reference
You select this for new transactions, e.g.
For a new bill raised by you on your customer or raised on you by your supplier.
If you mark the bill as a new reference, it is add to the list of outstandings.
In the field, you can give the voucher number, the reference number, or any alphanumeric set
of characters that would identify the reference and help set it off later using against reference.
You are not allowed to give the same name for two new references. In other words, new
references must be unique.

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Against Reference
Select this when adjusting against a previous reference, i.e.; adjust against a bill marked new
reference. Typically, You would mark a bill new reference and adjust its payment by marking
the payment against reference. When selecting against reference, a list of pending references
(bills) for the party comes up from which you select. You may adjust the whole bill or part of it.
The rest of the bill remains unadjusted. You can use Against Reference even to adjust advance
with an invoice. This you would do when entering a purchase or sales voucher. If there are no
pending bills, the option will not be available.
On account
On Account is selected when you are unable to mark a payment or a receipt against specific
pending references. Typically, you would do this in cases of lump sum payments where a
number of bills are pending but you are not instructed against which bill the money should be
adjusted.
Expenses / Fixed Assets A/c in Purchase Voucher
In Purchase voucher you can enter a ledger account under Purchase Group only . To enter an
account for any Expenses Account ( a ledger account placed under Direct Expenses or Indirect
Expenses ), at Accounting Voucher Configuration screen , set Yes to “ Allow Expenses / Fixed
Assets in Purchase Voucher” . This is useful when a Purchase Voucher is created for purchase of
Professional Services , Fixed Assets etc.
Income Account in Sales Voucher
In Sales voucher you can enter a ledger account under Sales Group only . To select any Income
Account ( a ledger account placed under Direct Income or Indirect Income ) in placed of Sales
Account , click F12: Configure at Voucher Entry screen to get Voucher Entry Configuration
screen and set Yes at “ Allow Income Account in Sales Voucher” . This is useful when a Sales
Voucher is created for Professional Services which cannot be placed under Sales Group .
Method of Calculation
On Duties & Taxes ledger creation screen you can select the method of calculation from the list.
As Additional Excise
In the Indian sub-continent, a manufacturing tax, or Excise is levied. For some products, a
supplementary levy on the Basic Excise Duty is charged, or Additional Excise Duty. This is a
surcharge calculation. For example, an Additional Excise Duty of 10% on the Basic Duty. While
the calculation method is identical to As Surcharge (see below), the result is to provide a Total
Excise Payable calculation accurately during Invoice printing.

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As a Flat Rate
When you wish to specify a standard mark-up/down on an invoice. For example, 100.00 for
every invoice, independent of the qty/value of the invoice.
As Surcharge
When you wish to calculate the value based on the immediately preceding figure. For example,
a Sales Tax of 10% is applicable on an invoice, which would be calculated on the value of goods
sold. On this, a 'Surcharge' of 5% - i.e. 5% of the Sales Tax value is applicable.
As Total Amount Rounding

Typically, the last line in an invoice. You would need to create an account which would carry
the 'rounding difference'. Now, as the other values of the invoice are calculated, this account
would automatically get adjusted to keep the Total Invoice Value to the desired rounding limits.
Normally, you would also mark this invoice as 'Remove if Zero ? Yes', so that the account head is
not retained in the invoice print-outs if no rounding was applicable.
As User Defined Value

This allows you to specify a value while creating the invoice itself. Normally, you would use this
when the basis of calculation is neither Value nor Qty dependent, and therefore, needs to be
entered every time you create an invoice.
Based on Quantity
In case of calculations based on the 'Total Qty' supplied. For example, you may have Freight or
Forwarding charges as 2.00/Kg, and if the total qty supplied in the invoice is 200.000 Kg, then
the amount should become 400.00. The 'Value Basis' will also need to be provided as '2.00/Kg' or
'0.50/Pc' as the case may be.
On Current Sub Total

In certain environments, taxes are applicable on the Total Goods Value as well as supplementary
charges such as 'Excise Duty', 'Packing Charges' etc. Normally, when the tax calculation method
is specified as 'On Total Sales' (see below), the calculations are based on the Total Goods Value
only. When you wish the supplementary charges to be included, then you would set 'On Current
Sub Total' as the type of calculation.
On Item Rate
Typically used for both VAT as well as Excise Duty style calculations. Here, you would have
specified the Rate of Tax applicable for each Stock Item, and you would want only those items
to be used for calculation purposes which equals this Rate of Tax. The advantage is to be able to
mix multiple Tax Rate products in the same Invoice, and yet get the correct ones picked up for
each Tax bracket.
On Total Sales
The most common basis of Tax Calculation is on the total value of goods/services. This method
would calculate using the sum of Stock Items used in the invoice.
Types of Inventory Vouchers

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Tally is pre-programmed with a variety of inventory vouchers, each designed to perform a
different job. The standard vouchers are:
1. Receipt note voucher (Alt + F9)
2. Rejections-in voucher (Ctrl+F6)
3. Delivery note voucher (Alt +F8)
4. Rejections-out voucher (Alt+F6)
5. Stock journal voucher (Alt+F7)

6. Physical stock voucher (Alt+F10)
Unless you have Tracking numbers activated in F11:Company Features, the Goods In Receipt
Note and Goods Out Delivery Note vouchers will not be activated. Tally will assume that goods
are received along with Purchase Vouchers and Goods are delivered along with Sales
Vouchers/Invoices. When Tracking Numbers are activated, you inform Tally that you may
receive goods that are not accompanied by Supplier's invoice – the invoice will arrive separately.
Also that you may not deliver goods together with your invoice – you may invoice later.
Receipt Note Voucher
For recording goods received. For example, the company receives new stock from a supplier. If
a Purchase Order exists for that Supplier, selecting it will bring up the order particulars.
Rejections-In Voucher
For recording goods received back that was rejected by a customer. For example, the company
takes back into stock items rejected by a customer.
Delivery Note Voucher

For recording goods delivered to a customer. For example, the company delivers goods from
stock to a customer. If a Sales Order exists for that customer, selecting the appropriate Sales
Order will bring up the relevant particulars.

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Rejections-Out Voucher
For recording of goods that are rejected and returned to a supplier. For example, the company
returns items that had previously been taken into stock to the supplier
Stock Journal Voucher
For recording stock transfers from one location to another. For example, the company transfers
items of stock from the warehouse to the shop.
Physical Stock Voucher

For recording actual stock as physically verified or counted. For example, stock found on
conducting a stock-check. It is not unusual that the company finds a discrepancy between the
actual stock and the computer stock figure. If you have configured your inventory vouchers to
Ignore physical stock differences, these physical stock vouchers will really be for recording
purposes only. However, if you have configured the vouchers not to ignore physical stock
difference, then all transactions subsequent to the physical stock voucher will use the balance
as mentioned in that voucher.
Value Added Tax ( VAT )

VAT is a consumption tax. As value addition takes place, tax on the value added is paid at that
stage. For example, a raw material is converted to semi-finished goods by one organization and
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another organization converts the semi-finished goods to finished products ; in first stage, tax
on value addition made over the raw materials to make semi-finished goods are paid by the first
organization. Likewise the second organization pays tax on the value addition made by them
from semi-finished products to finished goods. The entire tax is ultimately borne by the
consumer.
VAT activation for Company

At company creation or alteration screen select the country name and the state name.
Press F11: button & set Yes at “Enable Value Added Tax (VAT)” & “Set / Alter VAT Details”
under Statutory & Taxation Features. Also set the VAT TIN No. , Local Sales Tax No. , CST No.,
PAN No.
General terminologies used in VAT
Input Tax : This is a tax paid on purchases.
Output Tax : This is a tax charged on sales.
Input Credit : The amount of Input tax that is permitted to be set off against Output tax.
Composite Dealers : Dealers with annual gross turnover not exceeding a certain threshold
(threshold - decided by the respective State Governments) can opt for a composition scheme
whereby they will pay tax as a small percentage of their gross turnover. However, retailers
opting for this composition scheme will not be entitled to Input Credit.
Creation of Ledger for VAT
Sales & Purchase Ledger set up for VAT
Create Sales & Purchase ledgers for each VAT Rate , like :
• Purchase @ 4 %, Purchase @ 1%, Purchase @ 12.5 %, %, Purchase Exempted.
• Sales @ 4 %, Sales @ 1 %, Sales @ 12.5 %, Sales Exempted.

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At Used in VAT Returns, select Yes to link the Purchase ( or Sales ) ledger figures to VAT
computation and VAT Return. Consequently, at VAT /Tax Class, select the appropriate VAT
classification (select Not Applicable to select the VAT Class during voucher entry) which would
be selected as default on entry of the Sales / Purchase Ledger.
VAT Ledger set up
For each VAT Rate, create Input & Output VAT Ledgers, like
Input VAT 4 %, Input VAT 1 %, Input VAT 12.5 %.
Output VAT 4 %, Output VAT 1 %, Output VAT 12.5 %.
At Type of Duty / Tax, select VAT. At VAT / Tax Class, select the appropriate VAT Class from
the list. Consequently the Applicable Rate and Method of Calculations are auto filled.
Direct Expenses/Income Ledger

The VAT related fields in the Direct Expense ledger is the same as for Purchase and Sales
Ledgers.

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Voucher Entry
You may enter VAT in Voucher in Voucher & Invoice made. Since you need to compute VAT
during sale voucher entry, we explain the Invoice mode entry.
First, we explain entry of Single Sales / Purchase A/c, in which you select the Sales Ledger at
Header.
In a multi-item Invoice, if the Sales Ledger varies from Item to Item, at Invoice Configuration
(F12) set No at “Use Common Ledger for Item Allocation” to enter Sales Ledger after each
Item. After Item entry, at Accounting details sub-screen select the Sales ledger. The mapped
VAT classification associated with the Sales ledger is automatically carried.
To select VAT classification in the Invoice, in Invoice configuration screen (F12) set Yes at
“Allow selection of VAT/Tax class during entry”.

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At the header, you will be prompted to select the applicable VAT classification.
Common VAT classification applicable for the entire Invoice
If same VAT classification is applicable for all items transacted in the Invoice, select it at header
which will be carried for each item in the Accounting details sub-screen.
Varying VAT classification for each Item
If the VAT Class varies for each item, select Not Applicable at the header and set No at “Use
common Ledger A/c for Item allocation” at configuration screen (F12).
After Item details entry at Accounting allocation sub-screen, select the Sales ledger and then
select the VAT classification from the pop-up.
Sales transaction treated in the same way as Purchase transaction.
VAT computation Report
Gateway of Tally > Display > Statutory Report > VAT Report > VAT Computation.

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VAT Adjustment & Payment of VAT.
Create a ledger account named Vat Payable under Current Liabilities, and pass the following
entries.
Gateway of Tally > Accounting Voucher > F7 (Journal).
Now pass the Payment entry for payment the amount of Vat Payable.
Gateway of Tally > Accounting Voucher > F5 (Payment)

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Note : In case of Purchase or Sales Return you should charge Input & Output Vat.
Adjustment Through Journal.
If you need the Journal transactions for VAT Computation (for example, adjustment of Input
credit, output tax, etc) you will need to make the following settings:
Go to Gateway of Tally > Accounts Info > Voucher type > Create/Alter. You will see the
following screen :
Name of Class
Name the voucher class. In the above example, we have named it as VAT Adjustment Class.
Once you hit enter, you will see the following screen.
Use Class for VAT Adjustments

As the name implies, you will need to set it to Yes if you want the journal entries to be included
in VAT computation.
Let us consider a Purchase transaction and then a reverse entry for adjustment of Input credit.
Typical Purchase transaction

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Reversal of Input Credit

You can go to the Journal screen by clicking on F7: Journal button on the right side of your
screen Or by pressing the F7 key.
Firstly, you will see the following screen where you need to select the Voucher class created
before.
Once you have selected this, you can pass the typical reversal entry as shown below:
VAT Computation Report

The VAT Computation report will thus show as follows:

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VAT on MRP
Few state have enacted that on certain items (e.g. medicine) VAT should be paid on the MRP
(printed on the pack) instead of the actual sales rate in the bill.
Press F12: button and set Yes at “Calculate VAT on MRP”.
Consequently, in Stock Item Master, a new field MRP appears to enter the MRP (Maximum Retail
Price) for the item. The MRP entered here is carried to the Invoice entry form (which may be
changed in Invoice entry).
On entering MRP, another query will appear “MRP incl of VAT?”, if the VAT is to be charged
extra, select No here and in case the MRP includes VAT, select Yes.
MRP inclusive of VAT
If MRP Rate is inclusive of VAT (i.e., in the respective Stock Item master, pones at MRP incl of
VAT is Yes), the VAT calculation for the above transaction is explained below :
Computation formula for MRP incl. VAT :
The actual VAT % is calculated as ( 100 * Rate of VAT ) / ( 100 + Rate of VAT )
VAT amount = ( VAT % * VAT on ) / 100.
VAT on = MRP * Qty.
Invoice entry with MRP
Purchase

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Sales
Rate Difference
Rate difference allowed on Purchases or Sales are also entered through Debit Note and Credit
Note effectively reducing the Purchase and Sales value respectively.
Debit Note to Vendor for Rate Difference

Example : Due to price revision by the competition, Pixel India allowed a rate reduction of Rs.
50 each on CD ROM and accordingly issued Credit Note for Rs. 208 (Product Value 200 plus VAT
8) in favour of IACS.
IACS may enter the same in Debit Note as under

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Credit Note to Customer for Rate Difference

Based on the Credit received from the Customer, IACS issues a Credit Note for rate difference of
Rs. 50 plus VAT to Supreme Computers.
Inter State Purchase & Sales

On purchases from other state, Central Sales Tax (CST) is paid which is not set off against
Output VAT on sales within the state nor against Output CST on inter-state sales. Thus the CST
paid on purchase is part of procurement cost and therefore CST on purchase ledger account
should be placed either under Purchases or Direct Expenses group. Since the Inter-state
purchase is reported in the monthly VAT return, the interstate Purchase account should be set
to Used in VAT Returns to reflect in VAT Computation and Returns.
The treatment in case of interstate sales is however different where Input VAT can be adjusted
against Output CST. So Output CST ledger should to be placed under Duties & Taxes group as
usual and classified as CST for auto-computation.
Ledger Creation

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Ledger Name Under Used in VAT/Tax % of

Method of
VAT Returns Class Calculation
Calculation
Inter State Purchase Yes Inter State 0

Purchases Account Purchase
Input CST Purchase Yes Inter State 4 On Total

Account Purchase
Sales
Inter State Sales Account Yes Inter State 0

Sales Sales
Ledger Name Under Types of VAT/Tax % of

Method of
Duty / Tax Class Calculation
Calculation
Output CST Duties & CST Inter State 4 On Total

Taxes Sales Sales
Invoice Entry
Purchase
At Purchase Ledger, select Inter-State Purchases ledger to automatically select Inter-State
Purchases at Vat / Tax Class.
In the additional accounting area, select Input CST ledger & enter the percentage of tax
calculation on the product value.
Sales
At Sales Ledger, select Inter-State Sales ledger to automatically select Inter-State Sales at Vat /
Tax Class.
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In the additional accounting area, select Output CST ledger to auto-compute the CST @ 4% on
the product value.
VAT Computation Report
Display > Statutory Report > VAT Report > VAT Computation
In the VAT Computation screen press F12 and set Yes at “Show All VAT Classifications?”
Branch Transfer
If any organizations having more than one branch, they can transfer materials from one branch
to another. Inter-branch transfer do not attract any tax, but proper accounting is essential and
the figures are reported in the VAT return.
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Branch transfer transactions can be two different ways, either Transfer In or Transfer Out. Tally
9.0 provides specific VAT classes for this nature of transactions.
Branch Transfer Outward
You have to create the ledger named Branch Transfer Out and the Branch
Sales Invoice
Branch Transfer Inward

It is the similar to Branch Transfer Outward the only difference is that the applicable ledger is
Purchase and voucher class is Branch Consignment Transfer Inward.
VAT Computation
In VAT computation Report Particulars of the Consignment Transfer Outward appear in Sales
section under Others (VAT Not Applicable) while Transfer Inwards appear in Purchase section
under Others (VAT Not Applicable).
VAT paid on Capital Goods
Capital Goods are generally understood as assets used in the business either by a trader or a
manufacturer and includes Plant & Machinery, Tools, Building, Air Conditioners, Cars and other
motor vehicles and all other assets that are capitalize in the books of accounts.
A manufacturer will be eligible for input tax credit only on assets used in the manufacture of
taxable goods intended for sale. Assets not used in the manufacturer or processing goods or
assets used in the manufacture or exempt goods will not be eligible for input tax credit.
Generally, credit for Input VAT paid on Capital goods is allowed upon approval of the Assessing
Officer in 36 succeeding monthly installment from the date of commercial production by the
unit.
You are require to create the following ledger,
Tax paid on Capital Goods under Misc. Expenses (ASSET).

Input VAT on Capital Goods under Duties & Taxes.
Purchase of Capital Goods

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Each month, create a journal voucher to claim for the monthly installment of Input VAT credit
against Capital Goods.
The amount to be adjusted is Rs.(20000/36) = Rs. 556.
Voucher Class
Voucher Class is a pre-defined Voucher Type Profile that helps to automate & expedite voucher
entry and minimize errors . Voucher Class enables the administrator to set the controls on the
operators .
Voucher Class is pre configured template with defined Accounting entities (like Account Groups,
Ledgers, Cost Centres etc) & Allocation / Computation rules . Some of the uses of Voucher
Classs are :
Automatically select a ledger account (or propose a specified ledger for quick selection ) in
voucher entry .
Automatically round off figures as per rounding off rules .
Automatically compute Tax , Duty and other allocations .
Voucher Class ensures fast and correct data entry and provides more security (in many cases,
the data modification is prevented).
Creation of Voucher Class

Select Account Info > Voucher Types and select the Voucher Type from the list for which you
like to create a Voucher Class. Enter the details of Voucher Type.

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At Name of Class enter the Voucher Class Name.
Voucher Classes for Payment, Receipt and Contra Vouchers
The primary intention of using classes for payment, receipt and contra vouchers is to enable
data input in 'single entry' or list mode rather than in Tally's traditional double entry mode. You
can also use it to have a separate form for each cash and bank account.
Let us take an example of a Payment Voucher.
You can either alter the existing Payment Voucher Type or create a new voucher type based on
it.
(From Gateway of Tally > Accounts Info > Voucher Types)

The item Name of Class is below Effective Dates for Vouchers and above the Numbering Table.
Give a name to the class by simply typing it, e.g. Barclays Bank Payment. You may create more
than one class. Hence, you might want to have one more for Cash Payment.
Class creation screen
Exclude these Groups

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Groups other than Bank or Cash groups should not be selected. This is used to exclude Cash or
Bank Groups that are not to be used in this class to pay out the money. In our example, we want
to exclude Cash and Credit Cards.
Include these Groups
Groups other than Bank or Cash groups should not be selected. You might exclude a top level
group but include its sub-group.
Ledger Name
Selecting the ledger account that will be used to pay out the money will eliminate the need to
select it during entry. In this case, it is Axis Bank. In a receipt voucher, you will select the
ledger account into which monies will be received. You may even select 'Not Applicable'. The
purpose of selecting 'Not Applicable' will be to permit Single Entry mode and at the same time
retaining the option of selecting the account during entry.
Voucher Classes for Journals

Classes allow Journals to handle Forex Gain Loss Adjustments for companies having Multi-
Currency Accounts. You would create a 'class' in the normal way (Accounts Info > Voucher
Types > Alter > Journal). And having selected the class during Voucher Entry, will find only
those Ledger Accounts appearing which have a Gain/Loss to be adjusted as of the date of
voucher and auto-calculation of these amounts.
Voucher Classes for Debit Notes and Credit Notes
Voucher classes for Credit Notes are similar to sales invoices except for one important inclusion.
You can set the class for interest entries to enable adjustment of interest payable. If the
Interest option is selected, the other sales invoice-like options will not be available. A separate
class may to be created for entries like Sales Returns. Since Sales and Purchase Invoice classes
have already been dealt with, we shall not elaborate on this behavior anymore.
Debit Note classes can be set for interest entries only. Classes for other entries are not available
as the invoice mode of entry is not possible for Debit Notes.
Classes for interest entries are covered under Interest Calculations.

Voucher Classes for Stock Journals
Stock Journals classes allow you to handle transfers from one location (Godown) to another, for
companies having Multi-Location Inventory and at least two location/Godowns created. Once
the class is selected, you will need to specify the Destination and simply provide the list of
items to be transferred. Through this class all items/batches thus selected will be exactly
mirrored to the destination, including Batch Number, Rate and Value.
Price List
We have explained how the standard sale price entered in item Master is carried in Invoice.
However some organizations use different price lists for different customer type, e.g.
Registered & Unregistered dealers, wholesalers, Retailers, Government bodies & institutions
etc.
You may create separate price list and enter the Price & Discount Rates of each Item for the
related period. As the Price/Discount Rate changes, you enter another set of prices for each
type of price list for the next period. During invoice entry, select the appropriate price list to
carry the Rate in the sales invoice.

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Advance Company Operations set up for Price List
Click F11: Features and set Yes at “Use Multiple Price Levels” under Inventory Features to get
Company Price levels screen .
Enter price levels (like Wholesale, Retail etc.)
Price List Entry
Select Price List from Inventory Info menu and select the Price Level . Now enter as described
below .
Under Group :To select a stock group whose items will be given prices.
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Price Level : To select a Price Level. This is the level to which a specific group of ledgers
(customer accounts) will be assigned.
Applicable From :The date from which the price list is applicable.
The columns are:
Sl No :A simple serial number to track the number of items in the price-list.
Name of Item :Name of the stock item for which the price may be given.
Quantities - From & Less Than :These fields are repeated for an item and begin with a
blank for 0 items and end with a blank for any number of items. This is useful for quantity
based pricing and discounts. A staggered quantity price structure can be created if needed.
If no quantity based pricing is required, simply keep both the From and Less Than fields blank.
Rate & Discount (if any) : For each quantity band give a specific price or keep the price the
same for all bands but give different discounts. Different methods can be given for different
items.
Historical Details :If a price list existed before the Applicable From date, it will be
displayed.
Cost Price :The Cost (based on the Cost method set for it) of the item is displayed to help
deciding prices.
Manufacturing
In this chapter, we will discuss about production process in which the Raw materials are
consumed to produce the Finished Products. So, the Item bought (Raw Materials & components)
are different from Items sold (Finished Product) .
Bill of Materials (BoM)
Bill of Materials (BoM) is a profile of a manufactured / assembled product showing the standard
consumption of each Raw Materials / Components to produce an assembled / finished product .
Any manufacturing / assembling unit, where some materials are consumed to produce a
different product (finished or semi-finished), the BoM may be created specifying the standard
quantity for Production & Consumption . This profile is used to create Manufacturing Journals
used for control of materials issue & consumption in a production system .
Activation of Bill of Materials
Click F12: Configure and select Acct/Inv Info. Set Yes at “Allow Component list details (Bill of
Materials)” to activate BoM features.
Bill of materials Entry

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At the stock Item (for which you want to create BoM – normally for manufactured Item) entry /
alteration , set Yes at set Components (BoM) , to get BoM entry screen .
At BoM entry screen , enter the details of Production / Consumption Item .
Manufacturing Journal
You can use BoM in manufacturing Journal only .

To create a Manufacturing Journal type , create a Stock Journal Voucher Type and then set Yes
at Use as manufacturing Journal .
Entry of Manufacturing Journal
Manufacturing Journal is the record of Materials Produced and the corresponding materials
consumed for the Production, in a manufacturing process.

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Select Inventory Voucher and press Alt + F7 (Stock Journal) button . Now select the
Manufacturing Voucher Type to get the Manufacturing Journal entry screen .
Reference : Give a reference number, if required.
Name of Product : For the stock item to be manufactured.
Location : Give the location in which it is to be manufactured. This location will show the stock.
Qty : Give the quantity of the item to be manufactured.
Component (Consumption) :The component list for the product to be manufactured and the
proportionate quantity of each component (based on the quantity specified for the product)
is produced. The default location as specified in the BoM is also given for each component.
However, the entire component list can be altered, components added or removed and
locations amended.
Note: Any change made during this entry will not affect the original Bill of Material for this
product. If you want to make permanent change to the Bill of Material, change the stock item
master information (thru Gateway of Tally > Inventory Info)
Cost of components : The base cost of the components are automatically added and
displayed.
Additional cost components : You may specify additional costs for producing the item. These
would, typically be wages, power, freight etc. Remember that you must have ledger
accounts opened for the additional costs. Moreover, additional costs entered for the ledgers,
do not reflect in the relevant ledger with the amount but only add to the cost of the item.
%-age : You can specify the additional cost by way of a percentage of the cost of
components, in which case give the number, e.g. 2 for 2% of the cost of components. You
may, alternatively, skip the percentage field and input an amount directly.
Total additional cost : This displays the total additional cost for the item.

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Effective cost : This is the sum total of the cost of components and additional costs.
Effective rate : Effective cost per unit of item/product produced.
Production & Consumption Report

Select Display > Inventory Books > Movement Analysis > Transfer Analysis and select the
Manufacturing Journal Type to get Production & Consumption report, showing Goods in /
Production , Goods Out/ Consumption and the Effective Cost (including Production & other
Costs).
Production Analysis Report
At Production / Consumption Report , drill down through a Stock Item to get Production Analysis
Report .
Cost Estimate
This report shows the list of BoM for Stock Items under the selected Stock Group .
Select Display > Statement of Inventory > Cost Estimates and select a Stock Group (Primary for
all Items).
Interest Calculations
Normally Interest is charged on Loans , Deposits etc. , and overdue bills (bills not paid within
due date ).
Company Operation Set Up for Interest
To activate Interest computation features , click F11: Features and set Yes at Activate Interest
Calculation” under Accounting Features to enable Simple Interest Computation mode .
For charging Interest in single mode following steps should be maintain,

Activate and specify interest calculations in ledger masters.
Enter Interest details in Vouchers (only in case of transaction by transaction/Bill-by-bill).
View Interest reports.
Interest calculations on outstanding balances

Activate and specify interest calculations in ledger masters
You will have to alter existing ledger accounts to permit interest calculations on them. The
same operation will apply when creating a new ledger account.
Interest calculation on outstanding balances is allowed for any ledger account. You simply
specify the interest rate and style of calculation. Nothing is required to be done for interest
during voucher entry.
You might want to activate this on a Bank Account. Let's take an example:
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Alter a bank account e.g. Bank Ltd.
Tab (or press <ENTER>) down to the option Activate Interest Calculation?
Set it to Yes.
Now you have to set the Interest Parameters – the basis on which interest will be calculated for
this ledger account.
Only two pieces of information have to be given:-
Rate – give a rate say 15%
Style – this the basis on which the rate is applied.
There are 4 options

1. 30-day month
2. 365-day Year
3. Calendar Month
4. Calendar Year
Select the one applicable to you. For this example, select 365-day Year.
Accept the screen.
You are now ready to view the amount of interest that could be charged by the bank.
Report on Interest Calculated on outstanding balances

The Interest Calculations Report can be displayed and printed through the Display option in
Gateway of Tally.
Display > Statements of Accounts > Interest Calculations > Ledger > Bank Ltd
Note that interest is calculated with respect to each change in balance figures. (A report has
been reproduced under the Advanced Parameters section below).
Interest calculation transaction by transaction

Transaction by transaction or bill-by-bill interest calculation is permitted for 'Party' accounts
like accounts falling under the groups Sundry Debtors and Sundry Creditors.
Take an example to explain this feature:-

Alter a customer account .
Set Yes to Activate Interest Calculation.
The Interest Parameters now have three lines to answer.
Calculate Interest Transaction-by-transaction - Set it to Yes
Over-ride Parameters for each transaction - Set it to No.

If set to No, you are not allowed to change interest parameters in voucher/invoice entry.
If set to Yes, you can change the interest parameters during entry.
Report on Interest Calculated on outstanding transactions/bills
Display > Statements of Accounts > Interest Calculations > Ledger

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The report is similar to the Bill-wise Outstandings Statement. The last column gives the interest
amount on the transaction. Press Detailed to see the calculation. (A report has been reproduced
under the Advanced Parameters section ).
For Interest charged in advance mode
Set Use Advanced Parameters to Yes in F11:Company Features.

Advanced Parameters - Interest Calculations on outstanding balances
Follow the steps given in Simple Parameters.
The following extra options now become available:
You can now have multiple rates of interest.
Choice of balances – All Balances, Credit Balances only, Debit Balances only.
Applicability period – when is the interest applicable from and to which date.
Choice of methods for Rounding off of interest amounts.
A brief explanation on each is called for:
Balances : Interest can be calculated on all outstanding balances whether debit or credit. You
would like to select only credit balances in case of accounts like Bank accounts if you want
to know the interest that the bank might charge on overdrawn balances.
Applicable from : The date from which the rate is applicable to a specific date. If left blank
then it is up to the last date.
Rounding off : Whether the amount is to be rounded off normally or upward or downward. You
need to give the rounded to amount. e.g. round off upwards to the nearest 10.
The advanced parameters are particularly useful where interest rates change from time to time.
You may want to set your Axis Bank interest parameters as follows:
Report – Interest on Outstanding Balances
Display > Statements of Accounts > Interest Calculations > Ledger > Axis Bank
Advanced Parameters - Interest calculation transaction by transaction

Follow the steps given in Simple Parameters.
The following extra options now become available:
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You can now have multiple rates of interest.
You can override advanced parameters during voucher entry. Hence, each entry could have
different parameters.
Choice of balances – All Balances, Credit Balances only, Debit Balances only.
Applicability - This actually applies to the viewing of the statement and not the levy of
interest.
Calculate from - You can decide whether interest is to be levied from the Due Date or from
the Effective Date of the transaction (or the voucher date if effective date is not
activated) or even date ranges specified during voucher entry.
Choice of methods for Rounding off of interest amounts.
Set up the Interest Parameters for a customer as follows:
To obtain the option Calculate From ‘Date Specified during Entry', you must have Override
advanced parameters set to Yes. The option is required if you want to specify interest to be
calculated at different rates for different periods.
In case any of the other two options are selected, viz, Due Date of Invoice/Ref or Eff. Date of
Transaction, you will not have variable rates for different periods but for the same period.
Hence, it could be useful as a surcharge or penalty for past due dates for example.
If you choose to override parameters then information would be asked during voucher/invoice
entry. The interest information is required after the bill-wise details have been entered.
Report on Interest Calculated on outstanding transactions/bills

Display > Statements of Accounts > Interest Calculations > Ledger
Press Detailed to see the calculation and the period. Previous transactions are calculated from
Effective date of Transaction as a default. Date Specified During Entry has not been used.
Voucher Entry for booking Interest

Go to Voucher Entry
Select F7: Journal > Debit Note > Class – Simple Interest
A Cost Centre Class is also selected if required. Marketing Expenses Class has been selected
here.

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There are two situations for interest adjustment:-
Billwise interest
Simple Interest – Interest amounts are not debited onto the same bills. Create a fresh
reference for it.
Compound Interest – Amounts are auto-debited to the selected bills. Bill-wise details will
not appear
in this case .
Interest on balances only
Budget
Every Business has its objectives and goals . It must have an efficient mechanism to set its
targets and appraisal of achievements in respect of the target . To exercise the important
management controls, Tally provides flexible system of Budget . You can create multiple
Budgets for different purpose, e.g., Bank, Sales or Financial etc., get reports on different
emulated situations and scenarios (What if situations).
Click F11: Features button & set Yes at “Maintain Budgets and Controls” under Accounting
Features to activate Budgets & Scenarios. Consequently you get Budgets option at Account Info
menu .
Budget Creation
Select Acct Info > Budgets > Create to get Budget Creation screen and enter as follows :
Name : Give the budget a name, in this case, Corporate Budget. As you may have other
budgets as well, the name distinguishes them.
Under : In the true Tally tradition, you can have a hierarchical budget set-up. At the top
level is the Primary Budget. You can set up more than one Primary Budget. Under each
Primary Budget, sub-budgets can be created.
Period of Budget : Specify the period of the budget. The period could be a month, a year or
any period starting from any date to any date.
Set/Alter Budgets of : You may want to set the budget for groups of ledger accounts or for
ledger accounts individually or for cost centres or all of them. We shall take up budget for
group only. Follow the same process for setting budgets for individual ledgers and cost
centres

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At Budget Table entry screen Set Yes at Groups column to enter Accounts Groups Budget plan as
explained below.
Account Name : Give the names of the groups for which the budget is being set.
Cost Centre : For each group name, a cost centre may be earmarked, i.e., Indirect Expenses
for a particular cost centre or a group of cost centres only. If you select 'Not Applicable',
then the budget is not for any particular cost centre but the company as whole.
Type of Budget :Budgets could be of two types:
On Nett Transactions – where transaction amounts are to be monitored and not the balances.
Nett is net of debits and credits for the specified period. Hence, nett transactions for Indirect
Expenses would mean the debit amount for the specified period after reducing the credits for
the same period. Opening and closing balances not withstanding.
On Closing Balance – where you wish to monitor the balance of the accounts and are not too
keen on the transactions., e.g., balances of Bank Accounts, balances of debtors.
Amount : The budget amount for the account for the specific cost centre.
Budget Variance
The Budget variance report shows figures of Budgets, Actuals with Percentage, and Variance
from Budget with Percentage . You may get the Budget Variance from the following reports :
Select Trial Balance or Group Summary, Now click the Budget Variance button from the button
bar and select the Budget Master record from List of Budgets at Budget Analysis screen to get
the Budget Variance Report .
Unconventional Vouchers
These special vouchers are used to record provisional or non-accounting transactions. They do
not clutter the main books of accounts with unnecessary entries and at the same time make the
information available. These vouchers enable valuable reports in terms of provisional accounts
and forecasting. This aspect of reporting has been dealt with under a separate section 'Scenario
Management'.
Memo Voucher (Ctrl + F10)

This is a non-accounting voucher and the entries made using it will not affect your accounts.
That is, Tally does not post these entries to ledgers but stores them in a separate Memorandum
Register.
Some uses for Memo Vouchers

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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 enter a voucher for the 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.
Vouchers not verified at the time of entry
It sometimes happens that you do not understand the details of a voucher you are entering.
Enter it as a Memo voucher and amend it when you get the details.
Items given on approval
You will normally only enter completed sales into the books. Suppose items are given "on
approval". You can track them with a Memo voucher and convert it into a proper Sales voucher,
or delete the memo voucher, depending on the outcome.
You can view all memorandum vouchers through Display > Exception Reports > Memorandum
Vouchers. View them from the Day Book as well.
Optional Voucher
This is another non-accounting voucher. However, it differs from the Memo voucher in that it is
not a separate voucher type. You mark an existing voucher, (e.g., a payment voucher or a
receipt voucher) as 'Optional'. Press [CTRL]+[L] or click on the button. This button toggles with
'Regular'. By marking it 'Optional' the voucher does not get posted anywhere but remains in the
have the Optional Register.
Use of Optional Vouchers

If a transaction has not been completed, you may not want it to affect the accounts. But you
want to record it so that you simply modify the voucher and remove the 'Optional' mark by
'Regularising' it. Display the voucher in 'Alter' form and click on 'Regular'. This way you can
regularise the voucher and then post it. E.g. Proforma sales invoice. In fact, an optional
sales invoice prints as a Proforma Invoice.
You can view all optional vouchers through Display > Exception Reports > Optional Vouchers.
View them from the Day Book as well.
Reversing Journals (F10)
Reversing Journals are special journals that are automatically reversed after a specified date.
They exist only till that date and are effective only when called for in reports like the Balance
Sheet. These are used in interim reporting in the course of the financial year where accruals are
required to be reported. These accruals are usually short term and are cleared in the

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subsequent period. However, to get a proper perspective, decision makers require the reports
with full impact of all aspects and transactions.
Scenarios
Scenarios option allows user to define different situations like Forecast, Projection or Estimation
. This option facilitates to get Reports on various combination of selection of Voucher Types.
The vouchers that are used in Scenario Management are:
Optional Vouchers
Memorandum Vouchers
Reversing Journals
Scenario Creation
Click F11 : button and set Yes at “Use Reversing Journals and Optional Vouchers” under
Accounting Features .
Select Accounts Info > Scenario to get Scenario creation screen and enter as follows
Name : Give a suitable name to the scenario. In this case, we give Provisional.
Include Actuals : Yes, if you want the report to
Include : Include from the list of vouchers, the type of vouchers that you want to affect this
scenario. Notice that it picks up the Voucher Types created for this company. Only
provisional vouchers are permitted for selection Normal vouchers that are marked Optional
are available but not those not marked as such. They would affect the books of account.
Exclude : Include from the list of vouchers already included under Include above, the type of
vouchers that you DO NOT want to affect this scenario. You would use this typically later in
Alter mode and hence is discussed under Alter or Display Scenario Information.
Accept to create this scenario.
How to Use Scenarios?
Now that you have created one scenario, you are ready to use it in any report.
But first let's create a reversing journal.
Gateway of Tally > Voucher Entry > F10:Memo
Select Reversing Journals from the list

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For 31-12-98 make the following entry:
Dr Depreciation (under Group Indirect Expenses) 15000
Cr Prov. For Depreciation (under Group Fixed Assets) 15000
Narration: depreciation for the month for HO reporting purposes. Actual depreciation to be
provided for the whole year at year end.
Accept the Voucher.
Scenario Report
Having created Scenarios, you may include the scenario figures in a new column (where
available) for composition.
At the respective report screen, click New Column button to get column details screen. At
Column Details screen, select the scenario (or select Budget, Actuals) at Type of Value to Show
field.
Post-dated Vouchers
While entering vouchers, you can post-date them, and Tally will not update the ledgers until the
date in question. This is most useful for entering transactions that take place on a regular basis.
For example, if you pay for something by installments, you can set-up the payments in advance,
and Tally will only enter them in the ledgers as they fall due. Mark vouchers 'Post Dated' by
[CTRL]+[D] or click on the button. The button toggles with 'Regular'. All Post-dated vouchers
are maintained in a Post-dated vouchers Register .
Bank Reconciliation
Reconciling the Company's Bank Accounts with the Banker's Statement is a fundamental and
regular task of Accounting. Our first presentation of this facility aims to tackle two issues.
First, there should be the ability to 'check back' the correctness of the reconciliation. This has
been done, by marking the 'Bank Date' against the voucher. For instance, if you have issued a
cheque on 10th January, which was ultimately cleared by your Bank on 21st January, - you
would set the Bank Date for the voucher to be 21st January. This means, that when you next
need to 'check back' whether the entry made by you is correct, you will only need to verify the
Bank Statement of the 21st.
Second, that you should be able to 'recover' the reconciliation as of any date. This is of crucial
importance to Auditing. The Bank Reconciliation is one of the pre-requisites of Auditing and
verification of the correctness of accounts at the year end. However, it is not a 'real-time' task –
in the sense, that it is not done by the auditor's on the first day of the next year. This means,
that the reconciliation made on 31st Mar, should be 'viewable' even in August, - by when almost
all the cheques would have subsequently been marked as reconciled. This has again been
achieved using the concept above.
Bank Accounts may have a different 'Starting Date' for reconciliation purposes. When you create
a Bank Account, you are requested to give an 'Effective Date for Reconciliation' just before the
Opening Balance. Normally, this would be the Books Beginning from date itself. However, you
could have imported data from a previous version of Tally or from any other system (where the
reconciliation process was not available or was different. In that case, you may not wish to
reconcile the bank account with your bank statements from the very beginning. Give the date

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from which you want the reconciliation facility to be activated. Then, previous entries will not
appear for reconciliation, but will be taken as a reconciled Opening Balance.
Splitting Company
Tally's flexible period-less accounting permits entry of data for any number of years. This in
itself has tremendous benefits. However, presence of old data in cases where they are
voluminous, causes greater overhead on the system. Splitting financial years enables you to
retain most benefits while overcoming this overhead.
When you split the data, two things happen:
New companies are created for the respective split periods.

Full data is retained in the original company.
At the Gateway of Tally, Select [ALT]+F3: Cmp Info (Create Cmp in earlier releases).
Select Split Company Data.
Select the Company whose data is to be split.

Tally recommends the split-off date based on the data existing. It is recommended that the Split
Point is set as the beginning of the latest financial year though Tally permits any date as the
split point.
Splits occur in sets of two periods. Hence, start with the latest. For example assuming that
three years data – from 1-4-04 to 31-03-07 for a company and you want them split into three
separate 'companies' each with a financial year. First, select the beginning of the latest
financial year (this is what Tally would prompt you to do).
On confirming the activity, two new companies will be created – one with data from 1-4-04 to
31-03-06, i.e., two years, and the other for 1-4-06 to 31-03-07.
Tally Audit
Tally Audit provides the capability to the administrator/auditor to track changes in the accounts
following his previous review. Changes of two areas are important – changes in transactions or
vouchers and changes in ledger masters. Only material changes are considered, i.e., a change
in the narration does not affect the integrity of a transaction, hence it would not be considered
as changed. Any other change in a voucher is material and would be logged. The name of a
ledger account if changed, it is material, hence it would be tracked. So also a change in the
opening balance of a ledger master.
Security Control
The data is extremely valuable for you and contain trade secrets. So, it is essential that it is
protected from prying eyes and unauthorized access . In this chapter we shall look into various
issues involved with Security , Safety and Confidentiality of data .
During Creation / Alteration of a Company , set Yes at Security Control to activate Security
Control System.
Creation of Security Level

At Security Control menu, select Types of Security to create a new security level .
For convenience , Tally pre creates a Security Level called Data Entry . To rename the Security
Level , overtype the name . To create a new Security Level , press Dn Arrow to create a blank
line and enter the new Security Level name to get the Security Level definition screen.
At Security Level Definition screen , enter details at Level Definition screen as explained below
:

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Name of security level : This defaults to the name you have created.
Use Basic Facilities of : The default is the owner. However, the other option is also
available – Data Entry. If the popup list does not appear when you are at the field, press D –
beginning to type the word. Going back from the next field will also pop it up. The new level
Manager will, likewise, be available when you create a next level.
Days allowed for Back-dated vouchers : This is the number of days the users of this level are
allowed to create back-dated vouchers. Specifying 0 will indicate that back-dated vouchers
are not allowed, and 7 will allow the user at this level to insert vouchers going back 7 days.
Cut-off date for Back-dated vouchers. : Specify the date before which users of this profile or
security level may not create or alter vouchers. This is additional control over and above the
previous 'days allowed'. This is useful in cases where you have completed your Tax
Assessment for a period and no changes are desired in the data for that period.
Disallow the following facilities/Allow the following facilities : The screen is now divided into
two broad columns each have two sub-columns. The left side is to disallow access to the
various options of the system. The right side allows the security level the different
facilities.The different access rights options – Types of Access - are available in a pop-up list
when the cursor is on an access rights field (the first left column in the screen above). The
options sought to be controlled, are on the right (the second column from the left).
Importing Master data

Gateway of Tally > Import Masters
A file containing the masters exported from another Tally company data should exist so that it
can be imported and merged with the data of the current company.
On selection of All Masters, you will be required to give the source file name and format in
which it is to be imported. Give the full path of the source file. Data may be imported in Tally
from either Tally 4.5 Format, or Tally (XML) Format or plain Tally 6.3 / 7.2 / 9.0 Format.
Tally 9.0 Formats are inherently richer in content. Lists of Accounts (Masters), and Vouchers
(e.g. Daybook), exported out from Tally ies 9.0 are in this format, and may be imported into
another company or location. A typical use of this facility is to export the daily vouchers from a
Branch, and send it to the Head Office for importing into the main Accounts.
The structure of the import files are sufficiently complex not to merit discussion in a user level
manual. For the normal user, it is adequate to know, that the files exported out of Tally ies 9.0
, may be imported back using the Tally 9.0 Format.
Export of Data
Export of data is provided mainly for summaries and statement reports like Trial Balance, Stock
Summary, etc. The main use would be to export data to, say, a spreadsheet, and reorganise it
for statutory presentation. Or export it to another company using Tally that will import it
directly.
Export of all reports and statements is possible. A separate button is provided in the button bar
and press it to export the current report. All the four formats are available for export.
The exported file is saved in the parent Tally directory on your computer. You can now use that
file to import its contents into another program, send it as it is (say if it is HTML file) to a
colleague or view it using a browser.
E-capabilities
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Tally has extensive internet capabilities. E-mail, Web-publishing and data interchange over the
Internet are all easily achieved from within Tally.
Pre-requisites to using E-capabilities of Tally:
You should have an internet connection accessible from your computer. This could be through a
direct dial-up modem or through the network.
For E-mail - an E-mail account.
For Web Publishing - you should know the sites URL (address) and have authority to upload files
on the sites.
E-mail
Send Invoices to your customer by e-mail. Or your purchase order. In fact, e-mail any Tally
report or document as easily as you print! Even Reminder letters and statement of accounts
need not be printed and posted. Simply e-mail them. E-mail is the single largest use of the
Internet and is set to penetrate even the very small towns. You are uniquely positioned to take
advantage of this medium. It is not only postage cost that you save, you save on so much of your
valuable time.
E-mail a Reminder Letter
Select a customer's Outstandings Statement from Statements of Account.
Click the E-mail button.
There are various options that are automatically filled in if the information had been supplied in
the master records. Check if the details are all right. If they are, select Yes, if not select No to
change the options. The cursor first goes to the To E-mail address field as it seeks to save your
time in skipping standard information. However, if you wish to change them, e.g. the Format,
use back-space.
To E-mail Address
(mandatory field)
This is for the recipient's e-mail address. A valid e-mail address is required.
CC (if any)
For copying the mail to another recipient.
Subject
This is pre-filled for you. Change it to any other meaningful subject.
Additional Text
The text in this will appear as the first lines in the message body of the reception's mail
program.
The other options are the same as in Print option and are self-explanatory
Backup
Tally has a flexible back-up mechanism where in you can take a backup of the data from
virtually any storage medium into any other medium.
The more commonly used media are floppy drive, hard disk drive, zip drive, tape drive, etc -
installed either locally or on a network. In the backup screen, the source of the backup and the
destination of where it has to be stored has to be given, Tally will do as required.
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How to Take a Backup?
Start Tally - If the Company Information screen is loaded first – there is a menu option "Backup".
Select this to get the "Select Companies to Backup" screen. However, if the Gateway of Tally
Loads – use Alt+F3 to get the option Backup. Note that this option is available only on the
Company Information screen
To change either the source or the destination paths, use the Backspace key and change the
path as required. Let us say we want to backup the data to a directory Tally backup in the D
Drive – change the path to D:\Tallybackup and choose the companies as required. Incase we
want to take a backup onto another person's system – the path will be
\\machinename\\drivename\directoryname The process of backing up data begins when at least
one company is selected for the same. To stop selecting companies, select the option "End of
List" which appears at the top of the selection list. Note: This option appears only after one
company is selected for backup.
The backup file is stored as TBK500.001. If the backup is taken in a medium likely to extend
more than one – for example, floppy, then the extension digits (001, 002) will be stored
accordingly.
Restore
Restore literally means 'to bring back'. Similar to backing up of data, Tally allows restoring of
data from any medium into any other storage medium. In Tally's context restore means – we
have a Tally backup and we wish to work on the data backup instead of the current data – this
can be achieved by simply restoring from the existing data backup.
How to Restore?
Start Tally If the Company Information screen is loaded first – there is a menu option "Restore".
Select this to get the "Select Companies to Restore" screen. However, if the Gateway of Tally
Loads – use Alt+F3 to get the option Restore. Note that as in the case of backup - this option is
available only on the Company Information screen.
The Source and Destination paths displayed here are those that were used last.
The source field has to have the appropriate path from which we intend to bring back the
previous data. Accepting the path will read the contents of the particular file and will then
display the list of companies available.
Select as required and restore the data accordingly.

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The Gateway of Tally screen contains 5 major areas :

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Tally Calculator / Command Line

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Creation of a New Company

Gateway of Tally > Company Info > Create .

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Alteration of Existing Company

Gateway of Tally > Company Info ( Alt+F3) > Alter .

Accounts Info Menu

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Account Group Creation

Accounts Info > Groups > Single Group > Create .

Name : At Name field enter unique Account Group Name .

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Accounts Info > Ledger > Single Ledger > Create.

Name : enter the unique Ledger Name of the Ledger.

Alteration / Deletion of Account Groups / Account Ledgers

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Maintain Balances Bill-by-bill (Yes/No)

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Inventory values are affected?

Inventory Info Menu

What is a Stock Group?

Single Stock Group

Name : Give the name of the stock group.

Multiple Stock Group

Creation of Stock Category

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Stock Item Stock Group Stock Category

Cougho Glaxo Cough Syrup

Single Stock Category

Name : Enter the name of the Stock Category.

Multiple Stock Category

Fill the above field as Stock Group.

Creation of Units of Measure

Compound unit is composed of 2 simple units like Yd – ft , Lb – Oz , Box – Pc , Strip – Tabs .

1st Unit 2nd Unit Compound Uom Relationship Quantity Representing

Yard Ft Yard of 3 Ft 1 Yd=3 Ft 1-2 1 Yd 2 Ft = 5 Ft.

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Creation of Stock Item

Single Stock Item

Name : Enter a unique Name of the Stock Item .

Multiple Stock Items

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Alteration / Deletion of Inventory Master

Click F12: Configuration to get Configuration Menu . Now select :

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Gateway of Tally > Inventory Info > Godowns > Create .

Name : Enter name of the Godown .

Alteration / Deletion of Godown

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Gateway of Tally > Inventory Info > Reorder Levels

Gateway of Tally > Accounting Voucher

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student

Voucher Alteration, Deletion & Cancellation

From Voucher Entry Screen

Cost Categories & Cost Centre

Cost Centre Creation

Name : Enter the Cost Centre Name.

Cost Allocable Ledger Accounts

Notes Prepared By Biswajit Banerjee for Lalani Computer Academy’s Student