Stock Items, Groups, and Units of Measure

Creating Sunrise Retail's complete product catalog — phones, laptops, tablets, accessories — with HSN codes, GST rates, and alternate units

Module 14 of 31 — Tally Prime. Building the complete product master — stock groups, items, HSN codes, GST rates, and compound units. Duration: 45 min.

Prerequisites: Module 04 — Chart of Accounts & Groups

Learning Objectives

Create a hierarchy of stock groups for organizing Sunrise Retail's product categories
Create stock items with correct HSN codes, GST rates, and FIFO valuation
Set up simple and compound units of measure (Nos, Box of 10)
Build Sunrise Retail's complete product catalog — phones, laptops, tablets, accessories

Stock Hierarchy in Tally

Just like ledgers have groups, stock items have stock groups for organization and reporting:

Primary
  └── Mobile Phones (Stock Group)
        └── Samsung Galaxy A55 (Stock Item)
        └── Samsung Galaxy S24 (Stock Item)
        └── iPhone 16 128GB    (Stock Item)
        └── Redmi Note 13      (Stock Item)
  └── Laptops (Stock Group)
        └── Dell Inspiron 15   (Stock Item)
        └── HP Pavilion 14     (Stock Item)
  └── Tablets (Stock Group)
        └── iPad Air (WiFi, 64GB)
        └── Samsung Tab A9
  └── Accessories (Stock Group)
        └── USB-C Charger 45W
        └── Silicone Phone Cover
        └── Screen Guard (Pack of 2)

Stock groups enable category-wise reports — see total mobile phone stock value, total laptop movement, etc.

Step 1: Creating Stock Groups

Gateway of Tally
  → Masters
    → Inventory Info
      → Stock Groups
        → Create

Create all four groups:

Group 1:
Name                              : Mobile Phones
Under                             : Primary
Should Quantities Be Added        : Yes
→ Ctrl+A

Group 2:
Name                              : Laptops
Under                             : Primary
Should Quantities Be Added        : Yes
→ Ctrl+A

Group 3:
Name                              : Tablets
Under                             : Primary
Should Quantities Be Added        : Yes
→ Ctrl+A

Group 4:
Name                              : Accessories
Under                             : Primary
Should Quantities Be Added        : Yes
→ Ctrl+A

"Should Quantities Be Added: Yes" allows Tally to sum quantities across all items in the group — e.g., total units of mobile phones across all models. Set to No only for groups where adding quantities is meaningless.

Step 2: Units of Measure

Before creating stock items, set up the units.

Gateway of Tally
  → Masters
    → Inventory Info
      → Units of Measure
        → Create

Simple Units

Unit 1 (Numbers):
Symbol                : Nos
Formal Name           : Numbers
Type                  : Simple
Decimal Places        : 0
→ Ctrl+A

Unit 2 (Boxes):
Symbol                : Box
Formal Name           : Box
Type                  : Simple
Decimal Places        : 0
→ Ctrl+A

Unit 3 (Pack):
Symbol                : Pack
Formal Name           : Pack
Type                  : Simple
Decimal Places        : 0
→ Ctrl+A

Compound Unit — Box of 10

Accessories like phone covers are purchased in boxes and sold individually. Use a compound unit:

Symbol                : Box of 10
Formal Name           : Box of 10 Numbers
Type                  : Compound
First Unit            : Box
Conversion Factor     : 10
Second Unit           : Nos
→ Ctrl+A

This tells Tally: 1 Box = 10 Nos. When you buy 5 Boxes, Tally records 50 Nos in stock. When you sell 3 Nos, it deducts 3 from the 50.

Step 3: Creating Stock Items

Gateway of Tally
  → Masters
    → Inventory Info
      → Stock Items
        → Create

Mobile Phones

Samsung Galaxy A55:

Name                  : Samsung Galaxy A55
Under                 : Mobile Phones
Units                 : Nos
Opening Balance       : 0 Nos (company starting fresh this FY)

Set/Alter GST Details:
  GST Applicable      : Applicable
  HSN/SAC             : 8517
  Description         : Smartphones and mobile phones
  GST Rate            : 18%
  Taxability          : Taxable

Cost/Price Details:
  Valuation Method    : FIFO
→ Ctrl+A

Samsung Galaxy S24:

Name                  : Samsung Galaxy S24
Under                 : Mobile Phones
Units                 : Nos
HSN                   : 8517 | GST: 18% | Valuation: FIFO
→ Ctrl+A

iPhone 16 128GB:

Name                  : iPhone 16 128GB
Under                 : Mobile Phones
Units                 : Nos
HSN                   : 8517 | GST: 18% | Valuation: FIFO
→ Ctrl+A

Redmi Note 13:

Name                  : Redmi Note 13
Under                 : Mobile Phones
Units                 : Nos
HSN                   : 8517 | GST: 18% | Valuation: FIFO
→ Ctrl+A

Laptops

Dell Inspiron 15 (i5, 8GB RAM):

Name                  : Dell Inspiron 15 (i5, 8GB)
Under                 : Laptops
Units                 : Nos
HSN                   : 8471
Description           : Portable automatic data processing machines
GST Rate              : 18%
Valuation Method      : FIFO
→ Ctrl+A

HP Pavilion 14:

Name                  : HP Pavilion 14 (i5, 512 SSD)
Under                 : Laptops
Units                 : Nos
HSN                   : 8471 | GST: 18% | Valuation: FIFO
→ Ctrl+A

Tablets

iPad Air (WiFi, 64GB):

Name                  : iPad Air (WiFi, 64GB)
Under                 : Tablets
Units                 : Nos
HSN                   : 8471 | GST: 18% | Valuation: FIFO
→ Ctrl+A

Samsung Tab A9:

Name                  : Samsung Tab A9 (WiFi)
Under                 : Tablets
Units                 : Nos
HSN                   : 8471 | GST: 18% | Valuation: FIFO
→ Ctrl+A

Accessories — with Compound Unit

USB-C Charger 45W:

Name                  : USB-C Charger 45W
Under                 : Accessories
Units                 : Nos
HSN                   : 8544
Description           : Insulated wire, cables — chargers
GST Rate              : 18%
Valuation Method      : Weighted Average
→ Ctrl+A

Silicone Phone Cover (bought in boxes, sold individually):

Name                  : Silicone Phone Cover
Under                 : Accessories
Units                 : Nos
Alternate Units       : Box of 10
  Default Unit for Purchase  : Box of 10
  Default Unit for Sales     : Nos
HSN                   : 3926
Description           : Articles of plastic — phone covers
GST Rate              : 18%
Valuation Method      : Weighted Average
→ Ctrl+A

Screen Guard (Pack of 2):

Name                  : Screen Guard (Pack of 2)
Under                 : Accessories
Units                 : Pack
HSN                   : 3926 | GST: 18% | Valuation: Avg
→ Ctrl+A

HSN Code Reference — Sunrise Retail

Product Category	HSN Code	Description	GST Rate
Mobile phones	8517	Telephone sets incl. smartphones	18%
Laptops, tablets	8471	ADP machines — portable	18%
Chargers, cables	8544	Insulated wires/cables, electrical conductors	18%
Phone covers, screen guards	3926	Other articles of plastics	18%
Laptop bags	4202	Trunks, cases, bags	18%

Stock Valuation Methods

Method	Description	Best For
FIFO	First In First Out — oldest purchase is assumed sold first	Electronics — matches physical movement; reflects true cost when purchase prices change month to month
Weighted Average	Total cost ÷ total quantity — running average	Accessories, fungible items where older vs newer batch doesn't matter
LIFO	Last In First Out — not permitted under Indian tax law	Not used in India
Standard Cost	Fixed predetermined cost	Manufacturing standard costing

Sunrise Retail's choice:

Phones and laptops: FIFO — April batch purchased at ₹12,000 must be distinguished from May batch at ₹11,500 (price drop). FIFO reflects this correctly.
Accessories (chargers, covers): Weighted Average — small value, interchangeable units, average cost is sufficient.

Complete Product Catalog

Stock Item	Group	HSN	GST	Unit	Alt Unit	Valuation
Samsung Galaxy A55	Mobile Phones	8517	18%	Nos	—	FIFO
Samsung Galaxy S24	Mobile Phones	8517	18%	Nos	—	FIFO
iPhone 16 128GB	Mobile Phones	8517	18%	Nos	—	FIFO
Redmi Note 13	Mobile Phones	8517	18%	Nos	—	FIFO
Dell Inspiron 15	Laptops	8471	18%	Nos	—	FIFO
HP Pavilion 14	Laptops	8471	18%	Nos	—	FIFO
iPad Air (WiFi)	Tablets	8471	18%	Nos	—	FIFO
Samsung Tab A9	Tablets	8471	18%	Nos	—	FIFO
USB-C Charger 45W	Accessories	8544	18%	Nos	—	Avg
Silicone Phone Cover	Accessories	3926	18%	Nos	Box of 10	Avg
Screen Guard (Pack 2)	Accessories	3926	18%	Pack	—	Avg

Practice Exercise

Exercise: Create a stock item for "Laptop Bag (15 inch)" that is purchased in Dozens (12 Nos) and sold individually. HSN: 4202, GST 18%.

Show Solution

Step 1: Create compound unit:

Gateway → Inventory Info → Units of Measure → Create
Symbol             : Doz
Formal Name        : Dozen
Type               : Compound
First Unit         : Doz
Conversion         : 12
Second Unit        : Nos
→ Ctrl+A

Step 2: Create stock item:

Name               : Laptop Bag (15 inch)
Under              : Accessories
Units              : Nos
Alternate Units    : Doz (1 Doz = 12 Nos)
Default Purchase   : Doz
Default Sale       : Nos
HSN                : 4202
GST Rate           : 18%
Valuation          : Weighted Average
→ Ctrl+A

When purchasing: enter "3 Doz" → Tally records 36 Nos in stock. When selling: enter "5 Nos" → deducted from 36.

Key Terms

Term	Meaning
Stock Group	Category for organising stock items — analogous to ledger groups
Stock Item	An individual product/SKU in Tally inventory master
Unit of Measure (UOM)	How the product is counted — Nos, Box, Pack, Kg
Compound Unit	A unit defined from two simpler units — 1 Box = 10 Nos
Alternate Unit	Secondary unit for the same item — buy in Box, track and sell in Nos
HSN	Harmonised System of Nomenclature — mandatory on GST invoices for B2B
FIFO	First In First Out — assumed sequence for cost matching when prices change
Valuation Method	The rule Tally uses to calculate stock value when batches have different costs

Module Summary

Stock hierarchy mirrors account hierarchy: Stock Groups → Stock Items (like Groups → Ledgers)
Sunrise Retail product catalog: Mobile Phones (HSN 8517), Laptops + Tablets (HSN 8471), Accessories (HSN 8544/3926) — all at 18% GST
Units: simple (Nos, Pack) + compound (Box of 10 Nos) for buy-in-bulk-sell-individually scenarios
Valuation: FIFO for phones/laptops (prices change month-to-month), Weighted Average for accessories
HSN codes and GST rates on stock items auto-fill in sales/purchase invoices — no manual tax selection needed

Checklist before moving on:

Four stock groups created (Mobile Phones, Laptops, Tablets, Accessories)
Units created: Nos, Box, Pack, compound Box of 10
All 11 stock items created with correct HSN codes
FIFO set for phones/laptops; Weighted Average for accessories
Test: create a quick F8 (Sales) for Samsung A55 — confirm HSN 8517 and 18% IGST auto-fill

Quick Quiz

1. Sunrise Retail buys phone covers in boxes of 10 and sells them individually. The correct unit setup is:

a) Simple unit: Nos only
b) Simple unit: Box only
c) Compound unit: 1 Box = 10 Nos (alternate unit on stock item)
d) Two separate stock items — one for Box purchase, one for Nos sale

Answer

c) Compound unit: 1 Box = 10 Nos on a single stock item. One item, two units — Tally converts automatically. Creating two separate items leads to stock tracking errors.

2. The HSN code for Dell Inspiron and HP Pavilion laptops is:

a) 8517
b) 8471
c) 8544
d) 3926

Answer

b) 8471 — Automatic data processing machines (computers, laptops, tablets). 8517 is for mobile phones/smartphones. This is a frequently tested point in GST practice.

3. Why is FIFO recommended for Sunrise Retail's phone inventory?

a) It reduces the tax payable
b) It matches physical reality — older stock sold first — and correctly tracks cost when purchase prices change month to month
c) It is mandatory under Indian accounting standards
d) It produces the lowest closing stock value

Answer

b) FIFO matches physical movement (older stock first) and gives accurate cost tracking when purchase prices vary. If April phones cost ₹12,000 and May phones cost ₹11,500, FIFO correctly shows the lower-cost batch as closing stock after older units are sold.

Next: Module 15 — Discounts: Trade and Cash Discounts in Tally

Stock Items, Groups, and Units of Measure

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