Groups in Tally Prime

Prerequisites: Module 2 — Company Creation

Learning Objectives

• Understand Tally's two-tier master structure (Groups → Ledgers)
• Know all primary groups and which appear in Balance Sheet vs P&L
• Create custom groups for Sunrise Retail's specific needs
• Understand what "Net Debit/Credit Balance for Reporting" means

The Group-Ledger Hierarchy

In Tally, the chart of accounts has a two-level structure:

Primary Groups (built-in, cannot be deleted)
    └── Sub-Groups (custom, created by user)
         └── Ledgers (where actual transactions are posted)

Every ledger belongs to exactly one group. The group determines:

1. Where the ledger appears — Balance Sheet or P&L
2. What kind of balance — Debit or Credit normal
3. How it behaves — Debtors have bill-wise tracking, Bank has reconciliation, etc.

The 28 Primary Groups in Tally

Primary groups are pre-defined and cannot be altered or deleted. They are divided into Balance Sheet and P&L categories:

Balance Sheet Groups

P&L Groups

Primary vs Secondary (Custom) Groups

How Groups Affect Reporting

Balance Sheet groups: Ledgers under these appear in the Balance Sheet.

• Assets show as Debit balance in BS
• Liabilities show as Credit balance in BS

P&L groups: Ledgers under these appear in Profit & Loss Account.

• Sales, Direct Income → Revenue side
• Purchases, Direct Expenses, Indirect Expenses → Expense side

"Net Debit/Credit Balance for Reporting"

When creating a custom group, Tally asks whether transactions in this group show net Debit or Credit balance for reporting purposes.

• Net Debit Balance (assets, expenses) — the group shows on the debit side in reports
• Net Credit Balance (liabilities, income) — the group shows on the credit side in reports

For most custom groups, leave this as the default (inherited from parent group).

Creating a Custom Group — Step by Step

// In Tally Prime
Gateway of Tally → Masters → Accounts Info → Groups → Create

Creating "Mobile Phone Sales" (under Sales Accounts):

// In Tally Prime
Name:    Mobile Phone Sales
Under:   Sales Accounts
Net Debit/Credit Balance for Reporting:
         (Leave as default — Credit, inherited from Sales Accounts)
→ Ctrl+A to save

Creating "Laptop Sales":

// In Tally Prime
Name:    Laptop Sales
Under:   Sales Accounts
→ Ctrl+A to save

Creating "Inward Freight":

// In Tally Prime
Name:    Inward Freight
Under:   Direct Expenses
         (Inward freight is part of cost of goods — Direct Expense, appears in Trading A/c)
→ Ctrl+A to save

Bulk creation — multiple groups at once:

// In Tally Prime
Gateway → Masters → Accounts Info → Groups → Create (Multiple)
→ Enter group names one by one, set "Under" for each → Ctrl+A when done

Complete Group Structure for Sunrise Retail

BALANCE SHEET GROUPS
├── Capital Account
│   ├── Kiran Sharma Capital       (₹50,00,000)
│   └── Sneha Reddy Capital        (₹50,00,000)
│
├── Current Liabilities
│   ├── Sundry Creditors
│   │   └── TechWorld Mumbai Pvt Ltd  (supplier)
│   └── Duties and Taxes
│       ├── Output CGST
│       ├── Output SGST
│       ├── Output IGST
│       ├── Input CGST
│       ├── Input SGST
│       └── Input IGST
│
├── Current Assets
│   ├── Sundry Debtors
│   │   ├── Digital Hub Retail Pvt Ltd
│   │   └── CloudStore Pvt Ltd
│   ├── Stock-in-Hand
│   │   ├── Mobile Phones Stock
│   │   └── Laptops Stock
│   ├── Bank Accounts
│   │   └── SBI Madhapur Current A/c
│   └── Cash-in-Hand
│       └── Petty Cash
│
└── Fixed Assets
    └── Computer (Office asset)

PROFIT & LOSS GROUPS
├── Sales Accounts
│   ├── Mobile Phone Sales (custom sub-group)
│   │   ├── Sales — Local Telangana (CGST+SGST) [ledger]
│   │   └── Sales — Interstate (IGST) [ledger]
│   └── Laptop Sales (custom sub-group)
│
├── Purchase Accounts
│   └── Mobile Phone Purchases [ledger]
│
└── Indirect Expenses
    ├── Office Rent
    ├── Salaries and Wages
    └── Inward Freight (custom sub-group)

Worked Example — Why Group Placement Matters

Scenario: Sneha creates a "TDS Payable" ledger. She accidentally places it under "Indirect Expenses" instead of "Duties and Taxes".

Result: Every time TDS is deducted, it appears as an expense in P&L instead of a liability in Balance Sheet. Expenses are inflated; TDS payable balance is invisible.

Fix:

// In Tally Prime
Gateway → Masters → Ledgers → Alter → TDS Payable
→ Change "Under" from Indirect Expenses to Duties and Taxes
→ Ctrl+A

Practice Exercise

Exercise 1: Sunrise Retail starts selling ACs (Air Conditioners, HSN 8415). Where should "AC Sales" be placed in the group hierarchy? What about "AC Purchases"?

// In Tally Prime — optional: create sub-group first
Gateway → Masters → Groups → Create
Name: Appliance Sales
Under: Sales Accounts → Ctrl+A

Then create "AC Sales" ledger under "Appliance Sales" (in Module 5)

Exercise 2: Kiran wants to track all marketing spend under a parent group "Marketing Expenses" with two sub-ledgers: "Digital Marketing" and "Print Advertising." Create this structure.

// In Tally Prime — Step 1: Create parent group
Gateway → Masters → Groups → Create
Name: Marketing Expenses
Under: Indirect Expenses
→ Ctrl+A

Step 2: Ledgers (covered in Module 5) will be created under Marketing Expenses

Key Terms

Checklist — you're ready to proceed when you can:

• Name the 6 P&L primary groups and which side of P&L each appears on
• Explain why "Duties and Taxes" is under Current Liabilities, not Indirect Expenses
• Create a custom sub-group "Mobile Phone Sales" under "Sales Accounts" in Tally
• Build Sunrise Retail's group hierarchy from memory (Capital, Sundry Debtors/Creditors, Bank, Cash, Sales, Purchases, Indirect Expenses)
• Identify the correct group for: TechWorld Mumbai (supplier), Digital Hub (customer), Output IGST, Office Rent

Next up → Module 5: Ledger Creation — create all Sunrise Retail ledgers: customers, suppliers, GST accounts, bank, and expenses.