👥 TallyPrime Payroll Mastery: The Ultimate Guide to Employee Management & Salary Processing

Payroll in TallyPrime is more than just salary accounting—it’s a fully integrated system for managing employees, statutory deductions, payslips, reports, and compliance. Whether you’re an HR manager, accountant, or business owner, this guide will help you streamline your payroll processing directly from Tally.

✅ Basic Requirements to Use Payroll in Tally

Before you activate payroll features in Tally, ensure the following:

• ✅ Employees’ master data is available
• ✅ Salary structure (pay heads, units, groups) is finalized
• ✅ Statutory features (PF, ESI, PT, TDS) are enabled
• ✅ Attendance data is either manually entered or imported
• ✅ You’re using TallyPrime latest version

⚡ Quick Shortcuts to Manage Payroll

👤 Step 1: Enabling Payroll & Statutory Features

1. Press F11 → Enable Payroll & Statutory Features
2. Set the following to Yes:
   • Maintain Payroll
   • Maintain More Than One Payroll or Cost Category
   • Enable Statutory Deductions (PF, ESI, PT, TDS)
3. Configure Salary Details under F12: Configure for alignment

🧾 Step 2: Creating Payroll Masters

Payroll masters include employees, pay heads, salary structures, and units. These act as the building blocks of salary computation.

🔹 Create Employee Groups

• Gateway of Tally → Payroll Info → Employee Groups → Create
  Example: Factory Staff, Sales Team, Office Admin

🔹 Create Employee Master

• Payroll Info → Employees → Create
  Fill:
• Name, Group, Date of Joining
• Designation, PAN/Aadhar (optional)
• Statutory Details (PF/UAN, ESI Number, etc.)

🔹 Create Units (Work/Production)

• Useful for piece-rate salary
• Payroll Info → Units → Create
  E.g., Hours, Days, Units, KG

🔹 Create Pay Heads

Go to Payroll Info → Pay Heads → Create

Types of pay heads:

• Earnings for Employees: Basic Pay, HRA, Bonus
• Deductions from Employees: PF, ESI, TDS
• Employer Contributions: Employer’s PF, ESI

💼 Step 3: Salary Structure Setup (Pay Structure Assignment)

You can assign predefined salary structures to employees.

1. Go to Payroll Info → Salary Details → Create
2. Select employee and assign:
   • Basic: ₹20,000
   • HRA: 40% of Basic
   • Conveyance: Fixed ₹2,000
   • PF: 12% deduction from Basic
   • Employer PF: 12% addition

🧠 Tip: Use formula-based pay heads to auto-calculate from base salary.

📆 Step 4: Attendance Management

Tally enables manual or imported attendance tracking for salary computation.

Manual Entry:

• Gateway → Payroll Vouchers → Ctrl + F5
• Enter Employee → Present/Absent Days → Save

Import Option:

• Use Excel to import attendance data using standard XML format

💰 Step 5: Salary Processing

Generate payroll voucher for each salary cycle.

1. Gateway → Payroll Vouchers → Ctrl + F4
2. Choose Salary → Select Employee Group
3. System auto-fetches salary with earnings and deductions
4. Accept to post salary into books

🧾 Step 6: Payslip Generation

Payslips can be generated and printed/email directly from Tally.

• Gateway → Display More Reports → Payroll Reports → Payslip
• Select employee/group and period
• Print/email payslips with digital signature and company logo

📈 Salary Processing Journey in Tally

Create Payroll Masters → Configure Attendance → Assign Salary Structure →
Enter Attendance → Process Salary Voucher → Generate Payslip → Record Statutory Deductions

📊 Payroll Reports in Tally

🔐 Security Controls in Payroll

Tally allows user-level security to prevent unauthorized access:

• Enable “Tally.NET Users”
• Define roles:
  • View-only for HR
  • Entry-only for Payroll Admin
  • Manager Approval for Salary Finalization

🧮 Statutory Deductions from Salary

PF Deduction: 12% of Basic Pay  
ESI Deduction: 0.75% of Gross (Employee), 3.25% (Employer)  
Professional Tax: Based on State Slabs  
TDS: As per Income Tax Slabs (if applicable)

🔗 Internal Links of taxcrux

• Understanding TDS
• GST Registration Guide
• Audit Trail in Tally

🌐 External Link

• Income Tax Portal

• GST Portal

❓ FAQs on Payroll in TallyPrime

• What is the benefit of using payroll in Tally?
  It automates salary computation, statutory deductions, and payslip generation.
• Can I import employee data into Tally?
  Yes, using XML or Excel import templates.
• Is Tally payroll compliant with PF, ESI, PT laws?
  Absolutely. It includes in-built compliance reports.
• Can payslips be emailed directly?
  Yes, if email settings are configured in Tally.
• Can I manage multiple locations’ payroll in Tally?
  Yes, using Employee Groups and Cost Centres.
• Is there a way to create formula-based pay heads?
  Yes, use ‘Computation Info’ while creating pay heads.
• Can payroll be integrated with attendance software?
  Yes, via XML/Excel import or third-party tools.
• How is TDS on salary calculated in Tally?
  Based on applicable slabs and PAN availability.
• Does Tally support gratuity and bonus payments?
  Yes, with custom pay heads for gratuity or annual bonus.
• Can I reverse or modify salary vouchers?
  Only with appropriate security rights and approval settings.

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