Bank Reconciliation in Tally Prime: Step-by-Step Tutorial

Bank reconciliation is one of the most important — and most commonly skipped — accounting tasks. Many businesses let it pile up for months, then spend days untangling discrepancies. Done monthly, it takes 30–60 minutes. Done quarterly, it becomes a nightmare.

This guide covers bank reconciliation in Tally Prime and Tally ERP 9: how to set it up, how to do it step by step, what the common discrepancies mean, and how to handle them.

What is Bank Reconciliation?

Bank reconciliation is the process of matching the transactions in your Tally bank ledger against your actual bank statement. At the end of the process, the balance in Tally should equal the balance in your bank statement (adjusted for any outstanding items).

Discrepancies happen because:

• Cheques issued but not yet cleared by the bank
• Deposits recorded in Tally but not yet credited by the bank
• Bank charges, interest, or fees not yet entered in Tally
• Transactions in the bank statement not yet recorded in Tally
• Data entry errors (wrong amounts, duplicate entries)

How Bank Reconciliation Works in Tally Prime

Tally Prime has a built-in bank reconciliation feature that lets you mark each transaction as reconciled against your bank statement. There are two approaches:

• Manual reconciliation — you compare Tally entries against your bank statement and tick off matches
• Auto-reconciliation — you import your bank statement and Tally automatically matches transactions

Auto-reconciliation (available in TallyPrime) is significantly faster and is the recommended approach for any business with more than 50 monthly transactions.

Step-by-Step: Manual Bank Reconciliation in Tally Prime

Step 1: Open the Bank Reconciliation screen

1. Go to Gateway of Tally → Banking → Bank Reconciliation
2. Select your bank account ledger (e.g., HDFC Current Account)
3. Set the date range (typically the full month)

You will see a list of all transactions in your Tally bank ledger — receipts, payments, and journals involving the bank.

Step 2: Enter the bank statement closing balance

In the reconciliation screen, enter the Bank Date (the statement date) and the Closing Balance as per Bank Statement. This is the balance shown on your last bank statement.

Step 3: Mark reconciled transactions

For each transaction in Tally, check your bank statement:

• If the transaction appears in the bank statement → enter the bank transaction date in the "Bank Date" column
• If it does not appear in the bank statement yet → leave the date blank (it is an outstanding item)

As you mark transactions, Tally recalculates the reconciled balance. When all matched transactions are entered, the Difference should be zero (or equal to your outstanding items).

Step 4: Identify and handle discrepancies

If the difference is not zero after marking all matched transactions, there is a discrepancy. Common causes and fixes:

Step 5: Save the reconciliation

Once the difference is zero (or acceptable with documented outstanding items), press Ctrl+A to save. Tally marks all reconciled transactions and stores the reconciliation.

Auto Bank Reconciliation in Tally Prime (Import Method)

For businesses with high transaction volumes, importing the bank statement is much faster.

Supported import formats

• Excel (.xlsx) — download from your bank's net banking portal
• CSV — most banks offer this format
• MT940 — used by some banks for international transactions

Tally Prime has built-in import templates for major Indian banks including HDFC, ICICI, SBI, Axis, Kotak, and Yes Bank.

Steps for auto-reconciliation

1. Download your bank statement in Excel or CSV format from your bank portal
2. Go to Banking → Bank Reconciliation → Import Bank Statement
3. Select your bank (Tally loads the matching template)
4. Browse and select the downloaded bank statement file
5. Tally imports all transactions and automatically matches them against your Tally entries using date and amount
6. Review the matched, unmatched, and partially matched items
7. Manually confirm or adjust any uncertain matches
8. Create new Tally vouchers for bank transactions with no match (bank charges, interest, etc.)
9. Save the reconciliation

How to Handle Common Scenarios

Bank charges and service fees

These appear in your bank statement but are not in Tally. Create a Payment voucher:

• Debit: Bank Charges account (under Indirect Expenses)
• Credit: Bank account ledger
• Date: the date shown on the bank statement

Interest received from bank

Create a Receipt voucher:

• Debit: Bank account ledger
• Credit: Interest Received account (under Indirect Income)

Cheques issued but not cleared

These are legitimate outstanding items. Keep them unmatched in reconciliation. If a cheque is more than 90 days old and still uncleared, contact the payee — it may have been lost and needs to be reissued (or reversed if the payment is no longer due).

Direct transfers (NEFT/RTGS/UPI) not in Tally

Common for businesses where the owner pays from the bank app without informing the accountant. Create the appropriate payment or receipt voucher in Tally matching the bank statement entry.

Reconciliation Report in Tally

After completing reconciliation, you can print or export the Bank Reconciliation Statement:

1. Go to Banking → Bank Reconciliation
2. Select the bank account and date
3. Press P (Print) or E (Export)

The report shows: balance as per Tally, balance as per bank statement, outstanding cheques, outstanding deposits, and the reconciled balance. This is the document your CA or auditor will ask for.

How Often Should You Reconcile?

Too Time-Consuming? Outsource It

Bank reconciliation for a business with 200+ monthly transactions can take 3–5 hours per month. Many businesses outsource it as part of their monthly Tally work.

AutoTally's bank reconciliation service handles monthly reconciliation for all your accounts — starting at ₹2,000/month. We match every statement, flag every discrepancy, and deliver a clean reconciliation report. Get a free quote.