Accurately recording employee payroll is essential for maintaining clean financial statements and avoiding compliance issues. One of the most important components in this process is the salary payable journal entry, which helps recognize salary due but not yet paid. Businesses often struggle with how to classify salary payable, how to handle statutory deductions like PF, ESI, and NPS, and how to pass the correct salary journal entry.
This blog post breaks down salary due entries and ledger creation in Tally for an easier payroll process for users.
What is a salary payable journal entry?
A salary payable journal entry records the amount of salary earned by employees but unpaid at the end of the period. This amount appears as a liability account under current liabilities until the time of payment.
Salary due journal entry (Accrued Salary)
When salary is incurred but not yet paid:
Journal entry:
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Salary Expense A/c – Dr.
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To Salary Payable A/c
Example:
Suppose salary due ₹80,000:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Salary Expense A/c | 80,000 | |
| Salary Payable A/c | 80,000 |
This ensures the expense is recorded in the correct accounting period.
Salary journal entry in Tally (Step-by-step)
To process Salary in Tally.ERP 9, you can create payable ledgers for salary, PF, ESI, NPS and PF admin.
1. Salary payable ledger
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Go to Gateway of Tally > Payroll Info. > Pay Heads > Create.
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Enter the name of the ledger in the Name field.
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Select Not Applicable as the Pay head type from the list of Pay Head Types.
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Select Current Liabilities from the List of Groups in the Under field.
2. PF payable ledger
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Go to Gateway of Tally > Payroll Info. > Pay Heads > Create .
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Enter the name of the ledger in the Name field.
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Select Not Applicable as the Pay head type from the list of Pay Head Types.
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Select Current Liabilities from the List of Groups in the Under field.
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Press Enter to save.
3. ESI payable ledger
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Go to Gateway of Tally > Payroll Info. > Pay Heads > Create.
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Enter the name of the ledger in the Name field.
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Set the Pay head type as Not Applicable, from the list of Pay Head Types .
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Select Current Liabilities from the List of Groups at the Under field.
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Save.
For complete documentation and troubleshooting tips, check Tally Help.
Conclusion
A properly recorded salary payable journal entry ensures accurate payroll accounting, statutory compliance, and clean financial statements. By setting up the right ledgers and following the correct salary entry process in your payroll software, businesses can avoid errors and maintain audit-ready records.
