Easy Methods to Do Payroll in Tally Prime (2025 Guide) | Step-by-Step Payroll Setup & Processing

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Payroll management is one of the most essential functions for businesses of all sizes. Whether you are running a small organization or a large enterprise, handling employee salaries, attendance, statutory deductions, and compliance can become complicated without a proper system. Tally Prime simplifies the entire process with its built-in Payroll Module, offering automation, accuracy, and efficiency.

This article explains easy and practical methods to do Payroll in Tally Prime, along with step-by-step instructions so that even beginners can manage payroll smoothly. The content is completely non-copyrighted and perfect for website use, training, or documentation.

 What Is Payroll in Tally Prime?

Payroll in Tally Prime is a complete system that helps businesses manage:

• Employee salaries
• Attendance & leave records
• Overtime & incentives
• PF, ESI, PT, TDS deductions
• Salary slip generation
• Statutory compliance reports

It replaces manual payroll processes and ensures accuracy with minimal effort.

Benefits of Using Payroll in Tally Prime

• Eliminates manual errors
• Automates salary calculations
• Ensures statutory compliance
• Maintains complete employee records
• Generates PF, ESI, PT & TDS reports
• Reduces time spent on monthly payroll
• Integrates seamlessly with accounts

 Easy Methods to Do Payroll in Tally Prime

Below are the most effective methods for managing payroll quickly and easily.

Method 1: Enable Payroll Features (Basic Setup)

Before you begin, you must activate payroll in Tally Prime.

Steps:

1. Go to Gateway of Tally → F11: Features → Payroll Features
2. Set Enable Payroll? = Yes
3. Set Maintain More than One Payroll Unit? = Yes (if required)
4. Set Enable Statutory Features? = Yes
5. Select applicable statutory rules:
   • PF
   • ESI
   • Professional Tax
   • Income Tax

This enables all payroll menus and reports inside Tally Prime.

Method 2: Create Employee Groups and Employees

Tally allows you to organize employees neatly.

Step 1: Create Employee Groups

1. Go to Payroll Info → Employee Groups → Create
2. Examples:
   • Admin Staff
   • Sales Team
   • Accounts Department
   • Production Workers

Step 2: Create Employee Masters

1. Go to Payroll Info → Employees → Create
2. Enter employee details:
   • Name
   • Date of joining
   • Cost category
   • Salary details
   • PF/ESI applicability

This forms your payroll master data.

Method 3: Create Pay Heads (Earnings & Deductions)

Pay Heads are the components of a salary structure.

Common Earnings:

• Basic Salary
• Dearness Allowance
• House Rent Allowance (HRA)
• Incentives
• Overtime

Common Deductions:

• Provident Fund (PF)
• Employee State Insurance (ESI)
• Professional Tax (PT)
• TDS

Steps to Create a Pay Head:

1. Go to Payroll Info → Pay Heads → Create
2. Select Earnings for Employees or Deductions from Employees
3. Choose the calculation method (percentage, flat value, attendance-based)
4. Set statutory settings if applicable

This allows Tally to calculate salaries automatically.

Method 4: Create Salary Structure for Employees

A salary structure assigns pay heads to each employee.

Steps:

1. Go to Payroll Info → Salary Details → Create
2. Choose the employee
3. Add pay heads:
   • Basic
   • HRA
   • Allowances
   • PF
   • PT
4. Set amounts or percentages
5. Save

Multiple employees can share the same structure for easier management.

Method 5: Record Attendance and Leave

Attendance affects the salary amount. Tally allows attendance tracking.

Steps:

1. Go to Payroll Info → Attendance/Production Types
2. Create types like:
   • Present
   • Absent
   • Overtime Hours
   • Leave Without Pay

Monthly Attendance Entry:

1. Go to Payroll Vouchers → Attendance Voucher
2. Select the month
3. Enter attendance for each employee

Tally will calculate salary based on attendance.

Method 6: Process Monthly Payroll (Salary Voucher)

This is the most important step — generating monthly salary.

Steps:

1. Go to Payroll Vouchers → Payroll Voucher
2. Choose Salary
3. Select period (e.g., December 2025)
4. Auto-filled salary details will appear
5. Verify earnings & deductions
6. Accept the voucher

Your payroll for the month is now processed!

Method 7: Generate Salary Slips

Salary slips can be printed or sent digitally.

Steps:

1. Go to Display More Reports → Payroll Reports → Employee Pay Slip
2. Choose employee & period
3. Click Print / Export to PDF

Tally generates clean, professional salary slips instantly.

Method 8: Payroll Accounting & Payment Entry

Once salary is processed, post the salary to accounts.

Steps:

1. Go to Accounting Vouchers → Payment Voucher
2. Choose Salary Payable Ledger
3. Enter payment details (bank/cash)
4. Accept voucher

This clear pending salary dues in the ledger.

Method 9: Use Payroll Statutory Reports

Tally automatically prepares statutory compliance reports:

• PF Form 3A & 6A
• ESI Register
• Professional Tax Report
• Income Tax Computation

Go to:
Display More Reports → Payroll Reports → Statutory Reports

This ensures you stay compliant with labour laws.

Summary: Why Payroll in Tally Prime Is So Easy

Tally Prime makes payroll simple because it:

✔ Automates salary calculations
✔ Maintains employee database
✔ Handles statutory deductions
✔ Generates salary slips instantly
✔ Offers accurate accounting integration
✔ Reduces manual errors and saves time

With proper setup, payroll becomes a smooth monthly routine.

 Final Conclusion

Payroll in Tally Prime is designed for businesses that want a fast, reliable, and compliant payroll system. Once you set up employees, pay heads, and salary structures, monthly payroll becomes a simple 3-step process:

1️⃣ Enter attendance
2️⃣ Process salary
3️⃣ Generate salary slips & post payments

Whether you are new to Tally or an experienced accountant, these easy methods will help you manage payroll effectively without complications.

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