What is Tally ERP? The Complete Guide for Business Owners (2025)

If you run a business in India — or anywhere that trades with India — you have almost certainly heard of Tally. It is the most widely used accounting software in India, powering the books of millions of businesses from corner shops to mid-size manufacturers. But what exactly is Tally ERP, how does it work, and is it right for your business?

This guide covers everything from scratch — no accounting background needed.

What is Tally ERP?

Tally ERP is a business accounting and enterprise resource planning (ERP) software developed by Tally Solutions Pvt. Ltd., a Bengaluru-based company founded in 1988. It is designed to help businesses of all sizes manage their accounting, inventory, payroll, statutory compliance (GST, TDS, PF, ESI), and financial reporting — all from a single platform.

The latest version is called TallyPrime (launched in 2020), which replaced the older Tally ERP 9. Despite the name change, most people still refer to it simply as "Tally."

Tally dominates the Indian market with an estimated 70–80% market share in SME accounting software. It is available in India, UAE, GCC countries, Bangladesh, Kenya, and several other markets.

What Can Tally Do? Key Features

1. Accounting & Bookkeeping

Tally handles your entire double-entry bookkeeping process. You record transactions — sales, purchases, payments, receipts, journal entries — and Tally automatically updates all related ledgers, trial balances, P&L statements, and balance sheets.

• Sales and purchase invoice entry
• Receipt and payment vouchers
• Journal entries and debit/credit notes
• Multi-currency transactions
• Cost centre and profit centre tracking

2. GST Compliance

Since GST launched in India in 2017, Tally has been the go-to tool for GST-compliant invoicing and filing. It supports:

• GST-compliant sales invoices with HSN/SAC codes
• GSTR-1 and GSTR-3B preparation and export
• Input tax credit (ITC) reconciliation
• E-invoicing and e-way bill generation
• GSTR-2A/2B matching

3. Inventory Management

Tally is not just an accounting tool — it is a full inventory management system. You can track stock across multiple warehouses (called "godowns" in Tally), set reorder levels, manage batch and serial numbers, and value stock using FIFO, LIFO, or weighted average methods.

4. Payroll Processing

The payroll module in TallyPrime handles salary calculations, PF (Provident Fund), ESI (Employee State Insurance), professional tax, TDS on salary, payslip generation, and Form 16 preparation.

5. Banking

Tally supports bank reconciliation — matching your bank statement entries against your Tally ledger. It also supports cheque printing, online payment file generation (NEFT/RTGS), and bank statement import.

6. Financial Reports

Tally can generate a comprehensive range of reports instantly:

• Profit & Loss Account
• Balance Sheet
• Trial Balance
• Cash Flow Statement
• Debtor/Creditor Ageing Analysis
• Stock Summary
• Day Book and Ledger reports
• MIS reports (with TallyPrime)

7. TDL (Tally Definition Language)

One of Tally's most powerful features is TDL — its built-in programming language that lets developers customise and extend Tally's functionality. Businesses use TDL to create custom reports, modify invoices, automate workflows, and integrate Tally with other systems.

Tally ERP Versions: A Quick History

How Does Tally Work?

Tally is a desktop-based software installed on your Windows PC or server. Your data is stored locally (not in the cloud by default), though TallyPrime now supports connected services for remote access and cloud backup.

The core workflow in Tally is:

1. Create a company — enter your business details, financial year, and enable the features you need (GST, payroll, inventory).
2. Set up masters — create ledger accounts, stock items, units of measure, godowns, cost centres.
3. Record transactions — enter vouchers (sales, purchase, receipt, payment, journal).
4. View reports — Tally automatically generates all financial reports from the vouchers you enter.
5. File returns — export GST data to the portal, generate e-invoices, and prepare ITR data.

Who Uses Tally?

Tally is used across virtually every industry in India:

• Retailers and traders — for invoice entry, inventory, and GST
• Manufacturers — for BOM (Bill of Materials), production orders, and costing
• Chartered Accountants (CAs) — to maintain books for multiple clients
• Service businesses — for billing, accounts receivable, and payroll
• Construction companies — for project-based cost tracking
• Distributors and wholesalers — for multi-location inventory
• UAE businesses — for VAT-compliant bookkeeping (Tally has a UAE edition)

Tally Pricing (2025)

TallyPrime is sold as a perpetual license with an optional annual subscription (TSS — Tally Software Service) for updates and connected services.

Note: Prices vary by authorised Tally partner. TSS is optional but required for GST e-filing integration and updates.

Tally Pros and Cons

The Biggest Challenge with Tally: Data Entry

The single biggest pain point for businesses using Tally is data entry. Every invoice, every bank transaction, every payroll record — someone has to type it in manually. For a business processing 500–2,000 transactions per month, this can consume 15–30 hours of work every month.

Most small businesses handle this one of three ways:

1. Owner does it themselves — eats into valuable time
2. In-house accountant — costs ₹15,000–₹35,000/month in salary
3. Outsource to a service like AutoTally — certified specialists handle all entry at a fraction of the cost, with AI-powered accuracy verification

AutoTally's Tally data entry service starts at ₹5,000/month for up to 500 entries, with a 99.9% accuracy guarantee and 5–7 day turnaround. Get a free quote here.

Frequently Asked Questions

Is Tally available outside India?

Yes. Tally Solutions has editions for UAE/GCC (with VAT support), Bangladesh, Kenya, and other markets. Many UAE and Gulf businesses use Indian Tally specialists remotely for their bookkeeping.

Is Tally cloud-based?

Tally is primarily a desktop application. TallyPrime's "Connected Services" feature allows remote access and cloud sync, but the core software runs locally. Cloud-hosted Tally (running on AWS or Azure) is also possible but requires additional setup.

Can Tally integrate with e-commerce platforms?

Yes, via TDL integrations and third-party connectors. There are integrations for Shopify, WooCommerce, Amazon Seller Central, and major Indian e-commerce platforms.

What is the difference between Tally ERP 9 and TallyPrime?

TallyPrime is the successor to Tally ERP 9. It has a redesigned interface, multi-tasking support, a "Go To" navigation feature, improved reports, and better connected services. Read our detailed comparison of Tally Prime vs Tally ERP 9 for the full breakdown.

Do I need a CA to use Tally?

No. Tally is designed for business owners and accountants alike. However, having a trained accountant — either in-house or outsourced — significantly improves accuracy and compliance. Many businesses outsource their Tally work to services like AutoTally rather than hiring a full-time accountant.

Conclusion

Tally ERP (now TallyPrime) is the backbone of small business accounting in India. It handles everything from basic bookkeeping to GST filing, payroll, and inventory — making it an essential tool for any Indian business. Its dominance comes from deep GST integration, affordability, a massive talent ecosystem, and decades of trust.

The only real drawback? Data entry takes time. If you are spending hours every month entering transactions into Tally, consider outsourcing that work. AutoTally lets you focus on growing your business while certified specialists handle your Tally with guaranteed accuracy.