TallyPrime provides 28 predefined groups that form part of the Chart of Accounts for most businesses.

Groups classify ledgers under Assets, Liabilities, Incomes, or Expenses.

Groups under Assets and Liabilities appear in the Balance Sheet, while those under Incomes and Expenses appear in the Profit & Loss Account.

Out of the 28 groups,

• 15 are primary groups.
  • 9 are displayed in the Balance Sheet and are capital in nature.
  • 6 are displayed in the Profit and Loss Account and are revenue in nature.
• 13 are subgroups.

It is recommended not to modify the default group names, as this may cause mismatches in ledger classification. Instead, create new groups as needed.

Capital Account

Capital Account is used to record the capital invested in the business by the owner or partners. For companies, it appears as shareholders’ equity and also includes retained earnings.
In TallyPrime, ledgers under the Capital Account group include Share Capital, Partners’ Capital, Proprietor’s Capital, and similar accounts.

Reserves and Surplus [Retained Earnings]

Reserves are amounts set aside for future needs, such as buying assets, expansion, legal requirements, or investments. Therefore, regular cash or bank funds aren’t used.
A Surplus is the extra income left after all expenses. This group includes ledgers such as Capital Reserve, General Reserve, and Reserve for Depreciation.

Current Assets

Current Assets can be quickly converted into cash. They help manage daily expenses and maintain working capital.
Subgroups include Bank Accounts, Cash-in-Hand, Deposits, Loans & Advances, Stock-in-Hand, and Sundry Debtors.

• Bank Accounts: Includes current, savings, and short-term deposit accounts.
• Cash-in-Hand: TallyPrime comes with a predefined Cash A/c. You can create more if needed.
• Deposits (Asset): Includes fixed deposits, security deposits, or any amount the company will get back later.
• Loans & Advances (Asset): Loans given by the company or non-trading advances (like salary advances). 
• Stock-in-Hand: This group contains accounts like Raw Materials, Work-in-Progress, and Finished Goods. The balance control depends on whether you have selected the Integrated Account-cum-Inventory option while creating the company. Refer to the Company creation section under the Set Up Your Company topic for more details.
  Let us consider these options:
  • Integrated Accounts with Inventory:
    When set to Yes, TallyPrime automatically picks stock values from inventory records. You can’t manually change the closing stock balance. It is updated through inventory transactions and reflected directly in the Balance Sheet.
  • Non-integrated Accounts with Inventory:
    When set to No, stock values must be entered manually in the ledger. Accounts and inventory work separately. No vouchers can be passed for these ledgers, and only opening and closing balances can be edited.
• Sundry Debtors: Sundry Debtors are grouped with the persons or company who have bought the goods or services on credit and is liable to pay the business in the future.

Current Liabilities

Current liabilities are amounts a business must pay soon when they are due. They are paid using current assets, so the business must ensure it has enough funds to meet them on time.
This group includes Outstanding Liabilities, Statutory Liabilities, and similar accounts.
Sub-groups are Duties & Taxes, Provisions, and Sundry Creditors.

• Duties & Taxes: Duties & Taxes contain all tax accounts like GST, VAT, CENVAT, Excise, Sales, and other trade taxes and the total liability (or asset in case of advances paid) and the break-up of individual items.
• Provisions: Accounts like Provision for Taxation, Provision for Depreciation, and so on are recorded under Provisions.
• Sundry Creditors: Sundry Creditors are grouped with the persons or companies from whom the goods or services are purchased on credit and are liable to receive from the business in the future.

Investments

Group your investment accounts like Investments in Shares, Bonds, Govt. securities, long-term Bank deposit accounts, and so on. This allows you to view the total investments made by the company.

Loans (Liability)

Loans that a company has borrowed are typically long-term loans.

• Bank OD Accounts [Bank OCC Accounts]: TallyPrime provides you with distinct types of Bank Accounts. This is used to record the company’s overdraft accounts with banks; for example, Bill Discounted A/c’s and Hypothecation A/c’s, and so on.

An account under Bank OCC A/c group is printed as a separate Cash Book in the traditional Cash Book format and does not form part of the ledger.

• Secured Loans: Term loans or other long/medium term loans obtained against the security of some asset do not verify the existence of the security. Typical accounts are Debentures, Term Loans, and so on.
• Unsecured Loans: Loans obtained without any security. Example: Loans from Directors/partners or outside parties.

Suspense Account

A Suspense Ledger is used to record amounts whose purpose isn’t clear yet, like a travel advance that gets clarified later.
The Suspense Account appears in the Balance Sheet, but any expense with ‘suspense’ in its name should still be created under revenue groups like Indirect Expenses, not under the Suspense Account group.

Miscellaneous Expenses (Asset)

This group is used mainly for legal disclosure needs, like those under Schedule VI of the Companies Act. It includes incorporation and pre-operative expenses that are written off over time.
A balance remains to an extent that cannot be written off in the Profit & Loss Account. TallyPrime does not show a loss, carried forward in the Profit & Loss Account, under this group. The balance of the Profit & Loss Account is displayed separately in the Balance Sheet.

Branch/Divisions

This group is used to maintain accounts for your company’s branches, divisions, affiliates, and subsidiaries. You can record sales and purchase transactions with these accounts just like any other party.
These are only their accounts in your books if you want to maintain full books for a branch or division, you must create a separate company in TallyPrime.

Sales Account

You can classify your sales accounts based on different types of sales.

For example:

• Domestic Sales
• Export Sales

You can even open an account as Sales Returns under the group Domestic Sales to view your net sales after returns (or the returns may be directly passed through Journal against the specific Sales account).

Do not create customer accounts under this group. 

Purchase Account

This is similar to sales accounts, except for the type of transactions.

Direct Income [Income Direct]

These are non-trade income accounts that affect Gross Profit. All trade income accounts fall under Sales Accounts. You may also use this group for accounts like Servicing, Contract Charges that follow sales of equipment.

For a professional services company, you may not use the Sales Account group at all. Instead, open accounts like Professional Fees under this group.

Indirect Income [Income Indirect]

These are miscellaneous non-sale income accounts; for example, Rent Received and Interest Received.

Direct Expenses [Expenses Direct]

These are Manufacturing or direct trading expenses. These accounts determine the Gross Profit of the company.

Indirect Expenses [Expenses Indirect]

This group includes all administrative, selling, or non-direct expenses.

Profit & Loss A/c is a reserved primary account in TallyPrime. You can use this account to pass adjustment entries through journal vouchers. For example, transfer of profit or loss account to Capital or Reserve account.