Budgets & Scenario Controls

1. Core Concept

  • Budgets: Financial targets set for expenses, incomes, or ledgers over a specific timeframe (e.g., monthly, quarterly, annually) to manage cash flow and operational costs.
  • Variance Analysis: The process of comparing your actual expenses and incomes against your pre-set budget figures to identify overspending, cost savings, or revenue shortfalls.
  • Controls: Management tools in TallyPrime that alert you or provide reporting insights when expenses exceed budgeted limits.
  • Budget Allocation Types in TallyPrime:
    • On Net Transactions: Compares the budget against total net changes (debits minus credits) during the given period. (Best for expense and income accounts).
    • On Closing Balance: Compares the budget against the cumulative closing balance at the end of the period. (Best for assets and liability accounts).

2. Enabling & Creating Budgets in TallyPrime

Step A: Enable Budget Feature

  1. Press F11 (Features) on the Gateway of Tally.
  2. Set Enable Maintain Budgets and Controls to Yes.
  3. Press Ctrl + A to save.

Step B: Create a Budget Master

  1. Gateway of Tally → Create → Budget (or press Alt + G → Create Master → Budget).
  2. Enter the Name of the budget (e.g., Marketing Budget FY 26-27 or Q1 Expense Budget).
  3. Set the Period of Budget:
    • From: 1-Apr-2026
    • To: 02-Jun-2026 (Quarter 1)
  4. Set Budget Parameters for Group or Ledger:
    • Set/Alter Groups: Set to Yes if assigning a single budget limit to an entire group (e.g., Indirect Expenses).
    • Set/Alter Ledgers: Set to Yes if setting specific limits for individual ledgers (e.g., Advertising, Rent, Travel Expenses).
  5. Specify the allocation type (On Net Transactions or On Closing Balance) and enter the budget amounts.
  6. Press Ctrl + A to save.

3. Ledgers Required to be Created First

Ledger Name Group (Under) Maintain Cost Centres
Advertisement Expenses A/c Indirect Expenses Optional
Sales Promotion A/c Indirect Expenses Optional
Travel & Conveyance A/c Indirect Expenses Optional
Office Rent A/c Indirect Expenses Optional
Cash / Bank A/c Cash-in-Hand / Bank Accounts No

4. Complete Practice Set

Part 1: Set Up Q1 Expense Budget (1-Apr-2026 to 02-Jun-2026)

Budget Name: Q1 Marketing & Admin Budget
Period: 1-Apr-2026 to 02-Jun-2026

Ledger Name Budget Type Budgeted Amount (₹)
Advertisement Expenses A/c On Net Transactions 1,50,000
Sales Promotion A/c On Net Transactions 80,000
Travel & Conveyance A/c On Net Transactions 50,000
Office Rent A/c On Net Transactions 75,000

Part 2: Record Actual Payment Vouchers (F5)

Date Voucher Type Expense Ledger Amount Paid (₹) Payment Mode Narration
01-Apr Payment (F5) Advertisement Expenses 60,000 Bank Being social media ad campaign payment
02-Apr Payment (F5) Office Rent 25,000 Bank Being office rent paid for April
01-May Payment (F5) Sales Promotion 45,000 Bank Being trade show booth payment
01-May Payment (F5) Travel & Conveyance 30,000 Cash Being client site visit travel expenses
02-May Payment (F5) Advertisement Expenses 1,00,000 Bank Being print & digital campaign payment
01-Jun Payment (F5) Sales Promotion 40,000 Cash Being promotional flyers & banners

Part 3: Budget Variance Analysis (Actual vs. Budget)

Calculated Totals at Quarter-End (02-Jun):

Ledger Name Budget Amount (₹) Actual Spent (₹) Variance (₹) Status / Result
Advertisement Expenses 1,50,000 1,60,000 -10,000 Over Budget (106.6% spent)
Sales Promotion 80,000 85,000 -5,000 Over Budget (106.25% spent)
Travel & Conveyance 50,000 30,000 +20,000 Under Budget / Saved (60% spent)
Office Rent 75,000 25,000 +50,000 Under Budget (Pending June rent)

5. Report Verification & Variance Analysis

How to View Budget Variance Reports in TallyPrime:

  • Gateway of Tally → Display More Reports → Statement of Accounts → Budgets.
  • Alternative Shortcut: Press Alt + G (Go To) → Type Budget Variance.
  • Select your budget name (e.g., Q1 Marketing & Admin Budget).
  • Press F10 (Budget Variance) to toggle variance view on/off in the Profit & Loss or Trial Balance screen.

Interpreting Columns:

  • Target Column: Shows the budgeted target figures.
  • Actual Column: Shows actual voucher postings during the period.
  • Variance Column: Shows the difference in amount and percentage (+ values indicate savings, - values indicate overspending).