Inventory management in Tally

  1. 1. What is Inventory Management ?
  2. 2. How to maintain stock in Tally.ERP 9 ?
  3. 3. Conclusion

1. What is Inventory Management ?

Stock management or Inventory management is a discipline primarily about specifying the shape and placement of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials.

Inventory is one of the most valuable assets that business values. In manufacturing, retail, food service and other inventory-intensive sectors, a company's inputs and finished products are the core of its business, and a shortage of inventory when and where it's needed can be extremely detrimental.

Its for these reasons, inventory management becomes important for businesses of any size. Taking up the decisions of when to restock certain items, what amounts to purchase or produce, what price to pay – as well as when to sell and at what price – can easily become complex decisions. Small and medium sized enterprises will often keep track of stock manually and determine reorder points and quantities using Excel formulas. Bigger companies will use specialized enterprise resource planning (ERP) software.

2. How to maintain stock in Tally.ERP 9 ?

Let us understand this with a Tally inventory example. ABC LTD purchased 10 pieces of ABC Brand TV units for Rs. 5,000 per piece and sold 5 pieces of TV units of ABC Brand for Rs. 10,000 per piece to XYZ & Sons Private Limited.

Recording the above transaction in Tally.ERP 9 would reveal as how inventory management in Tally could be achieved.

For inventory management in Tally.ERP 9 :

Particulars Path/Direction Entry to pass or details to be filled
First step is to create a company On Gateway of Tally Press Alt + F3 to create a new company.
  • Select Create Company option in the menu and press enter key.
  • The screen displayed in front of you is company creation screen.
  • Under Company details select Accounts with Inventory in order to activate Tally ERP 9 Inventory management feature.
  • Type the name of the company, address, financial year begins and all other details asked by the creation screen.
Second step to create ledger Gateway of Tally > accounts info > ledger > create (single).
  • Create purchase ledger under purchase accounts and
  • Create sales ledger under Sales account
  • Press Ctrl + A every time a ledger is created and Yes to accept the ledger on ledger creation screen.
To create a stock group Gateway of Tally > Inventory Info > Stock Group > Create
  • Under the Stock group name type “TV” and
  • Assign the group under primary category
To create a stock item Gateway of Tally > Inventory Info > Stock Item > Create
  • Under the Stock item name type “ABC”
  • And assign the stock item to stock group created “TV”
  • Select/ Create Units/ Unique Quantity Code to “PCS”
  • Under GST Rate Classification fill in the Description/ HSN Code and then enable GST tax classification.
  • To enable GST tax classification, set the Tax details to taxability and then tax type feed the GST rates applicable to the product
  • Since TV is an electronic item it falls under 18% GST slab so under IGST Rate type feed 18% and CGST and SGST are automatically  fed from the entry by dividing the same into two halves i.e., 9% for CGST and 9% for SGST
  • Finally Press Enter to accept the stock creation.
To Pass Voucher Entry for purchase Gateway of Tally > accounting voucher > F9 (Purchase Voucher)
  • F2 select the date
  • Feed Suppliers Invoice No.
  • Create Suppliers ledger by pressing Alt + C from voucher creation screen and feed all particulars including suppliers GSTIN
  • Now under purchase ledger select purchase ledger created in earlier steps.
  • Under Name of the Item select ABC stock item ledger and feed in the quantity and rate particulars and
  • Finally select the GST tax ledgers for example for Intra state purchase select CGST and SGST ledger and for Inter State purchase select IGST Tax ledger and press enter to create the voucher
To view stock summary under inventory management in Tally after passing purchase voucher Gateway of Tally > Stock summary
  • Under particulars column the Stock Item “ABC” with group name “TV” will appear along with quantity, rate and value.
To Pass Voucher Entry for sales Gateway of Tally > accounting voucher > F8 (Sales Voucher)
  • Pass entry in similar way as in case of purchase voucher with a only change that you will be selecting sales ledger instead of purchase ledger.
To view stock summary under inventory management in Tally after passing sales voucher to finally view as how inventory management in Tally ERP looks Gateway of Tally > Stock summary
  • In Stock summary screen now you will find the quantity reduced by 5 units after passing the sales voucher.
  • To view detailed summary Press Alt + F1

In similar way entries can be passed for any stock item one wants to create and view the Stock summary from the Stock register maintained by Tally. ERP 9 solution and track the inward and outward details with inventory management in Tally.

3. Conclusion

Tally ERP software has a number of novel user friendly features which make it a convenient tool to manage stock. One such innovative feature is the stock ageing report. The Stock Ageing report in Tally ERP 9 displays the age of the stock in hand. This report lists the age wise break up of Inventory to point out old stock based on the user defined slabs. Whether a new startup or a huge corporation, Tally is the best enterprise resource management system and it can completely revolutionize the course of a company’s trajectory to maintain inventory levels with help of order processing features under inventory management in Tally.


With the trust of nearly 2 million businesses, Tally is truly the leading business software of choice in India. Be it accounting or GST compliance, you can rely on us to simplify all ends of your business.