Payroll in Tally Prime 6.0 – A Complete Guide

Published on: 13-05-2025

Payroll in Tally Prime 6.0 – A Complete Guide

Tally Prime 6.0 is a robust business management software that simplifies accounting, inventory management, taxation, and payroll. Payroll in Tally Prime allows businesses to handle employee salaries, statutory deductions, attendance, and other HR processes seamlessly. Whether you are a small business or a large organization, Tally’s payroll module is flexible enough to meet all your payroll requirements.

This guide explains how to set up and manage payroll in Tally Prime 6.0 in a step-by-step manner.

1. Enable Payroll in Tally Prime

Before you can start using the payroll feature, you need to enable it:

• Open Tally Prime 6.0.
• Select the company for which you want to manage payroll.
• Press F11 (Features) > F1 (Accounting Features).
• Set Maintain Payroll to Yes.
• If you want statutory compliance (for PF, ESI, PT, etc.), set Enable Payroll Statutory to Yes as well.
• Save and exit.

Now, payroll menus and related options will be visible under "Gateway of Tally."

2. Create Payroll Masters

Payroll Masters define the structure of employee pay and deductions.

a) Employee Groups

Employee groups help you categorize employees.

• Gateway of Tally > Payroll Masters > Create > Employee Group.
• Enter the Group Name (e.g., "Sales Department," "HR Team").
• Select a parent group (e.g., Primary).
• Define applicability for ESI, PF, etc.

b) Employee Master

Each employee needs to be created individually.

• Gateway of Tally > Payroll Masters > Create > Employee.
• Enter Employee Name, Group, Date of Joining, Date of Birth, Gender, etc.
• Input statutory details like PAN, PF No., ESI No. if applicable.

c) Pay Heads

Pay Heads represent salary components like Basic Salary, HRA, Conveyance, etc.

• Gateway of Tally > Payroll Masters > Create > Pay Head.
• Specify the Pay Head Name (e.g., Basic Salary).
• Select the type: Earnings for Employees, Deductions from Employees, or Employer Contributions.
• Define Calculation Type (Flat Rate, As Computed Value, On Attendance, etc.).
• Example:
  • Basic Salary – Earnings > On Attendance.
  • Provident Fund – Deduction > On Computed Value.

d) Salary Details

Assign salary structures to employees.

• Gateway of Tally > Payroll Masters > Create > Salary Details.
• Select the Employee or Employee Group.
• Add Pay Heads like Basic, HRA, Allowances, Deductions.
• Define calculation basis (e.g., monthly, daily).

3. Create Attendance/Production Types

Attendance types help manage working days, leave, overtime, etc.

• Gateway of Tally > Payroll Masters > Create > Attendance/Production Type.
• Define types like "Present Days," "Leave Without Pay," "Overtime Hours."
• Set Calculation Type (Attendance/Leave with Pay, leave without Pay, Production).

This will be used during payroll voucher creation.

4. Record Attendance

Attendance records are needed if salary is based on the number of days worked.

• Gateway of Tally > Vouchers > Press F2 to select the date.
• Press Alt + A for-Attendance Voucher.
• Select the relevant Attendance Type (e.g., Present).
• Enter number of days/hours for each employee.

5. Process Payroll

Payroll processing involves salary computation and generating payslips.

a) Payroll Voucher

• Gateway of Tally > Vouchers > F4: Payroll Voucher.
• Select the month.
• Choose employees individually or groups.
• Tally will auto-calculate salaries based on salary structure and attendance.

You can manually adjust amounts if needed before saving.

6. Generate Payslips and Payroll Reports

Once payroll vouchers are recorded, you can generate payslips and various reports:

a) Employee Payslip

• Gateway of Tally > Display More Reports > Payroll Reports > Employee Payslip.
• Select an employee.
• You can print or email the payslip.

Payslips will show:

• Earnings
• Deductions
• Net Pay
• Statutory deductions (PF, ESI, PT)

b) Payroll Statement

• Gateway of Tally > Display More Reports > Payroll Reports > Payroll Statement.
• It shows earnings and deductions for multiple employees together.

c) Payroll Register

• View detailed payroll transactions month-wise.

7. Handle Statutory Compliance

Tally Prime 6.0 supports:

• Provident Fund (PF)
• Employee State Insurance (ESI)
• Professional Tax (PT)
• Income Tax (TDS on Salary)

You can configure statutory features under Payroll Masters:

• Create pay heads for Employer PF Contribution, Employee PF Deduction, etc.
• Set percentages according to prevailing laws.
• Generate necessary statutory reports like PF Challan, ESI Returns, etc.

Statutory Payment Vouchers (e.g., PF remittance) can also be made through Payment Vouchers in Tally.

8. Advanced Payroll Features

Tally Prime also provides additional payroll functionalities:

a) Loans and Advances

Record employee loans and deduct instalments via payroll vouchers.

b) Arrears Calculation

Handle salary revisions and generate arrear reports.

c) Gratuity Calculation

Calculate gratuity payable to employees based on tenure.

d) Bonus and Ex-Gratia

Manage special salary components like festival bonuses.

9. Backup and Security for Payroll Data

Since payroll data is sensitive:

• Regularly back up Tally data.
• Use user-level security to restrict payroll access.
• Tally provides Audit Trail and User Roles for better internal control.

Conclusion

Managing payroll through Tally Prime 6.0 is highly efficient once configured properly. It reduces manual work, ensures statutory compliance, and simplifies salary processing. Setting up payroll involves enabling features, creating employee masters, defining pay structures, recording attendance, processing salaries, and generating reports.

Although it may seem slightly technical at first, after a few monthly cycles, payroll management in Tally becomes smooth and routine. With the powerful features of Tally Prime, businesses can save time, improve accuracy, and ensure transparency in employee salary management.