Salary Structures and Payroll Processing in Tally Prime

Managing salary structures and payroll processing is essential for businesses to calculate and manage employee compensation accurately. Tally Prime provides a simple and efficient way to create salary structures, process payroll, and generate reports. This article will guide you step by step on how to create salary structures and process payroll in Tally Prime with real examples.

1. Enabling Payroll Features in Tally Prime

Step 1: Enabling Payroll Features

• Open Tally Prime and go to Gateway of Tally → F11: Features → Payroll Settings.
• In the Payroll Settings screen, set Enable Payroll to "Yes".
• Press Enter to save the settings. This will enable all payroll-related features, including salary structures and payroll processing.

2. Creating Salary Structures in Tally Prime

Step 1: Creating Salary Structure

Salary structures define the components of an employee's salary, including earnings, deductions, and other benefits. You can create multiple salary structures for different categories of employees.

• Go to Gateway of Tally → Payroll Info → Salary Structures → Create.
• Enter the Salary Structure Name (e.g., "Standard Salary Structure").
• In the Under field, select Salary to group the salary structure under payroll expenses.
• Under Salary Components, select the different earnings and deductions. You can choose predefined pay heads or create new ones, such as:
  • Basic Salary
  • HRA (House Rent Allowance)
  • Special Allowance
  • Provident Fund (PF) - Deduction
  • Professional Tax (PT) - Deduction
• Set the Calculation Type for each component. For example:
  • Basic Salary: Fixed amount (e.g., ₹25,000)
  • HRA: Percentage of Basic Salary (e.g., 40%)
  • Provident Fund: Percentage of Basic Salary (e.g., 12%)
• Press Enter to save the salary structure.

Example: Creating a Salary Structure

• Salary Structure Name: Standard Salary Structure
• Basic Salary: ₹25,000
• HRA: 40% of Basic Salary (₹10,000)
• Provident Fund: 12% of Basic Salary (₹3,000)
• Professional Tax: ₹500

3. Assigning Salary Structure to Employees

Step 1: Assigning Salary Structure to Employees

After creating the salary structure, you can assign it to individual employees to ensure accurate payroll processing.

• Go to Gateway of Tally → Payroll Info → Employees → Create/Alter.
• Enter the Employee Name (e.g., "John Doe").
• In the Salary Details section, select the salary structure you created earlier (e.g., "Standard Salary Structure").
• Fill in the employee’s other details such as Designation, Branch, and Joining Date.
• Press Enter to save the employee master record.

Example: Assigning Salary Structure to Employee

• Employee Name: John Doe
• Salary Structure: Standard Salary Structure
• Designation: Software Developer
• Branch: New York
• Joining Date: 01-01-2023

4. Processing Payroll in Tally Prime

Step 1: Recording Payroll Transactions

Once the salary structure is assigned to employees, you can record the payroll transactions. Tally Prime automatically calculates the earnings and deductions based on the salary structure.

• Go to Gateway of Tally → Accounting Vouchers → Payment to record salary payments.
• Select the Bank or Cash Account from which the salary will be paid (e.g., "Bank Account").
• In the Particulars section, select the relevant employee's ledger (e.g., "John Doe").
• Enter the salary components (earnings and deductions) for the employee. For example:
  • Basic Salary: ₹25,000
  • HRA: ₹10,000
  • Provident Fund: ₹3,000 (deduction)
  • Professional Tax: ₹500 (deduction)
• Press Enter to save the salary payment entry.

Step 2: Generating Payslips

Tally Prime allows you to generate payslips for employees, showing the detailed breakdown of earnings, deductions, and net salary.

• Go to Gateway of Tally → Display → Payroll Reports → Pay Slip.
• Select the employee (e.g., "John Doe") and the period for which the payslip should be generated.
• The payslip will display all components such as Basic Salary, HRA, deductions, and the final net salary.
• You can print or export the payslip as required.

5. Viewing Payroll Reports in Tally Prime

Step 1: Viewing Payroll Reports

Tally Prime offers various payroll reports to track employee salaries, deductions, and overall payroll expenses.

• Go to Gateway of Tally → Display → Payroll Reports.
• Some key payroll reports you can view are:
  • Salary Statement: Displays the detailed salary components of employees.
  • Employee Payslip: Displays payslips for individual employees.
  • Payroll Register: Shows the payroll expenses for a specific period.
• Select the relevant report to view the details.

6. Conclusion

Creating salary structures and processing payroll in Tally Prime is a streamlined process that ensures accurate and efficient management of employee compensation. By defining salary components, assigning them to employees, and processing payroll transactions, businesses can ensure compliance, accuracy, and transparency in payroll management. The detailed reports generated by Tally Prime also make it easier to monitor payroll expenses and manage statutory compliance.