How to Make Payment Entry in Tally Prime (2025 Guide) – Step-by-Step with Examples for Beginners

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Recording payment entries correctly is one of the most important tasks in accounting. Whether you are paying suppliers, clearing expenses, making bank payments, or settling dues—Tally Prime makes the process simple, fast, and fully GST-compliant.

This complete, non-copyrighted 6-minute guide explains:

✔ What a payment entry is
✔ Steps to enable payment vouchers
✔ How to pass payment entries in Tally Prime (Cash, Bank, UPI, Cheque)
✔ Examples for easy understanding
✔ Common mistakes users make
✔ Tips to keep your payment records clean

This guide is ideal for beginners, accountants, business owners, and students.

What Is a Payment Entry in Tally?

A payment entry is used to record any amount paid out of the business, such as:

• Paying suppliers
• Paying salaries
• Paying utility bills (rent, electricity, etc.)
• Paying for purchases
• Paying GST or taxes
• Paying petty cash expenses
• Clearing outstanding liabilities

Every payment entry reduces the balance of the Cash or Bank account.

 Step 1: Enable Payment Voucher in Tally Prime

Before making payment entries, ensure the voucher type is active.

Go to:

Gateway of Tally → Settings → Voucher Type → Payment → Enable

OR simply press:

➡V (Voucher)
➡F5 (Payment)

Payment Voucher screen will open.

Step 2: Choose Mode of Payment (Cash / Bank / UPI / Cheque)

Tally Prime shows Modes at the top:

✔ As Voucher Mode – Traditional view

✔ As Invoice Mode – GST style for expenses

✔ Banking Mode – Cheque / NEFT / RTGS / UPI

Select the one based on your payment method.

Examples:

• Cash Payment → Choose Cash ledger
• Bank Payment → Select Bank Account
• UPI/NEFT Payment → Select Bank + Payment Mode
• Cheque Payment → Select Bank + Enter Cheque No.

 Step 3: Pass a Payment Entry (Step-by-Step)

Here’s the simplest structure of a payment:

➡Credit: Cash / Bank (Money goes out)
➡Debit: Expense / Supplier / Ledger

 Example 1: Cash Payment Entry

Scenario: You paid ₹2,000 for office stationery.

Steps:

1️⃣ Press F5: Payment
2️⃣ Select Cash
3️⃣ Debit: Stationery Expenses
4️⃣ Credit: Cash (auto-selected)
5️⃣ Narration: Being stationery purchased for office use
6️⃣ Save entry

✔ That’s it! Payment entry is recorded.

 Example 2: Bank Payment to Supplier

Scenario: You paid ₹25,000 to supplier ABC Traders via NEFT.

Steps:

1️⃣ Press F5: Payment
2️⃣ Select Bank Account
3️⃣ Debit: ABC Traders
4️⃣ Enter amount: ₹25,000
5️⃣ Set Bank Allocations

• Mode of Payment: NEFT
• Instrument No: Transaction ID
  6️⃣ Add narration
  7️⃣ Save entry

✔ Supplier dues get cleared automatically.

 Example 3: Payment of GST in Tally

1️⃣ Go to Payment Voucher
2️⃣ Debit: GST Ledger (CGST/SGST/IGST)
3️⃣ Credit: Bank Account
4️⃣ Enter UTR/Challan No
5️⃣ Save

✔ GST payment updated in books.

 Example 4: Salary Payment in Tally

1️⃣ Enable Payroll or create Salary Expense Ledger
2️⃣ Press F5: Payment
3️⃣ Debit: Salary Expense
4️⃣ Credit: Bank/Cash
5️⃣ Save entry

✔ Salary recorded.

 Important Options in Payment Entry Screen

1. Cost Centers (If enabled)

Useful for tracking department-wise expenses.

2. TDS/TCS Ledger Selection

Auto deducts statutory tax before payment.

3. Bank Reconciliation Fields

When paying through bank, you can enter:

• Cheque No.
• Cheque Date
• Transaction ID
• Bank Allocation

4. Narration

Helps auditors understand each payment clearly.

 How to View All Payment Entries

Go to:

Gateway of Tally → Display More Reports → Accounts Books → Cash/Bank Book

OR use:

Voucher Register → Payment Register

You can see, filter, or correct entries.

 Common Mistakes to Avoid in Payment Entries

❌ Using wrong ledger (Expense vs Supplier)

Always check whether expense is paid directly or clearing payable.

❌ Not entering correct bank mode

This affects bank reconciliation.

❌ Forgetting narration

Makes audit difficult.

❌ Using Cash for large payments

Avoid cash for purchases above ₹10,000 to stay compliant.

❌ Not matching payment with outstanding report

Mismatch leads to pending dues.

 Tips for Clean & Accurate Payment Records

✔ Always create proper ledgers before entering payment
✔ Use Invoice Mode for detailed expense recording
✔ Match bank entries with bank statement weekly
✔ Use Cost Centers for tracking department expenses
✔ Keep narration meaningful
✔ Review Payment Register weekly

 Final Summary

Payment entry in Tally Prime is simple once you understand the basics:

• Debit: What is being paid for
• Credit: Cash or Bank account

Tally allows fast, accurate, GST-ready payment tracking with multiple modes such as:

✔ Cash
✔ Bank
✔ UPI
✔ Cheque
✔ NEFT / RTGS

By following the steps and avoiding common errors, you can maintain clean, professional, and audit-ready payment records in Tally Prime.

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