Every line on a bank statement becomes one of three vouchers in Tally — a Receipt, a Payment or a Contra — and each of those is a two-sided entry. The bank ledger is always one side. The work is deciding the other side, and getting the debit and credit the right way round when the statement appears to say the opposite.
This sets out the completed entry for each kind of statement row, where the second ledger comes from, and what changes when the statement arrives as a PDF.
Why the debit and credit look reversed
A credit on your bank statement is money coming in, and in Tally that is a debit to the bank ledger. Neither document is wrong — they are written from opposite sides of the same transaction.
The bank statement is the bank’s record of what it owes you. When you deposit money the bank owes you more, so the bank credits your account. In your own books the bank account is an asset, so the same deposit increases an asset, and an increase in an asset is a debit.
| On the bank statement | What happened | In your Tally books |
|---|---|---|
| Credit column, or Cr, or Deposit | Money came into the account | Debit the bank ledger |
| Debit column, or Dr, or Withdrawal | Money left the account | Credit the bank ledger |
Read the column heading, not the word. Some banks print a single amount column with a Cr or Dr tag beside each figure, and a few signal it with a plus or a minus sign instead. All three mean the same thing, and all three turn around when they reach your books.
The three vouchers a bank statement can produce
A statement row can only be a Receipt, a Payment or a Contra, because money genuinely moved through the account in every case. The table below gives the finished entry — what is debited and what is credited — for the rows that make up most statements.
| What the statement row is | Voucher | Debited | Credited |
|---|---|---|---|
| A customer pays you by NEFT, UPI or cheque | Receipt (F6) | Bank account | The customer, under Sundry Debtors |
| You pay a supplier | Payment (F5) | The supplier, under Sundry Creditors | Bank account |
| Bank charges, and the GST on them | Payment (F5) | Bank Charges, an indirect expense | Bank account |
| Interest the bank credits to you | Receipt (F6) | Bank account | Interest Received, an indirect income |
| Cash deposited into the bank | Contra (F4) | Bank account | Cash |
| Cash withdrawn from the bank or an ATM | Contra (F4) | Cash | Bank account |
| A transfer between two of your own accounts | Contra (F4) | The receiving bank account | The sending bank account |
| Salaries paid | Payment (F5) | Salaries, or Salary Payable if you had already provided for it | Bank account |
| GST, TDS or advance tax paid | Payment (F5) | The matching ledger under Duties & Taxes | Bank account |
| A loan EMI debited | Payment (F5) | The loan account for the principal, Interest on Loan for the interest | Bank account |
Two of those rows need a caution. The EMI is a single figure on the statement, and the split between principal and interest is not on the statement at all — it comes off the lender’s repayment schedule. Post the whole EMI to the loan account if you do not have the schedule to hand and correct it when you do, rather than inventing a split.
A returned cheque is two things on one date: the bank takes back the credit it gave you, and it charges a return fee. The fee is a straightforward Payment to a charges ledger. The reversal only needs an entry if you had already recorded the receipt — if the cheque was never entered as received, there is nothing to reverse.
Is a bank statement row ever a Journal voucher?
In normal use, no. Tally does not accept a cash or bank ledger inside a Journal voucher unless you deliberately turn that on in the voucher’s F12 configuration, and the restriction is sound: a Journal is for adjustments where no money moved, and every line on a bank statement is a line where money did move.
Journals still have their place around the bank — a provision, a write-off, a reclassification between two ledgers — but those entries come from your own decisions, not from the statement.
Where the second ledger comes from
The bank side of the entry is decided for you. The other side is the judgement, and the only clue the statement gives you is the narration.
Indian bank narrations nearly always open with a code for the rail the money travelled on. These are the ones that turn up most:
| Code in the narration | What it tells you |
|---|---|
| NEFT, RTGS, IMPS, MMT | A bank-to-bank transfer; the counterparty name usually follows |
| UPI, P2A, P2M, QR | A UPI payment; P2M is a merchant, P2A is another person or account |
| ACH, NACH, ECS, SI | A mandate the payee collects on — an EMI, a premium, a utility bill |
| CHQ, CLG, DD | An instrument, cleared through the clearing house |
| ATM, POS | A card used at a machine or a merchant terminal |
| MB, IB, INB, NET, MOB | The channel the instruction came from, not the type of payment |
| CMS, BULK, TPT | A collection or a bulk file, common on current accounts |
Read what the code is actually telling you. It names the rail, never the ledger. NEFT-HDFC0000123-RAMESH TRADERS tells you money moved by NEFT and who it moved to; whether that is a purchase, a loan repayment or a partner’s drawing is a fact about your business that no statement carries. As our guide to the Tally XML route puts it, somebody still has to decide that a UPI payment to a fuel pump is Vehicle Running Expenses and not Suspense.
Which is the argument for writing a proper narration on the entry while you still know what it was. A narration reading NEFT tells you nothing in March. And Suspense A/c is a parking slot for the rows you genuinely cannot place today — it is not a destination, and a Suspense balance carried into the year end is one of the five mistakes that cause the most rework.
What changes when the statement is a PDF
Nothing about the entries themselves. A Receipt is a Receipt whether you typed it off a printout or imported it. What changes is how the figures get from the page into Tally, and who checks them on the way.
Tally’s own Bank Statement import will not read a PDF, and it will not read a CSV or Excel file converted from one either, because that import expects each bank’s published file layout. There is more on exactly what it will and will not take in what TallyPrime will import. So a PDF statement reaches Tally by one of three routes:
- Typing it. The PDF on one screen, Tally on the other. No setup, and every figure passes through somebody’s hands twice. The step-by-step method is here.
- Converting it to a file Tally accepts. A converter gives you a spreadsheet, you reshape it into the layout Tally’s import expects, and you map the ledgers yourself.
- A connector that posts the vouchers. The entries are created in Tally directly, so no intermediate file has to be built or imported by hand.
Whichever route you take, one risk belongs to the PDF and not to the others: a figure can be misread on the way in, entered faithfully, and never look wrong afterwards. Reconciliation will tell you the totals disagree. It will not tell you that 45,900 was read as 49,500 on line 34.
The statement itself carries the check. Every bank prints a running balance, and that column is a proof: the previous balance, plus the deposit, minus the withdrawal, has to equal the balance printed on that row. Run it down the whole statement and a misread figure has nowhere to hide — the chain breaks on exactly the row that is wrong.
How SmartXtract turns a statement into entries
SmartXtract reads bank statements as PDF, Excel or CSV, including scanned copies and password-protected files — the password is entered at upload, so the file never has to be unlocked and saved somewhere first. Every row is checked against the statement’s own running balance before anything leaves the app, on bank statement PDFs and on scanned statements, where a misread digit is the commonest failure of all.
From there the entries reach Tally through Tally Connector, a free Windows app that runs alongside TallyPrime on the same PC. It reads the Excel the web app produced, suggests a ledger for each row from the narration, and remembers a payee you have set once so the same counterparty comes up mapped next month. You review and Apply, then Export To Tally creates the Receipt, Payment and Contra vouchers. If a batch goes in wrong, Undo Import reverses the whole thing.
The ledger decision stays yours, on every route. What comes off the statement is the date, the amount, the direction and the counterparty — the whole two-sided entry except for the one piece only you know.
Try it on one statement free — 20 pages, no card — and compare the entries against your own PDF.
A quick way to check a month of entries
Before you close a month, three checks catch most of what goes wrong, in this order:
- Closing balance first. The bank ledger’s closing balance in Tally against the last line of the statement, for the same date. If they agree, the month is probably clean.
- Then the Contras. Filter the month’s Contra vouchers and confirm every one really is money moving inside the business. A cash withdrawal posted as a Payment inflates expenses and understates cash, and nothing in the trial balance will look obviously wrong.
- Then Suspense. Open the Suspense ledger. Anything still sitting there is a row whose second ledger was never decided, and it is far easier to place this month than next year.
Frequently asked questions
What accounting entry does a bank statement become in Tally?
Each line becomes one voucher: a Receipt (F6) for money in, a Payment (F5) for money out, or a Contra (F4) when the money only moved between your own cash and bank accounts. Every one of those is a two-sided entry with the bank ledger on one side and another ledger — a customer, a supplier, an expense, an income or a tax ledger — on the other.
Is a credit on a bank statement a debit or a credit in Tally?
A credit on the statement is a debit to the bank ledger in Tally. The statement is the bank’s record of what it owes you, so money arriving is a credit there. In your books the bank account is an asset, and money arriving increases it, which is a debit.
Which voucher type is used for bank charges in Tally?
A Payment voucher (F5). Debit Bank Charges, which sits under Indirect Expenses, and credit the bank account. GST charged on the fee goes to the relevant ledger under Duties & Taxes if you are claiming the credit, and to the same expense ledger if you are not.
Can a bank statement entry be a Journal voucher?
Not in Tally’s default configuration — it does not accept a cash or bank ledger in a Journal voucher unless that is switched on in the voucher’s F12 settings. A Journal is for adjustments where no money moved, and every line on a bank statement is a line where money did.
What entry is a transfer between my own two bank accounts?
A Contra voucher (F4), debiting the account that received the money and crediting the account that sent it. It appears on both statements, so enter it once. Posting it as a Payment on one side and a Receipt on the other creates an expense and an income that never happened.
How do I decide which ledger goes opposite the bank ledger?
From the narration and from what you know about the business. The code at the front — NEFT, UPI, ACH, CHQ — tells you how the money travelled, not what it was for, and the name that follows is the counterparty. A payment to the same supplier every month is a supplier ledger; a one-off you cannot place belongs in Suspense until you can, not permanently.
Can Tally create these entries from a PDF bank statement automatically?
Not on its own. Tally’s Bank Statement import does not read a PDF, or a CSV or Excel file converted from one. The entries have to be built from the statement first, either by typing them or by a tool that reads the statement and posts the vouchers, and on both routes the ledger for each row is still reviewed by a person.
