Payroll in Tally ERP 9

|Updated on: January 20, 2022

What is Payroll?

Payroll is simply an aggregation of total amount of wages paid by the company to its employees. It is one of the most significant expenses for businesses; hence it is very complicated expense for companies to process. Processing payroll slips is a very time consuming task and can be prepared weekly, semi - monthly or monthly depending upon the resources which the company has in its reserve.

How do we process Payroll Accounts?

Companies usually hire payroll services from third parties by way of outsourcing which make the process of accounting for payroll and easy and effortless task. Payroll service provider manages multiple tasks such as tax obligations, employee’s time calculation, preparing checks and salary report management. It eventually reduces the operating cost of the business.

What changes do we see today in processing of Payroll Services?

With Advent of ERP systems such as Tally.ERP 9 the process has made a shift. Today the ‘Payroll Module’ in the software is totally integrated with the business management solution and been enabled to manage trouble free payroll processing along with the accounting processes.

The software provides remote facility that can be relied upon and is now easy to access, process and manage the payroll information from anywhere and anytime in the world.

There is also no requirement of hiring specialised IT/ HR professionals to manage and organize the payroll module from the Tally software. As this module can be managed on its own and provides impeccable solution, an accountant or any HR personnel of the company can install, organise and manage it.

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Salient Payroll features in Tally.ERP 9

  • Payroll accounting in Tally offers the benefits of simplified Payroll processing and accounting due to its added benefit of integration with accounts.
  • The Payroll module in Tally.ERP 9 reports comprehensively as it has user defined classifications and sub classifications. This might be associated with the employees, employee groups, pay components, departments etc.
  • The payroll module also lets flexible and user defined criteria for users.
  • It also offers the facility to create user defined earnings and deductions pay heads.
  • The module lets us use unlimited grouping of Payroll Masters.
  • Supports production/attendance/time based remuneration units which are user defined production units.
  • It offers all-inclusive cost centre as well as employee wise costing reports.
  • Ensures timely and precise processing of salary along with employee statutory deductions and employer statutory contributions with the help of predefined processes.
  • It helps generate Statutory forms and challans for EPF & ESI as prescribed.
  • The payroll module helps in tracking the loan details of employees as well.

How to enable payroll feature in Tally ERP 9

We can enable payroll in Tally.ERP 9 from the Cost/Profit Centers Management section under F1: Accounting Features parked under “F11”: Company Features Panel.

To enable Payroll in Tally.ERP 9:

Step 1

Go to Gateway of Tally > F11: Features > F1: Accounting Features.

Step 2

Tab down to Cost/Profit Centers Management section.

Step 3

Set the option Maintain payroll to Yes.

Step 4

Set the option Maintain more than one payroll or cost category to Yes, to allocate employee cost by creating separate employee categories.

Step 5

Press Enter to accept and save, and return to the Gateway of Tally screen.

Now at Gateway of Tally.ERP 9 we can see Payroll Info master next to Accounts Info. With this now we can process payroll accounting by creating Employee master, and then creating payroll units, creating pay heads and defining the salary structure and tax related to these components.

How to generate a payslip in Tally.ERP 9?

We can generate a payslip in Tally with just 6 simple steps:

Step 1

The first step is to create employee master.

·       Path for employee creation: - G.O.T. (Gateway of Tally) --> Payroll Info --> Employees --> Create (Single).

·       Path for employee group creation: - G.O.T. (Gateway of Tally) --> Payroll Info --> Employee Group --> Create (Single).

We are here required to enter the requisite Employee Details & Employee group by grouping employees under the function they perform such as their department or designation.

Step 2

The next step in this process is to create payroll units.

Path for attendance/ production types creation: - G.O.T. (Gateway of Tally) --> Payroll Info --> Attendance/ Production Types --> Create.

Here we are required to brief on Attendance/Production type which will be used to record the Attendance and Production details.

Step 3

In this step we will create pay heads for salary components.

Path for pay head creation: - G.O.T. (Gateway of Tally) --> Payroll Info --> Pay Heads --> Create.

All the components of structured salary are created under Pay Head. Pay head creation in Tally ERP 9 is very user-friendly as it allows creating any complex type of pay heads.

Step 4

Ant this stage we will journalize or record salary details.

Path for salary detail creation: - G.O.T. (Gateway of Tally) --> Payroll Info --> Salary Detail --> Create

Here we will key into the Tally ERP 9 system the details of salary applicable for both Employee Groups as well as Individual Employees with earnings, deductions and basis of computation.

Step 5

Path for voucher creation: - G.O.T. (Gateway of Tally) --> Payroll Voucher --> Press “Ctrl + F5” and then press “Ctrl + F4” to open payroll voucher: and finally Press “Alt + A” to auto fill information.

This is the final step in the process to pass payroll voucher

Here we will be required to enter all Earnings and Deductions in payroll transactions that are paid along with the salary payslip for all employees.

Step 6

To generate the payslip created.

Path for view report of payroll: - G.O.T. (Gateway of Tally) --> Display --> Payroll Report --> Statement of Payroll

Finally we have to generate the Payslip which will provide details of employee such as attendance details, and we will also see that Tally ERP 9 system itemizing each components of employee’s  earnings and deductions, and displaying the net amount paid to him for a given pay period.


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