Lesson 7 of 20

Payment voucher (F5)

Whenever money goes out of the business, by cash, cheque or transfer, it is a Payment voucher.

When to use it

• Paying an expense: rent, salaries, electricity, freight.
• Paying a supplier for an earlier credit purchase.
• Repaying a loan or paying interest.
• The owner withdrawing money for personal use.
• Paying an advance to a supplier or employee.
• Paying tax to the government.

The purchase of goods itself, even for cash, is normally entered through the Purchase voucher, so that stock and GST are recorded.

Steps

1. Gateway of Tally > Vouchers, press F5.
2. Press F2 for the date.
3. In single entry mode, choose the cash or bank ledger in Account; then, under Particulars, choose the ledger being paid (the expense or the party) and enter the amount. Several ledgers can be listed in one voucher.
4. For a party with bill-wise details on, Tally asks which bill the payment is against. Choose Agst Ref and select the bill.
5. For a bank payment, fill in the bank allocation: transaction type and cheque or reference number.
6. Narration, then Ctrl+A.

Examples

1. Paid shop rent ₹15,000 by bank transfer.

2. Paid salaries ₹30,000 and electricity ₹2,400 in cash on the same day.

3. Paid Mohan Paper Mart ₹50,000 by cheque against their bill.

The supplier is debited because the amount we owe them goes down.

4. The owner withdrew ₹10,000 from the bank for household use.

5. Paid a supplier ₹49,000 in full settlement of a bill of ₹50,000. The discount received is not a payment, so it is recorded by a separate Journal: Dr Mohan Paper Mart 1,000, Cr Discount Received 1,000. The Payment voucher is for ₹49,000 only.

The logic of debit and credit

In every payment, Cash or Bank is credited, because an asset is going down. What is debited depends on what the money was for: an expense (expenses increase by debit), a creditor (a liability decreases by debit), a new asset, or drawings.

Bill-wise references

If "Maintain balances bill-by-bill" is on for a party, each payment must be tagged:

• Agst Ref: against an existing bill. This is the usual choice when paying a supplier.
• New Ref: creates a new reference; used on the purchase, not on the payment.
• Advance: money paid before the bill exists.
• On Account: a lump sum not matched to any bill yet.

Careful tagging gives a correct "bills payable" report showing which bills are still unpaid and for how long.

Cash or bank?

Enter the payment from the account the money actually left. A cheque issued today is entered today, even though the bank will pay it some days later; that gap is what bank reconciliation accounts for. Businesses and their accountants also have to observe legal limits on payments in cash for tax purposes; those limits are set by tax law, change from time to time, and should be checked with the accountant or the Income Tax Department's own material.

Printing a payment voucher or cheque

After saving, Ctrl+P prints the voucher, which can be signed by the receiver as a receipt. Tally can also print on cheque leaves once the bank ledger's cheque format is set up.

Common mistakes

• Debiting Purchases when paying a supplier for a bill already entered. That counts the purchase twice. Debit the supplier.
• Entering the owner's personal expenses as business expenses.
• Choosing Cash when the payment went through the bank, which later makes both balances wrong.
• Lumping different expenses under one ledger for speed.
• No narration. Write what, to whom and for which period: "Shop rent for April paid to landlord by NEFT".

Next: Receipt voucher.

Questions learners ask

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An independent learning site. Tally and TallyPrime are trademarks of Tally Solutions Private Limited. This site is not connected with, approved by or paid by Tally Solutions, and uses none of its logos, screens or course material. Keys and menu paths were checked against Tally's own help site on 12 November 2026; the software changes with each release, so if your screen differs, follow Tally's help (press Ctrl+F1). Tax treatment in the examples is for learning only: ask your accountant.