Overview: What You’ll Configure
- Enable Payroll and choose your pay period (monthly/weekly).
- Create Employee Groups & Employees with bank & statutory IDs.
- Define Pay Heads (Earnings/Deductions) and Salary Structures.
- Capture Attendance/Production (present days, OT, incentives).
- Process Payroll Vouchers, Payslips, and Bank/Statutory payments.
Do a company backup before first payroll run. It’s the safest rollback plan.
Step 1 — Enable Payroll in TallyPrime
- Press F11 (Features) → Payroll → Enable Payroll = Yes.
- Set Maintain more than one payroll or cost category if you split departments.
- Configure Pay Period (e.g., 01–31 every month).
Step 2 — Employee Groups & Employees Masters
- Gateway → Create → Employee Group (e.g., Production, Sales, Admin).
- Gateway → Create → Employee:
- Personal: Name, DOJ, Gender, PAN/Aadhaar (optional).
- Bank: A/c No, IFSC (for salary transfers).
- Statutory: PF UAN, ESI IP, Professional Tax state (if applicable).
Group employees for easier bulk assignment and reporting.
Step 3 — Pay Heads Earnings & Deductions
- Gateway → Create → Pay Head.
- Examples:
- Basic (Earnings → Calculation Type: As Computed Value or As a % of CTC).
- HRA (Earnings → % of Basic).
- Conveyance (Earnings → Flat).
- PF Employee (Deductions → % of PF Wages).
- ESI Employee (Deductions → % of ESI Wages).
- PT (Deductions → As per state slab).
- PF Employer / ESI Employer (Company Contribution → Expense booking).
- Map each pay head to the correct ledger (e.g., Salaries, PF Payable).
Step 4 — Salary Structure Assignment
- Create a Pay Structure (package) with Basic, HRA, allowances, and deductions.
- Assign the structure to employee/group; set effective date.
- Use Cost Centres to track department-wise payroll.
Step 5 — Attendance & Leave
- Create Attendance/Production Types (Present Days, Overtime Hours, Leave Without Pay).
- Record monthly attendance: Attendance Vouchers (days/hours).
- Set LOP rules—auto prorate Basic/HRA for absences if needed.
Step 6 — Process Payroll Monthly Run
Payroll Vouchers
- Gateway → Vouchers → Payroll → Salary.
- Select Period → Employee/Group → Auto Fill based on structure & attendance.
- Review computed values (Basic, HRA, PF/ESI/PT) → Ctrl + A to accept.
Generate Payslips
- Display → Payroll Reports → Payslip.
- Choose employee/group & period → Alt + P Print or Email.
- Add your company logo/address in features for branding.
| Pay Head | Type | Example | Ledger Impact |
|---|---|---|---|
| Basic | Earning | ₹20,000 | Salary Expense (Dr) |
| HRA (40% Basic) | Earning | ₹8,000 | Salary Expense (Dr) |
| PF Employee (12% Basic) | Deduction | ₹2,400 | PF Payable (Cr) |
| ESI Employee (0.75%) | Deduction | ₹210 | ESI Payable (Cr) |
| Net Pay | — | ₹25,390 | Salary Payable (Cr) |
Step 7 — Salary Disbursement & Statutory Compliance PF/ESI/PT
Salary Payment
- Create Payment Voucher: Salary Payable (Dr) → Bank (Cr).
- Use Banking → Payment Advice to export NEFT files (if supported).
PF / ESI / PT
- Record Employer Contributions (PF/ESI) via pay heads mapped to expense & liability ledgers.
- Remit statutory liabilities with Payment Vouchers against PF/ESI/PT Payable.
- Generate forms/challans from Payroll Statutory Reports (state-specific availability varies).
Step 8 — Payroll Reports You’ll Use
| Report | Path | Purpose |
|---|---|---|
| Payslip (Single/Multiple) | Display → Payroll → Payslip | Employee salary statement |
| Attendance Sheet | Display → Payroll → Attendance | Presence/leave/OT review |
| Payroll Statement | Display → Payroll → Statements | Month-wise earnings & deductions |
| Pay Head Analysis | Display → Payroll → Pay Head Analysis | Cost of each component |
| Employee Ledger | Display → Payroll → Employee Ledger | All transactions for an employee |
Best Practices
- Freeze attendance by a cut-off date; avoid back-dated edits post run.
- Keep a standard CTC template for quick onboarding.
- Map every pay head to correct ledgers (expense/liability) to keep BS & P&L clean.
- Use Cost Centres to analyze payroll by department or project.
- Back up before salary run; lock period after disbursement.
Troubleshooting (Common Errors & Fixes)
| Issue | Cause | Quick Fix |
|---|---|---|
| Payslip shows zero | No attendance or structure not assigned | Enter attendance; assign pay structure with effective date |
| PF/ESI not calculating | Wrong pay head base or employee not marked for PF/ESI | Check pay head formula & employee statutory settings |
| Duplicate salary expense | Posted both Payroll Voucher and manual JV | Use Payroll Voucher only; reverse extra JV |
| Bank advice not matching net pay | Unapproved edits after processing | Re-process payroll or lock period before export |