Public Provident Fund (PPF)

PPF stands for Public Provident Fund – a government backed, long term, retirement saving instrument. With a 15 year lock in, this is the longest horizon for an investment that exists in India. If you are keen on a safe investment, a decent rate of return, tax benefits deduction and tax free interest) and have a long term investment horizon, then the PPF is for you. It is a disciplined investment avenue as your money is blocked for 15 years.

PPF also offers loan against the account which can help you during occasions like a wedding in the family, further studies of your children, etc. The minimum deposit amount is Rs. 500 per annum and the upper ceiling limit is Rs. 1,00,000 per annum. The current rate of interest on Public Provident Fund (PPF) is 8.7%, which is compounded annually. A Public Provident Fund (PPF) account gets matured after the completion of 15 years from the end of the year in which the account was opened. A customer can extend the tenure of a Public Provident Fund (PPF) investment for a block period of 5 years beyond the maturity period by submitting Form H within one year from the date of maturity.

No premature withdrawal is allowed for Public Provident Fund (PPF) accounts. Only in the case of the death of a customer, their nominee/legal heir can close the account by submitting the required documents as guided by the Ministry of Finance. Customer can make one withdrawal every year, from the 7th financial year, of an amount that does not exceed 50% of the balance of the customer credit at the end of the fourth year immediately preceding the year of withdrawal or the amount at the end of the preceding year, whichever is lower. Customers can avail of the loan facility between third financial year to sixth financial year ie. from third financial year upto end of fifth financial year.

What is the eligibility for investing under Public Provident Fund (PPF) Scheme, 1968?

• A Public Provident Fund (PPF) account can be opened by resident Indian Individuals and individuals on behalf of minors.
• Only one Public Provident Fund (PPF) account can be maintained by an Individual, except an account that is opened on behalf of a minor.
• A Public Provident Fund (PPF) account can be opened either by the Mother or Father on behalf of their minor Son or Daughter; however the Mother and Father both cannot open Public Provident Fund (PPF) accounts on behalf of the same minor.
• Grand-parents cannot open a Public Provident Fund (PPF) account on behalf of minor grand-child; however, in case of death of both the Father and Mother, Grand-parents can open a Public Provident Fund (PPF) account as guardians of the Grand-child.

5 things one must know about PPF Account

1. If somebody has the PPF account which is forgotten or ignored, one can revive this PPF account with paying the pending subscription and penalties.
2. One needs to deposit minimum of Rs. 500 per year to make the account active. If somebody fails to deposit the minimum amount, a penalty of Rs. 50 per year will be charged on the account. In case of reactivation, one need to pay due amount as well as penalty till the date of reactivation.
3. Once PPF account is declared inactive, the account holder needs to visit in the bank for make it active for verification process.
4. If your PPF account has already matured, it will not earn any interest from the date of maturity. You cannot reactivate such an account, but will have to pay the penalty to claim the proceeds.
5. If the PPF account is close to maturity, you can apply for an extension, with or without further contribution, for a period of five years from the date of maturity to be able to earn an interest on the accumulated amount.

General Terminologies of VAT

Term	Description
Input Tax	This is the tax paid on purchases
Output Tax	This is the tax charged on sales
Input Credit	The excess amount of Input tax over output tax for the current period which is permitted to be set off against Output tax of subsequent periods is termed as Input Credit.
TIN	Tax Identification Number (TIN) is the Registration Number given by the department to the dealer at the time of  Registration. This needs to be quoted at all required places where the registration details are to be provided.
Tax Invoice	This is the Sales invoice format issued by one Registered Dealer to another. Based on this Invoice, the ITC can be claimed by the purchasing dealer.
Retail Invoice	The Sales invoice format used for invoicing the Exempted Sales and the Sales made to Unregistered dealers is termed as Retail Invoice.
Registered Dealer	This term is used to identify a dealer who is registered either under Voluntary Registration or Compulsory Registration under the VAT Act. Such dealer can issue tax invoice and also claim the tax paid on purchases made from other registered dealers as Input tax credit.
Unregistered Dealer	Dealers who are not registered under the VAT Act are called as Unregistered Dealers (URD). Such dealers cannot issue tax invoice. They can neither Charge Tax nor Claim Input Tax Credit.
Purchase Tax	The Tax paid on goods purchased from unregistered dealers is liable to Purchase Tax. The purchase tax is treated as Output VAT payable by the dealer as it is a liability. It has to be paid while making the payment towards VAT liability. Based on the Rules and Regulations, the Input Tax Credit can be claimed on the payment made towards Purchase Tax.

Management Information System

Tally packs enormous power to generate numerous reports for management information that assists management in taking correct & timely decisions. This enables rapid growth and better control of business. The primary concern for Management Information System of a business is to ensure that the knowledge necessary to drive critical business processes is available at the right place and time.

Management Reports & Functionalities

Ratio Analysis

Ratio, in general terminology, is referred to as a quantitative relation between two numerical values. Ratio Analysis is a way of expressing relationships between a firm’s financial numbers.

Ratios are most commonly used to analyze the financial and operational characteristics of a company. Ratios give managers a tool to conduct comparison and trend analysis.

Ratios are used to effectively monitor and plan the following :-

•     Overall financial health of the business
•          Liquidity position
•          Receivables collection
•          Payables rescheduling
•          Level of exposure to external borrowings
•          Prospective investment levels
•          Managerial decision making process

At centre (unit/division) level, ratios are one of the best tools to identify:-

• And compare centre wise profitability
• Centres that require attention in terms of additional investment, cost reduction, human resources etc. 
• The most and least preferred customers based on their performance

Ratios are effective management decision making tools. The following are some of the management decision making areas, where ratios are used :-

• expansion of business
• diversification
• raising additional working capital
• Additional investment etc. 

To view Ratio Analysis
Go to Gateway of Tally > Ratio Analysis
The Ratio Analysis Statement is a Single Sheet Performance Report for a selected period. It gives important values and key performance indicators for the company. It is one report that top management need to look at to know the state of the company’s financial health and where it is going in the short term.
The Ratio Analysis Screen is divided into two parts: Principal Groups and Principal Ratios.
The Principal Groups are the absolute key figures that give perspective to the ratios.
Principal Ratios relate two pieces of financial data to get a comparison that is more meaningful when compared with ratios of other companies.
Principal Groups and Key Figures


Working Capital – Tally follows the Accountants’ definition and is the Net Working Capital calculated as Current Assets less Current Liabilities. Financial Analysts often mean total Current Assets as Working Capital. This is a measure of the extent the firm is protected from liquidity problems.


Cash in Hand and Bank Balances – These are indicated in the Ratio Analysis screen to give the liquidity perspective.


Sundry Debtors – (Due till today) – These are two figures, total debtors and debtors that are due as on the date of the Statement.


Sundry Creditors – (Due till today) – These are figures for total creditors and those that are due as on the date of the Statement.
Sales and Purchases Accounts – These show the trading activity for the period.


Stock in Hand – This is the Stock in hand as on the date of the report. Together with Cash and Bank Balances and Debtors. Stocks complete the Current Assets aspect of Working Capital.


Net Profit – This is derived from the Profit & Loss Account and is the profit after all direct and indirect expenses.


Principal Ratios


The following ratios can be viewed in Tally :-

Current Ratio - (Current Assets: Current Liabilities): which indicates the solvency position of the enterprise. The ideal ratio is 2 under normal business conditions.

Quick Ratio - (Current Assets – Stock in Hand : Current Liabilities): which indicates the liquidity position of the enterprise. This ratio is useful in planning future cash requirements.

Debt Equity Ratio - (Loans (Liabilities) : Capital + Net Profit): which indicates the level of exposure to external borrowings and is a useful tool in determining the options of raising additional capital internally or externally.

Gross profit % – Gross Profit / total Turnover – indicates the percentage of profit earned from direct operations (manufacturing)., This ratio is useful, where an enterprise produces more than one product, in identifying the order of profitability and making decisions such as increasing production capacity, continuance of a product etc.

Net Profit % - Net Profit/ Total Turnover – indicates the percentage of net profit earned by the enterprise after considering all expenses of the enterprise.

This is useful in identifying the overall profitability of the enterprise.

Operating Cost – is referred to as the percentage of operating cost with respect to the total turnover – This ratio is useful in making decisions in the areas of cost control, cost reduction etc.

Receivables Turnover – is an analysis of debtor wise payment performance and a useful tool in identifying the most preferred and least preferred customers or agents and planning the receivables collection process.

Return on Investment – is referred to as a percentage of net profit / capital + net profit. This is a useful tool in measuring returns expected of the project/product and plan additional capital infusion, increase in production capacity (subject to market demand) etc.

Return on working capital – is referred to as the percentage of net profit to working capital (current assets – current liabilities).

Working capital turnover ratio – indicates how effectively working capital is used in terms of turnover it can help to generate. It is a useful tool in identifying the level of deployment of funds with respect to sales.

Inventory turnover ratio –turnover / inventory – indicates the relationship of inventory with respect to sales. This is a useful tool in identifying the extent of investment in stock and indicates

• Stock control measures whether to be taken in case of change in demand
• Procurement planning

CASH FLOW

A Cash Flow is a measure of a business’s financial health. It is defined as cash receipts minus cash payments over a given period of time. Through Tally, a business can analyze the following:

• Periodic cash flows
• Group & Ledger wise cash flows

Periodic cash flow statements can be used by a business to effectively analyze and plan

• The current pattern of cash flow under various heads
• The timing and certainty of its future cash flows
• The availability of excess funds-the extent and tenor of such availability for short term investment.

Group & Ledger wise cash flow statements can be used to

• Identify major heads, which require constant monitoring.
• Analyze the pattern of inflow/outflow under a particular group/ account head for planning overall cash requirement.

Cash flow statements can also be used as receipts and payments statement. This is particularly useful for businesses such as Non Profit Organizations where receipts and payments statements need to be generated.

To view Cash Flow Summary

Go to Gateway of Tally > Display > Cash/Fund Flow > Cash Flow

To view Monthly/Quarterly cash flow statement press Alt+F5 Further Display can be configured through F12 Configuration

• Appearance of names: alias / names, alias only, name/ alias, name only
• Scale factor for values: crores, ten millions, millions, ten lakhs, lakhs, ten thousands, thousands, hundred
• Periodicity to use: 4 week month, daily, fortnightly, half yearly, monthly, quarterly, weekly and yearly
• Show average details: selecting yes option will display the average of the selected period’s cash inflow and outflow at the end of the statement.
• Show with Graph: selecting yes option will display the graph in terms of period selected.

To view detailed Detailed/Condensed Press Alt+F1

To view Daily flow / Break up Press F4

Funds Flow

The Funds Flow depicts the Working Capital analysis of the company. It gives details of the movement of funds in a business, i.e. source of funds and their application. Working Capital is the net difference between Current Assets & Current Liabilities

Fund flow statements are useful tools to analyze

• The changes in the net assets
• Its financial structure
• Its solvency and liquidity
• Its operating performance
• Areas that require immediate attention
• Periodic fund flows
• Group wise and ledger wise fund flows

Display of sources and application separately for each group enables a business to identify core areas that require immediate attention and take effective steps to address the issues.

To view Funds Flow Summary

Go to Gateway of Tally > Display > Cash/Fund Flow > Fund Flow

Press Enter to get Funds flow Summary for the month

Few Useful Hints

• If you want to repeat last narration of last voucher then go to narration of the voucher and Press CTRL+R.  It will place the last narration and will save your time to write to write narration again and again.

• To alter the recently saved voucher just hit the page up button from your voucher screen and you will find the last entered voucher there. Now you can modify it easily alter the voucher. Similarly you can edit any voucher by this way by selecting a date and pressing page up button again and again and you will find voucher entries one by one for that particular date.

• To create a new ledger account any time during voucher creation use ALT+C and use CTRL+Enter on the ledger/Group name to alter without leaving the voucher screen.

• At any stage CTRL+N can activate Calculator but during voucher creation ALT+C used at amount column automatically fill the result in that field. For that just Press ALT+C on amount column that will take you to the calculator. Here you can calculate the desire figures and after making your calculation. Now, simply pressing ENTER the result will be in your amount column automatically.

• For screen shot at any point on Tally just go to the desire screen and take a screen shot and pressing PrtScr button of your key board (top right side of your keyboard) now go word/excel and just press Ctrl+V and you will find the screen shot of your tally screen.

• Use ALT+D to delete any voucher/ledger/group etc.  

Function Keys Combination for Tally

Windows	Functionality	Availability
F1	To select a company	At all masters menu screen
F1	To select the Accounts Button	At the Accounting Voucher creation and alteration screen.
ALT + F1	To select the Inventory To view the detailed or condensed report	At the Inventory/Payroll Voucher creation and alteration screen Almost all the Reports
CTRL + F1	To select Payroll Voucher to alter	At the Accounting / Inventory voucher creation or alteration screen.
F2	To change the Current Date To select Company Inventory features	At almost all screens At the F11 : Features Screen
F3	To select the Company To select Company Statutory & Taxation Features	At almost all Screens At F11 : Features Screen
F4	To select the Contra Voucher	At Accounting / Inventory Voucher creation and alteration screen
F5	To select the Payment Voucher	At Accounting / Inventory Voucher creation and alteration screen
F6	To select the Receipt Voucher	At Accounting / Inventory Voucher creation and alteration screen
F7	To select the Journal Voucher	At Accounting / Inventory Voucher creation and alteration screen
F8	To select the Sales Voucher	At Accounting / Inventory Voucher creation and alteration screen
CTRL + F8	To select the credit note voucher	At Accounting / Inventory Voucher creation and Alteration Screen
F9	To select the purchase  Voucher	At Accounting / Inventory Voucher creation and Alteration Screen
CTRL + F9	To select the Debit Note Voucher	At Accounting/ Inventory Voucher creation and Alteration Screen
F10	To select the Reversing Journal Voucher	At Accounting/ Inventory Voucher creation and Alteration Screen
CTRL + F10	To select the Memorandum Voucher	At Accounting/Inventory/Payroll Voucher creation and alteration Screen
F11	To select the Functions and Features Screen	At almost all screens
F12	To select the Configure Screen	At almost all screens

How to automate Bank Reconciliation Statement in Tally?

Most businesses these days prefer to receive and make payments via their bank accounts. Typically, while transacting via the bank, an organization prepares a deposit slip to credit the payments received into the firm’s account, generates payment advice and tracks funds in order to always ensure that the bank account has the minimum funds required at all times. But as the number of transactions increase, it becomes a challenging task for organizations to prepare a large number of deposit slips, covering letters, and reconcile the bank ledger balance and the bank statements. Tally.ERP 9 has made life simple, it allows you to effortlessly print cheques, reconcile the entries in books of accounts, generate deposit slips and payment advice, whenever required.

Bank reconciliation

Bank reconciliation explains the difference between the bank balance shown in an organization’s bank statement and the corresponding amount shown in the  organization’s accounting records, on a particular date.

To reconcile the bank statement

• Go to ‘Gateway of Tally > Banking > Bank Reconciliation’
• Select the name of the required bank

The ‘Bank Reconciliation’ screen appears:

• Match every transaction with the bank statement and record the transaction date in the ‘Bank Date’ field.

Accept the screen to reconcile the bank ledgers as per the corresponding banking statement.

On successfully reconciling, the 'Bank Reconciliation' screen appears as shown:

Tally.ERP 9 also allows you to record the un-reconciled transactions based on the nature of transactions.

Recording un-reconciled transactions

Un-reconciled transactions can be entered by clicking ‘U: Opening BRS’ or pressing ‘Alt+U’ in the ‘Bank Reconciliation’ screen. In this screen, the user can enter all transactions in which the cheques were issued but not presented, or when cheques were received but not presented. This will be useful under the following circumstances:

• When a company starts bank reconciliation in the middle of the financial year by setting an effective date in the bank ledger.
• Or when the opening balance of the bank account having unreconciled transactions is brought forward to the bank’s ledger of the company.

Recording transactions

During reconciliation, some transactions like the bank’s charges, the interest paid by the bank, etc., need to be recorded. These transactions can be recorded at the ‘Banking’ screen by simply clicking ‘C: Create Vouchers’ or pressing ‘Alt+C’ in the ‘Bank Reconciliation’ screen and choosing the required voucher.

Generating deposit slips

You can generate deposit slips for the payments received through cheques or demand drafts, which can be deposited to the bank later.

To generate the deposit slip

• Go to ‘Gateway of Tally > Banking > Deposit Slip’
• Select the appropriate bank.

The ‘Deposit Slip’ screen appears:

•    Click ‘P: Print’ or press ‘Alt+P’

In the ‘Print Report’ screen

• Set ‘Print Deposit Slip’ to ‘Yes’.
• Click ‘Accept’ to print the deposit slips.

The printed deposit slip appears as shown below:-

Payment advice

Using your Tally.ERP 9 system, you can also generate the payment advice, which the company needs to send to its suppliers or other parties, along with the respective cheque /demand draft.

To generate the payment advice:

•     Go to ‘Gateway of Tally > Banking > Payment Advice’.
•     Select the required ledger from the ‘List of Ledgers’.

The ‘Payment Advice’ screen appears

• Click ‘P: Print’ or press ‘Alt+P’

The ‘Payment Advice’ screen for the selected ledger appears, as shown below: