You enter a bank statement in Tally one voucher at a time. Money leaving the account is a Payment (F5), money arriving is a Receipt (F6), and anything moving between your own accounts is a Contra (F4). That part takes a minute to learn.
The part that takes the month is deciding which ledger each line belongs to. This walks through the entry itself properly, then the three settings that make it faster, and finally the routes that skip the typing altogether.
Which voucher type each line needs
| What the statement row is | Voucher type | Key |
|---|---|---|
| Paid a supplier, a bill, salaries, an expense | Payment | F5 |
| Received from a customer, a refund, interest credited | Receipt | F6 |
| Cash withdrawn from the bank | Contra | F4 |
| Cash deposited into the bank | Contra | F4 |
| Transfer between two of your own bank accounts | Contra | F4 |
| Bank charges, or interest the bank charged you | Payment | F5 |
Contra is the one people get wrong
A cash withdrawal is not an expense. The money is still yours; it has only moved from the bank to the cash box. Enter it as a Payment and you have quietly inflated your expenses and understated cash, and nothing about the trial balance will look obviously wrong until someone counts the cash.
The test is simple: did the money leave the business, or just move inside it? If it only moved, it is a Contra. We wrote about this and four other traps in the five mistakes people make entering bank transactions in Tally.
Three settings to fix before you start
Doing these once saves an hour across a month of entry.
- Put the bank ledger under Bank Accounts. If it sits under a general group instead, the banking menus stay empty and the reconciliation reports have nothing to show you later. This is the single most common reason someone thinks a Tally banking feature is missing.
- Turn on ledger-wise bank allocations. In the voucher screen press F12 and set Set Ledger-wise Bank Allocations during voucher creation to Yes. You then get a Bank Allocations screen on each entry, which is where the payment method and reference number go.
- Use Single Entry mode if debit and credit slow you down. Tally’s own documentation is blunt about this: in single entry mode, once you select the ledgers correctly, TallyPrime records the transaction according to the accounting rules for you. There is no prize for doing it the hard way.
Entering a payment, step by step
- Press Alt+G, choose Create Voucher, then F5 for Payment. From the Gateway of Tally the path is Vouchers, then F5.
- Set the date to the statement date, not today. Tally opens on the current date and this is the most common cause of entries that will not match at reconciliation.
- In Account, pick the bank ledger the money left.
- Under Particulars, pick the ledger the money went to — the supplier, or the expense head — and enter the amount.
- On the Bank Allocations screen, set the Transaction Type. It defaults to Cheque, so change it to NEFT, UPI or whatever the statement actually shows, and put the reference number from the statement in the number field.
- Write the narration. More on this below, because it matters more than it looks.
- Ctrl+A to accept.
A receipt is the same sequence on F6, with the money arriving instead. A contra is F4, and both sides are your own accounts — bank on one side, cash or the other bank on the other.
The narration habit that saves you later
Paste the bank’s own narration in, exactly as printed. Not a tidy summary of it.
UPI/DR/451093/RELIANCE RET looks like noise. It is the only thing that will let you find that entry again in six months, and it is what settles the argument when two payments in the same month are for the same amount and you cannot tell which is which. “Fuel” tells you nothing that the ledger name did not already tell you.
If you want a summary as well, put it after the bank’s text rather than instead of it.
How long a month of entry actually takes
Work it out on your own numbers rather than trusting anyone’s percentage, including ours. Time yourself on one page of one real statement, start to finish, including the rows you had to stop and think about. Then:
minutes per page x pages per statement x statements per month
Do that before you decide whether the manual route is fine. For a single company with a short statement it very often is, and nothing on this page is trying to talk you out of it. For a practice running twenty client books, the same arithmetic usually ends the discussion.
Where manual entry goes wrong
- The Contra mix-up. Cash withdrawals entered as Payments. Expenses look higher than they are, all year.
- The Suspense habit. A row you were not sure about goes to Suspense, and nobody comes back to it. Suspense should be empty at month end, and if it is not, that is the first report to open.
- Duplicates from a restart. Interrupted halfway down a page, you resume from the wrong row. The trial balance still balances, because a duplicate entry is internally consistent. Only the running balance catches this.
- Today’s date. Tally opens on the current date and it is easy to type the amount and skip the date. The entry is right, in the wrong month.
There is one check that catches nearly all of these in a minute. Your statement has a closing balance. Once the month is entered, open the bank ledger in Tally and compare its closing balance with the statement’s. If they disagree, something was missed, duplicated or mistyped, and you have found it before it becomes next year’s problem.
The routes that skip the typing
In order of what to try first, because the free option is genuinely the right answer for a lot of people.
| Route | Cost | Works when |
|---|---|---|
| Tally’s own Bank Statement import, then auto-create vouchers from the imported rows | Free, already in TallyPrime | Your bank is on Tally’s list and gives an Excel or CSV download |
| A Tally XML voucher file built from a spreadsheet | Free if you maintain the template | You are comfortable keeping a template working |
| A tool that reads the statement and creates the vouchers | Paid, usually per page | Statements arrive as PDFs, every month, across several clients |
One catch on the first route, and it surprises most people: TallyPrime will not accept a PDF, and it will not accept an Excel or CSV that was converted from a PDF either — Tally’s documentation names both cases. So “convert the statement and import it” does not work the way it is usually described. What TallyPrime will and will not accept covers exactly where that leaves you.
Where SmartXtract fits
If your bank hands you an Excel file and TallyPrime supports it, use Tally’s built-in import. It is free and already installed.
SmartXtract is for the other case: the statement is a PDF, a scan of a branch printout, or from a bank Tally does not list. Upload it — type the password at upload if it is locked — and every row is read and checked against the statement’s own running balance, so a misread figure shows up as a break in the chain rather than sitting quietly in your books. You get a clean Excel file.
That file goes into Tally through Tally Connector, a free Windows app running beside TallyPrime on the same PC. Its AI Assistance suggests a ledger for each narration; you correct what it got wrong, apply, and it creates the receipt, payment and contra vouchers. Nothing posts until you approve it, Undo Import reverses a whole batch, and a payee you map once is remembered on the next statement.
Start free with 20 pages, no card.
Frequently asked questions
Which voucher type should I use for a bank statement entry?
Money out of the bank is a Payment (F5), money in is a Receipt (F6), and money moving between your own cash and bank accounts is a Contra (F4). Bank charges and interest the bank took are Payments. The question that settles it every time is whether the money left the business or only moved inside it.
What is the difference between Contra and Payment in Tally?
A Payment records money genuinely leaving the business, to a supplier or an expense. A Contra records money moving between accounts you own — a cash withdrawal, a cash deposit, a transfer between two of your bank accounts. Nothing is spent in a Contra, so using a Payment for a cash withdrawal overstates your expenses and understates cash.
Can I enter a bank statement in Tally without knowing debit and credit?
Yes. Use Single Entry mode on the payment and receipt vouchers. Tally’s documentation says plainly that once you select the ledgers correctly, it records the transaction according to the accounting rules for you. Picking the right ledger still matters, but you do not have to work out which side each entry goes on.
How do I enter bank charges in Tally?
As a Payment, with a Bank Charges expense ledger on the other side. Interest the bank credited to you is a Receipt against an interest income ledger. Keep both in their own ledgers rather than folding them into a general expense head, because they are the two lines you will be asked about at year end.
Do I have to type the narration for every entry?
You do not have to, and you will regret skipping it. Paste the bank’s own narration exactly as printed. It is what lets you find an entry again months later, and it is what tells two same-amount payments apart when you are matching your books against the statement.
How do I check I entered the whole month correctly?
Compare the closing balance on the bank ledger in Tally against the closing balance printed on the statement. They should be identical. A difference means a row was missed, duplicated or mistyped, and finding it now costs minutes rather than the hours it costs at year end.
Is there a way to avoid entering bank statements by hand?
Yes, and try the free one first: if your bank is on Tally’s supported list, download the statement as Excel or CSV and use TallyPrime’s own Bank Statement import, which can also create the vouchers for you. That route is closed if all you have is a PDF, because Tally accepts neither a PDF nor a spreadsheet converted from one. At that point you either build a Tally XML file or use a tool that creates the vouchers directly.
In short
Payment, Receipt, Contra. Statement date, not today’s. The bank’s own narration, pasted in. Closing balance checked at the end. Do those four things and manual entry is slow but sound.
Then do the arithmetic on your own statement and decide whether slow is a problem. If it is, try it on one of your own statements — 20 pages free, no card — or read how a bank statement PDF gets into Tally.
