Payroll Masters in Tally Prime – Complete Guide to Employee, Groups, Attendance & Production Setup (2025 Edition)

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Payroll accounting inside Tally Prime is a powerful module that allows businesses to maintain salary structures, attendance systems, employee records, production data, statutory payroll components, and pay sheet calculations.

To run payroll correctly, you must configure Payroll Masters first. These masters work as the backbone of the entire payroll system and control how salary information is recorded, displayed, and processed.

A common exam and interview question on this topic is:

Payroll masters include __________ under TallyPrime.

Options:
A: Employee Group
B: Employee Master
C: Attendance / Production Type
D: All of the above

Correct Answer:
✔ D – All of the above

TallyPayroll masters include:

• Employee Group
• Employee Master
• Attendance / Production Types
• Pay Heads
• Payroll Units

Payroll Masters create structure and classification so that payroll entry becomes automated rather than manual.

What Are Payroll Masters in TallyPrime?

Payroll masters are predefined and user-created records that store employee-related payroll information. They help businesses automate salary calculations, maintain attendance records, compute statutory components, and generate payroll reports.

Payroll masters are used for:

• storing employee database
• categorizing employees into groups and departments
• generating salary sheets
• capturing attendance and production details
• linking pay heads such as Basic Pay, DA, HRA, PF, ESI
• costing and payroll allocation

They ensure payroll processing stays error-free and consistent.

Payroll Masters Included in TallyPrime (Detailed Breakdown)

1️⃣ Employee Group

Employee group master allows you to organize employees department-wise or category-wise.

Examples:

• HR department
• Accounts department
• Sales department
• Worker category
• Staff category

Grouping makes reporting and payroll calculations structured and clean.

2️⃣ Employee Master

Employee master stores complete individual staff details such as:

• Name & profile
• Date of joining
• Designation
• Pay structure
• Salary rate
• PF/ESI applicability
• Bank details
• Income tax slab

All processing depends on this master. Changing employee information updates payroll automatically.

3️⃣ Attendance / Production Type

Attendance/production types define how attendance will be tracked, such as:

• Days present
• Days absent
• Leave
• Overtime
• Late entry
• Production output
• Piece-rate work

These masters are used while entering attendance vouchers.

4️⃣ Pay Head

Although not in the MCQ, pay head is a crucial master in payroll. Pay head defines earnings or deductions such as:

• Basic salary
• HRA
• Bonus
• Incentive
• PF
• TDS
• Professional tax

5️⃣ Payroll Units

Payroll units allow calculation in quantity, weight, hours or minutes.

Examples:

• Daily wages
• Per hour
• Piece rate

Why Payroll Masters Are Important in TallyPrime

Payroll masters help businesses:

• Automate salary
• Reduce manual calculation
• Avoid payroll errors
• Provide transparency
• Maintain statutory compliance
• Speed up salary disbursement
• Generate salary slips professionally

Without payroll masters, accounting staff would spend hours preparing salary sheets manually every month.

Benefits of Payroll Management in TallyPrime

• Integrated with accounts
• salary cost entries auto-post
• full audit trail
• precise attendance
• multi-level reporting
• unlimited employee records
• easy data backup
• statutory payroll support

Payroll in Tally saves time during salary calculation, bank transfers, journal posting and statutory filing.

Steps to Enable Payroll in TallyPrime

Step 1 – Open Company

Gateway of Tally → Features

Step 2 – Enable Payroll

Payroll/Cost Centre activation

Step 3 – Create Masters

• Employee grouping
• Employee masters
• Pay heads
• Units
• Attendance type

Step 4 – Enter Attendance

Attendance voucher entry

Step 5 – Salary Processing

Payroll voucher → payslip
Generate pay sheets and cost centre allocation

Step 6 – Accounting Integration

Salary journal posting

Common Mistakes to Avoid in Payroll Setup

• Missing PF/ESI configuration
• Wrong units
• Incorrect grouping
• Absence rules not set
• Not linking ledgers
• No salary structure assigned
• Data not backed up

Master setup accuracy reduces rework.

Example Payroll Structure in TallyPrime

Employee: Rahul
Employee Group: Production
Attendance: 26 days
Basic: ₹25,000
HRA: 40%
Bonus: ₹2,000
PF deduction: 12%

Tally automatically performs salary computation.

Conclusion

Payroll masters are essential for building a complete payroll environment inside TallyPrime. They organise workforce information, enable automated salary calculation, track attendance precisely and provide complete statutory control.

The correct answer to the MCQ:

Payroll masters include employee group, employee masters and attendance/production types — so the correct answer is “All of the above.”

Payroll module in Tally is powerful, flexible, and complete for SMEs, factories, shops, corporate offices, schools and professional firms.

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