A Purchase Invoice is a document received from a supplier when goods or services are purchased. Recording purchase invoices correctly in Tally Prime helps businesses maintain accurate accounting records, manage inventory, track supplier balances, and claim eligible GST input tax credits.
Every business regularly purchases products, raw materials, office supplies, or services. Proper purchase invoice management ensures that expenses and inventory are recorded accurately and financial reports remain reliable.
What Is a Purchase Invoice?
A purchase invoice is a document issued by a supplier for goods or services sold to a business.
A typical purchase invoice contains:
- Supplier Name
- Invoice Number
- Invoice Date
- Product Details
- Quantity
- Rate
- GST Information
- Total Amount
Businesses use purchase invoices to record purchases and verify supplier transactions.
Why Are Purchase Invoices Important?
Purchase invoices help businesses:
- Record purchase transactions
- Track supplier liabilities
- Manage inventory
- Calculate GST input credits
- Verify supplier bills
- Generate accurate reports
Proper invoice recording is essential for accounting accuracy and tax compliance.
Information Required Before Creating a Purchase Invoice
Before entering a purchase invoice, ensure the following records exist:
- Supplier Ledger
- Purchase Ledger
- Stock Items
- GST Configuration
- Units of Measurement
These records help ensure accurate transaction entry.
Steps to Create a Purchase Invoice in Tally Prime
Step 1: Open Tally Prime
Launch Tally Prime and select the required company.
Step 2: Open Purchase Voucher
From the Gateway of Tally, navigate to:
Vouchers
or press:
F9 – Purchase Voucher
The Purchase Voucher screen will appear.
Step 3: Select Invoice Mode
Choose:
Item Invoice Mode
This allows detailed inventory tracking.
Step 4: Select Supplier Ledger
Choose the supplier account.
Examples:
- ABC Suppliers
- XYZ Distributors
- National Traders
This records the liability toward the supplier.
Step 5: Enter Supplier Invoice Details
Enter:
- Supplier Invoice Number
- Invoice Date
Maintaining invoice references helps during audits and reconciliation.
Step 6: Select Stock Items
Choose the purchased products.
Examples:
- Laptop
- Printer
- Mobile Phone
Enter:
- Quantity
- Rate
Tally Prime automatically calculates the purchase value.
Step 7: Verify GST Calculation
If GST is enabled, the software calculates:
- CGST
- SGST
- IGST
automatically according to tax settings.
Step 8: Review Invoice Total
Verify:
- Product Value
- GST Amount
- Total Invoice Amount
Ensure all details match the supplier invoice.
Step 9: Save the Purchase Invoice
Press:
Ctrl + A
to save the voucher.
The purchase invoice is now recorded successfully.
Example of Purchase Invoice Entry
Suppose a business purchases:
Product:
Dell Laptop
Quantity:
5
Rate:
₹35,000
Purchase Value:
₹1,75,000
GST:
18%
Total Invoice Value:
₹2,06,500
This transaction can be entered using the Purchase Voucher.
Cash Purchase Invoice
When payment is made immediately:
Supplier Ledger:
Cash Account
This records the purchase as a cash transaction.
Cash purchases are common for small expenses and local purchases.
Credit Purchase Invoice
Most businesses purchase goods on credit.
Supplier Ledger:
ABC Suppliers
The amount remains payable until payment is made.
Supplier outstanding balances update automatically.
Service Purchase Invoice
Businesses often purchase services.
Examples include:
- Internet Services
- Legal Services
- Consultancy Services
- Software Subscriptions
These transactions are recorded using expense ledgers rather than stock items.
GST Input Tax Credit
Purchase invoices play a vital role in GST compliance.
Benefits include:
- Input tax credit tracking
- GST return preparation
- Tax liability reduction
Proper GST configuration ensures accurate reporting.
Inventory Updates After Purchase
When stock items are included in the invoice:
- Inventory quantity increases
- Stock valuation updates
- Inventory reports refresh automatically
This ensures real-time stock management.
Reports Updated by Purchase Invoices
Purchase invoices automatically update:
- Purchase Register
- Stock Summary
- Supplier Outstanding Reports
- GST Reports
- Profit and Loss Account
This provides accurate financial information.
Common Mistakes During Purchase Invoice Entry
Wrong Supplier Selection
Incorrect supplier accounts affect payable balances.
Wrong Invoice Number
Errors can create reconciliation issues.
Incorrect GST Rate
Tax reporting may become inaccurate.
Wrong Quantity or Rate
Inventory and expense records become incorrect.
Always review invoice details before saving.
Benefits of Recording Purchase Invoices in Tally Prime
Accurate Accounting
Financial records remain updated.
Better Supplier Management
Outstanding balances are tracked automatically.
Improved Inventory Control
Stock quantities update immediately.
GST Compliance
Input tax credits are recorded correctly.
Reliable Reporting
Business reports remain accurate and current.
These benefits improve financial management.
Best Practices for Purchase Invoice Management
Follow these recommendations:
- Verify supplier invoices carefully
- Match invoice details with received goods
- Check GST information
- Maintain proper invoice references
- Review purchase reports regularly
These practices improve accounting accuracy and compliance.
Conclusion
Creating and recording purchase invoices in Tally Prime is essential for maintaining accurate accounting records, managing supplier relationships, tracking inventory, and ensuring GST compliance. By entering purchase invoices correctly, businesses can improve financial control, claim eligible tax credits, generate reliable reports, and support better business decision-making.
