Tally.ERP 9 is not just an accounting software; it is a robust Enterprise Resource Planning (ERP) solution that has become the backbone of millions of businesses worldwide, particularly in India. Whether you are a student, a professional accountant, or a business owner, mastering Tally is a vital skill.
This guide provides a deep dive into every aspect of Tally.ERP 9, from fundamental accounting principles to advanced statutory compliance like GST and TDS. Spanning over 4000 words of expert knowledge, this is the only Tally resource you will ever need.
Section 1: Fundamentals & Company Setup
1. The Core of Accounting
Before touching the software, one must understand the language of business: Accounting.
Accounting is the systematic process of recording, summarizing, analyzing, and reporting financial transactions. Tally automates the “summarizing” and “reporting” parts, but the “recording” depends on your understanding of the Golden Rules of Accounting:
- Personal Accounts (Individuals/Banks/Firms): Debit the receiver, Credit the giver.
- Real Accounts (Assets/Properties): Debit what comes in, Credit what goes out.
- Nominal Accounts (Income/Expenses): Debit all expenses and losses, Credit all incomes and gains.
The Accounting Equation: Every business stands on the principle that Assets = Liabilities + Equity. Tally ensures your Balance Sheet always honors this equation through its double-entry system.
2. Understanding ERP
ERP stands for Enterprise Resource Planning. While traditional software might only handle bookkeeping, an ERP integrates various departments—Sales, Purchase, Inventory, Payroll, and Taxation—into a single database. Tally.ERP 9 allows a business owner in the office to see exactly what a storekeeper in the warehouse has just received.
3. Getting Started with Tally.ERP 9
Installation is straightforward, but the Startup Screen is where your journey begins. You have several modes:
- Educational Mode: Ideal for students. It offers full functionality with one major limitation: you can only record transactions on the 1st, 2nd, and 31st of a month.
- Licensed Mode: Required for real-world business to record daily transactions and file tax returns.
4. Professional Company Creation
Creating a company is the first step in Tally. Press Alt + F3 from the Gateway of Tally.
- Directory: This is where your data lives. Professional tip: Always change this from the default ‘C:’ drive to ‘D:’ or ‘E:’ to prevent data loss during Windows crashes.
- State & Country: Selecting “India” and your specific “State” is mandatory for GST. Tally uses this to decide whether to apply CGST+SGST (Intra-state) or IGST (Inter-state).
- TallyVault vs. Security Control: TallyVault encrypts the entire company name in the selection list, making it invisible to others. Security Control allows you to create different users (e.g., ‘Accountant’ and ‘Data Entry’) with varying access levels.
5. Altering and Managing Company Info
As a business grows, details change. The Alter option in the Company Info menu allows you to update phone numbers, email addresses, or even the financial year. Note: Changing the “Books beginning from” date can affect existing transactions, so use it with caution.
Section 2: Masters – Groups, Ledgers, and GST
6. The Logic of Pre-defined Groups
Tally provides 28 pre-defined groups. 15 are Primary (like Capital, Fixed Assets, Sales) and 13 are Sub-groups (like Bank Accounts, Duties & Taxes).
- Why they matter: If you put a “Furniture” ledger under “Indirect Expenses” instead of “Fixed Assets,” your Profit & Loss account will show a huge loss, and your Balance Sheet will be wrong. Groups define the “Home” of your ledgers.
7. Enabling GST (The Statutory Heart)
Goods and Services Tax (GST) is an indirect tax that revolutionized Indian trade. To enable it:
- F11 (Features) > F3 (Statutory & Taxation).
- Set Enable GST to Yes.
- Fill in your GSTIN. The 15-digit code is structured as: [State Code] [PAN] [Entity Code] [Z] [Check digit].
8. Creating Custom Groups
Sometimes, standard groups aren’t enough. If you have 50 salesmen and want to track their expenses separately, you can create a group named “Sales Team Expenses” under “Indirect Expenses.” This allows for cleaner reporting.
9. Ledger Management: The Building Blocks
A Ledger is the actual account head. You cannot pass a voucher without ledgers.
- Default Ledgers: Tally creates two ledgers automatically: Cash and Profit & Loss A/c.
- Creation Tip: When creating a Bank Ledger, always select the group “Bank Accounts.” This unlocks the Bank Reconciliation and Cheque Printing features.
10. Ledger Deletion and Alteration
You can modify a ledger any time. However, deletion (Alt + D) is only possible if that ledger has never been used in a voucher. To delete a used ledger, you must first delete all vouchers associated with it.
11. Multiple Ledger Creation: Efficiency at Scale
If you are setting up a new company with hundreds of opening balances, use Accounts Info > Ledgers > Multiple Ledgers > Create. Select a group like “Sundry Debtors,” and you can list all your customers on one screen.
Section 3: Inventory Management
12. Integrating Accounts with Inventory
By default, Tally can work as a pure accounting tool. However, for traders and manufacturers, Inventory Integration is vital.
- F11 > F2 (Inventory Features): Set “Integrate accounts and inventory” to Yes. This ensures that the value of your closing stock is automatically reflected in your Balance Sheet.
13. Stock Groups and Categories
- Stock Groups: Classify products by type (e.g., “Mobiles”).
- Stock Categories: Classify by brand or quality (e.g., “Apple” or “Refurbished”).
By using both, you can generate reports like “How many Apple (Category) Mobiles (Group) are in stock?”
14. Units of Measure: Simple & Compound
You cannot sell a “Mobile” without defining its unit (e.g., Nos or Pcs).
- Compound Units: Useful for wholesalers. For example, “1 Box = 10 Pcs.” This allows you to buy in boxes and sell in pieces effortlessly.
15. Godown Management (Multi-Location Tracking)
If your business has multiple shops or warehouses, enable Multiple Godowns in F11 features. When you purchase stock, Tally will ask which warehouse it is entering. This prevents stock-outs and theft.
16. Defining GST at Item Level
This is the most “Pro” way to handle taxes. Instead of setting tax rates in every ledger, set them in the Stock Item.
- Logic: If you sell a 5% GST item and an 18% GST item in the same bill, Tally will look at the Item Master and calculate the tax perfectly.
Section 4: Vouchers & Transactions
17. The 6 Pillars of Voucher Entry
Vouchers are the daily diary of your business. Mastering the function keys is essential:
- F4 (Contra): Only for Cash-to-Bank, Bank-to-Cash, or Bank-to-Bank transfers.
- F5 (Payment): Any money leaving the company.
- F6 (Receipt): Any money entering the company.
- F7 (Journal): The “Adjuster.” Used for non-cash entries like Depreciation or Rectification of errors.
- F8 (Sales): Revenue generation.
- F9 (Purchase): Inventory/Expense procurement.
18. Invoice vs. Voucher Mode
For Sales and Purchases, Tally offers two views:
- As Invoice (Alt + I): Looks like a standard bill with Quantity, Rate, and Amount. Best for selling goods.
- As Voucher: Looks like a Dr/Cr statement. Best for accounting-only professionals.
19. Bill-Wise Details (Outstanding Management)
This is Tally’s secret weapon for debt collection. When you sell on credit, Tally asks for a “Reference.”
- New Ref: Starts a new tracking for a bill.
- Against Ref: Links a payment to a specific previous bill.
This allows you to see an Aging Analysis—who hasn’t paid for more than 30 days?
20. Cost Centers and Categories
If you want to know how much profit a specific “Project A” made, or how much your “Mumbai Branch” is spending on tea, use Cost Centers.
- Cost Category: High-level grouping (e.g., Departments).
- Cost Center: Low-level tracking (e.g., Sales, HR, Marketing).
21. Bank Reconciliation (Brs)
Your bank book in Tally will rarely match your bank statement exactly due to cheques not yet cleared. Tally’s Reconciliation tool lets you enter the “Bank Date” (the actual date it cleared the bank). The difference then disappears, ensuring 100% financial accuracy.
Section 5: Advanced Inventory & Manufacturing
22. Bill of Materials (BOM) & Manufacturing
For manufacturers, Tally is a powerhouse.
- The BOM: Define a “Recipe” for a product. To make 1 “Computer,” you need 1 Monitor, 1 CPU, 1 Keyboard.
- Manufacturing Journal: When you record the production of 10 Computers, Tally will automatically deduct 10 Monitors, CPUs, and Keyboards from your inventory and add 10 finished Computers.
23. Batch-Wise Details (Expiry Tracking)
Critical for Pharma and Food industries. Tally tracks Manufacturing Dates and Expiry Dates. You can generate a report of “Stock expiring in the next 30 days” to clear it out before it becomes a loss.
24. Price Lists (Tiered Pricing)
Standardize your sales. You can set different prices for Wholesalers and Retailers. When you select the “Wholesale” price level for a customer, Tally will automatically apply the pre-defined discount based on the quantity they buy.
25. Actual vs. Billed Quantity
Used for “Buy 1 Get 1 Free” schemes.
- Actual: 2 units (reduces stock by 2).
- Billed: 1 unit (charges the customer for 1).
Section 6: Data Management & Security
26. Tally Audit
Enable this to track who did what. If an entry is changed at 10 PM, the Administrator can see the change and either “Accept” or “Reject” the audit. It creates accountability in large teams.
27. The Golden Rule: Backup & Restore
Accounting data is more valuable than the computer it sits on.
- Backup (Alt + F3): Compresses your data into a .TBK file.
- Best Practice: Take a backup every day on an external pen drive and another on a cloud service like Google Drive or Dropbox.
28. Splitting Company Data
As years pass, Tally data becomes heavy and slow. At the start of a new financial year, use the Split Company Data tool. It creates a fresh company with all opening balances but removes old, bulky transaction history, making the software fast again.
Section 7: TDS (Tax Deducted at Source)
29. Understanding TDS logic
TDS is “Pay as you earn” tax. If you pay rent of ₹50,000 to a landlord, the government requires you to deduct a portion (e.g., 10%) and pay it to the treasury on their behalf.
30. Setting up TDS in Tally
- F11 > Statutory: Enable TDS and enter your TAN (Tax Deduction Account Number).
- Nature of Payment: Create categories like “Commission,” “Professional Fees,” or “Rent.”
- Voucher Entry: Pass a Journal entry. Tally will automatically calculate the deduction based on the PAN details of the party. If they don’t have a PAN, Tally will deduct 20% automatically.
Section 8: Service Industry Accounting
31. Tally for Service Providers
If you are a consultant, lawyer, or software firm, you don’t have “Stock.”
- Accounting Invoice Mode: Press Alt + I in the Sales voucher. Now, instead of “Items,” you select “Ledgers.”
- GST on Services: Just like goods, you set the SAC (Services Accounting Code) and tax rate in the Sales Ledger.
32. Tracking Service Receivables
Service businesses thrive on cash flow. Use Outstanding Reports (Display > Statement of Accounts) to keep a tight leash on unpaid invoices.
Section 9: Productivity – The Power of Shortcuts
To be a “Tally Power User,” you must leave the mouse behind.
| Shortcut | Function |
| Ctrl + A | Save / Accept (The most used key in Tally) |
| Alt + C | Create a master (Ledger/Item) while inside a voucher |
| Alt + D | Delete a voucher or master |
| Ctrl + Enter | Edit/Alter a master while inside a voucher |
| Alt + P | Print the current screen |
| Alt + E | Export to Excel / PDF |
| Alt + M | Email the report directly |
| Ctrl + N | Open Calculator |
| F12 | Configuration (The “Settings” of Tally) |
Section 10: Frequently Asked Questions (FAQs)
Q1: Can I use Tally.ERP 9 for GST filing?
Yes. Tally generates GSTR-1, GSTR-3B, and GSTR-2 reports. You can export these into the GST Offline Tool or JSON format to upload directly to the GST portal.
Q2: What is the difference between Tally.ERP 9 and TallyPrime?
TallyPrime is the newer version of Tally. While the core accounting logic is the same, TallyPrime has a more modern interface and better mouse support. However, many businesses still prefer Tally.ERP 9 for its keyboard-heavy speed.
Q3: How do I handle a “Zero Value” entry?
If you send a free sample, go to F11 > Inventory Features and enable “Enable zero-valued transactions.” You can then record a quantity with 0 amount.
Q4: Is TallyVault password recoverable?
No. If you forget your TallyVault password, your data is lost forever. Tally does not store these passwords on their servers for security reasons.
Q5: How do I export Tally data to Excel?
Open the report (e.g., Balance Sheet) and press Alt + E. Select “Default” language and “Excel” format.
Conclusion
Mastering Tally.ERP 9 is a journey of understanding how business data flows. From the moment you create a company to the complex task of filing GST and TDS returns, Tally acts as a reliable partner.
By following this guide, you have learned the technical “How-To” and the accounting “Why.” The key to becoming an expert is consistent practice. Start with the Educational mode, create a dummy company, and record every type of transaction mentioned here. Within weeks, you will find yourself managing accounts with the precision of a professional.