Tally Prime and Tally ERP 9 are the accounting software most Indian commerce courses teach, and the tests are practical: create the company, put each ledger under the right group, pass the right voucher and get a trial balance that agrees. This page covers all four, with a full practical set worked through to the trial balance. FLN Tutors (Freelancer Network) also offers one-to-one Tally help. Matched to a verified specialist who knows your course, your university's marking criteria, and your deadline.
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Tally ERP 9 was replaced by Tally Prime in 2020, and Tally Prime is now what most institutes install. Many syllabuses, question papers and textbooks still say "Tally ERP 9", which is why students search for both.
For exam purposes the good news is that the accounting has not changed. The same 28 predefined groups, the same voucher types and the same function keys for vouchers carry over. What changed is mainly navigation: Tally Prime adds a menu bar along the top and a Go To search that opens any report or screen by name, and it reorganises some menus.
So learn the accounting once and it works in both. Where a menu path differs, the method in this page still applies: create the ledger, choose its group, pass the voucher, check the report.
Tally ships with 28 predefined groups: 15 primary groups and 13 sub-groups. Nine primary groups belong to the balance sheet and six to the profit and loss account. Every ledger you create must sit under one of these groups or under a group you create beneath them.
Primary groups
| Balance sheet (9) | Profit and loss (6) |
|---|---|
| Branch / Divisions | Sales Accounts |
| Capital Account | Purchase Accounts |
| Current Assets | Direct Incomes |
| Current Liabilities | Direct Expenses |
| Fixed Assets | Indirect Incomes |
| Investments | Indirect Expenses |
| Loans (Liability) | |
| Suspense A/c | |
| Misc. Expenses (ASSET) |
Sub-groups and their parents
| Sub-group | Parent group |
|---|---|
| Bank Accounts | Current Assets |
| Cash-in-Hand | Current Assets |
| Deposits (Asset) | Current Assets |
| Loans & Advances (Asset) | Current Assets |
| Stock-in-Hand | Current Assets |
| Sundry Debtors | Current Assets |
| Duties & Taxes | Current Liabilities |
| Provisions | Current Liabilities |
| Sundry Creditors | Current Liabilities |
| Reserves & Surplus | Capital Account |
| Bank OD A/c | Loans (Liability) |
| Secured Loans | Loans (Liability) |
| Unsecured Loans | Loans (Liability) |
The group decides where a ledger appears in the final accounts, so a ledger under the wrong group produces a balance sheet and profit figure that are wrong even when every voucher is right.
This is the most-asked practical question in Tally, and the rule is the same one you use in manual accounts: direct items relate to buying or producing the goods, indirect items to running the business.
| Ledger | Group |
|---|---|
| Capital, Drawings | Capital Account |
| Furniture, Machinery, Computers, Building | Fixed Assets |
| Customers (debtors) | Sundry Debtors |
| Suppliers (creditors) | Sundry Creditors |
| Bank current or savings account | Bank Accounts |
| Bank overdraft | Bank OD A/c |
| Cash | Cash-in-Hand (created by default) |
| Purchases | Purchase Accounts |
| Sales | Sales Accounts |
| Wages, Carriage inward, Freight inward, Factory power | Direct Expenses |
| Salary, Rent, Office electricity, Carriage outward, Advertising, Depreciation, Discount allowed | Indirect Expenses |
| Commission received, Interest received, Discount received, Rent received | Indirect Incomes |
| CGST, SGST, IGST, VAT | Duties & Taxes |
| Outstanding expenses, Provision for tax | Provisions (or Current Liabilities) |
| Prepaid expenses, Advances given | Loans & Advances (Asset) |
| Bank loan with security | Secured Loans |
| Loan from a friend or relative | Unsecured Loans |
| Investments in shares or fixed deposits for the long term | Investments |
Two traps. Drawings is not an expense: it goes under Capital Account, because it reduces what the owner has put in. And carriage is split: carriage inward is a direct expense because it is part of the cost of getting goods in, while carriage outward is indirect because it is a selling cost.
Every transaction is entered through a voucher. Choosing the wrong voucher type is a common way to lose marks even when the debit and credit are right.
| Key | Voucher | Use it for |
|---|---|---|
| F4 | Contra | Cash and bank only: cash deposited into bank, cash withdrawn, transfers between two bank accounts |
| F5 | Payment | Any money going out by cash or bank |
| F6 | Receipt | Any money coming in by cash or bank |
| F7 | Journal | Adjustments with no cash or bank: depreciation, outstanding expenses, credit purchases of assets |
| F8 | Sales | Sale of goods, cash or credit |
| F9 | Purchase | Purchase of goods, cash or credit |
| Ctrl+F8 | Credit Note | Sales returns, or an allowance given to a customer |
| Ctrl+F9 | Debit Note | Purchase returns, or an allowance received from a supplier |
Other keys worth knowing: F2 changes the voucher date, F3 changes the company, F11 opens features (where GST is enabled) and F12 opens configuration.
The Contra rule decides more marks than any other: a transaction goes in Contra only when both sides are cash or bank. Paying rent by cheque is a Payment, not a Contra, because rent is not a cash or bank ledger.
A typical practical set, worked through. GST at 18% is intra-state, so it splits into 9% CGST and 9% SGST.
| No. | Transaction | Voucher | Debit | Credit |
|---|---|---|---|---|
| 1 | Started business with cash ₹2,00,000 | Receipt (F6) | Cash 2,00,000 | Capital 2,00,000 |
| 2 | Deposited ₹1,20,000 into the bank | Contra (F4) | Bank 1,20,000 | Cash 1,20,000 |
| 3 | Bought goods on credit from Kumar Traders, ₹50,000 + GST | Purchase (F9) | Purchases 50,000, Input CGST 4,500, Input SGST 4,500 | Kumar Traders 59,000 |
| 4 | Sold goods on credit to Rao & Co, ₹80,000 + GST | Sales (F8) | Rao & Co 94,400 | Sales 80,000, Output CGST 7,200, Output SGST 7,200 |
| 5 | Paid rent by cheque ₹15,000 | Payment (F5) | Rent 15,000 | Bank 15,000 |
| 6 | Received ₹50,000 from Rao & Co by cheque | Receipt (F6) | Bank 50,000 | Rao & Co 50,000 |
| 7 | Paid Kumar Traders in full by cheque | Payment (F5) | Kumar Traders 59,000 | Bank 59,000 |
| 8 | Paid salary in cash ₹12,000 | Payment (F5) | Salary 12,000 | Cash 12,000 |
The resulting trial balance
| Ledger | Group | Debit ₹ | Credit ₹ |
|---|---|---|---|
| Capital | Capital Account | 2,00,000 | |
| Cash | Cash-in-Hand | 68,000 | |
| Bank | Bank Accounts | 96,000 | |
| Rao & Co | Sundry Debtors | 44,400 | |
| Purchases | Purchase Accounts | 50,000 | |
| Sales | Sales Accounts | 80,000 | |
| Input CGST | Duties & Taxes | 4,500 | |
| Input SGST | Duties & Taxes | 4,500 | |
| Output CGST | Duties & Taxes | 7,200 | |
| Output SGST | Duties & Taxes | 7,200 | |
| Rent | Indirect Expenses | 15,000 | |
| Salary | Indirect Expenses | 12,000 | |
| Total | 2,94,400 | 2,94,400 |
Kumar Traders does not appear because the account was settled in full: 59,000 credited, 59,000 debited, nil balance.
How to check your own answer. Cash: 2,00,000 − 1,20,000 − 12,000 = 68,000. Bank: 1,20,000 − 15,000 + 50,000 − 59,000 = 96,000. If your trial balance in Tally does not show these, one voucher has gone to the wrong ledger, and the ledger report will show you which.
Intra-state sale (seller and buyer in the same state): the tax splits equally into CGST and SGST. On a sale of ₹80,000 at 18%, that is CGST ₹7,200 and SGST ₹7,200, an invoice total of ₹94,400.
Inter-state sale: the whole tax is IGST. The same sale to a buyer in another state carries IGST of ₹14,400, and the invoice total is still ₹94,400.
Working out the tax payable from the practical above:
| CGST ₹ | SGST ₹ | |
|---|---|---|
| Output tax on sales | 7,200 | 7,200 |
| Less: input tax credit on purchases | 4,500 | 4,500 |
| Payable | 2,700 | 2,700 |
Total GST payable is ₹5,400. In Tally, the tax ledgers sit under Duties & Taxes, with the type of tax set in the ledger, and the returns are prepared from the GSTR-1 and GSTR-3B reports.
Set-up order matters. Enable GST for the company first, through the features screen, and enter the GSTIN. Then set GST details on the stock items or sales and purchase ledgers. Vouchers passed before GST is enabled will not calculate tax, and that is the usual reason a student's tax ledgers show nothing.
For the Gulf. The same structure handles VAT in the UAE, where the standard rate is 5%: the VAT ledgers go under Duties & Taxes, and output VAT less input VAT gives the amount payable.
See accounts help for the double entry behind every voucher, journal entries and ledger posting for the manual versions of the same records, bank reconciliation statements for reconciling the bank ledger, and finalisation of accounts for the adjustments at year end.
If a Tally practical will not balance, send it over with a list of your vouchers and a tutor will find the entry that has gone wrong.
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Tally Prime replaced Tally ERP 9 in 2020. The accounting is the same: the same 28 predefined groups, the same voucher types and the same function keys for vouchers. Tally Prime mainly changes navigation, adding a top menu bar and a Go To search that opens any screen by name.
Tally has 28 predefined groups: 15 primary groups and 13 sub-groups. Nine primary groups appear in the balance sheet and six in the profit and loss account. You can create your own groups beneath them, but every ledger must ultimately sit under one of the predefined primary groups.
Salary goes under Indirect Expenses, because it is a cost of running the business rather than of buying or producing the goods. Wages paid to workers producing goods go under Direct Expenses instead. The distinction matters because direct expenses affect gross profit while indirect expenses only affect net profit.
Drawings go under Capital Account, not under any expense group. Drawings are money or goods taken out by the owner for personal use, so they reduce the owner's capital. Putting them under Indirect Expenses wrongly reduces the profit and is one of the most common practical mistakes.
A Contra voucher, opened with F4, records transactions where both sides are cash or bank: cash deposited into the bank, cash withdrawn from the bank, or a transfer between two bank accounts. If either side is any other ledger, such as rent or a supplier, use a Payment or Receipt voucher.
F4 is Contra, F5 Payment, F6 Receipt, F7 Journal, F8 Sales and F9 Purchase. Ctrl+F8 opens a Credit Note for sales returns and Ctrl+F9 a Debit Note for purchase returns. F2 changes the date, F3 the company, F11 opens features and F12 opens configuration.
Use a Journal voucher, F7, for entries that involve neither cash nor bank: depreciation, outstanding or prepaid expenses, provisions, transfers between ledgers, and credit purchases or sales of fixed assets. Anything paid or received in cash or through the bank belongs in a Payment, Receipt or Contra voucher instead.
Enable GST for the company and set GST details on the stock item or sales ledger. In a Sales voucher, select the customer, enter the item or sales ledger and amount, then select the CGST and SGST ledgers for an intra-state sale or the IGST ledger for an inter-state one.
All GST ledgers, both input and output, go under Duties & Taxes, which is a sub-group of Current Liabilities. In the ledger you also set the type of duty and the tax head, such as Central Tax, State Tax or Integrated Tax, so that Tally calculates and reports the amounts correctly.
GST payable is output tax collected on sales minus input tax credit on purchases, worked out separately for each tax head. With output CGST and SGST of 7,200 each and input of 4,500 each, the business pays 2,700 CGST and 2,700 SGST, a total of 5,400.
Tally itself always posts both sides of a voucher, so a disagreement almost always comes from opening balances, shown as "Difference in opening balances". Check the opening balances on every ledger. If the totals agree but figures look wrong, a voucher has been posted to the wrong ledger or voucher type.
Carriage inward goes under Direct Expenses, because it is part of the cost of bringing purchased goods into the business. Carriage outward, the cost of delivering goods to customers, is a selling cost and goes under Indirect Expenses. The two are often confused because both carry the word carriage.
Yes. Tally handles VAT in the same way as GST: VAT ledgers are created under Duties & Taxes, output VAT is charged on sales and input VAT recovered on purchases, and the difference is the amount payable. The standard VAT rate in the UAE is five per cent.
Many syllabuses, question papers and textbooks still use the name Tally ERP 9, while most institutes now install Tally Prime. Because the groups, vouchers and accounting are the same, anything you learn in one transfers to the other, and only some menu paths and screen layouts differ.
Yes. A one-to-one tutor can work through company creation, ledger groups, vouchers and GST entries with you, and check a practical that will not balance. You complete your own assessed work and practical exams in line with your school, college or university's academic rules.
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