How to Manage Inventory and Stock in Tally Prime (2026)

If you sell physical goods, your stock figures in Tally Prime are only useful if the setup behind them is solid — stock groups, units of measure, and godowns (warehouses/locations) all affect how accurately your inventory reports reflect reality. Get this right early, and your stock reports become a genuinely useful tool instead of a number you don’t fully trust.

This guide covers setting up inventory in Tally Prime and the reports that help you actually manage it day to day.

What You Need Before You Start

• Tally Prime installed, with your company created and GST configured if applicable — see our guide on how to create a company in Tally Prime
• A rough list of your product categories, the units you sell in (pieces, kg, litres, boxes, etc.), and whether you store stock across more than one location

Step 1: Enable Inventory Features

1. Gateway of Tally, then F11 (Features), then F2 (Inventory Features)
2. Confirm Maintain Inventory is set to Yes (usually enabled by default for most company types)
3. Enable Maintain Multiple Godowns if you store stock in more than one location
4. Enable Maintain Batch-wise Details if you track expiry dates or batch numbers, relevant for businesses like pharmaceuticals or food
5. Press Ctrl+A to save

Step 2: Create Units of Measure

1. Gateway of Tally, then Inventory Info, then Units of Measure, then Create
2. Enter the unit symbol (for example, Pcs, Kg, Ltr, Box)
3. Choose whether it’s a Simple unit or a Compound unit (for example, a Box that equals 12 Pcs)
4. Save

Setting up compound units correctly upfront saves you from manual conversion math later when stock arrives in boxes but sells individually.

Step 3: Create Stock Groups

Stock Groups let you organize similar items together for reporting, similar to how Account Groups organize ledgers.

1. Gateway of Tally, then Inventory Info, then Stock Groups, then Create
2. Name the group (for example, “Electronics” or “Raw Materials”)
3. Set whether GST details should apply uniformly to items under this group, which saves repeating the same rate on every item

Step 4: Create Stock Items

1. Gateway of Tally, then Inventory Info, then Stock Items, then Create
2. Enter the item name and assign it to the relevant Stock Group
3. Select the Unit of Measure
4. If GST applies, set GST Applicable to Yes and enter the HSN/SAC code and rate
5. Enter an Opening Balance and Opening Value if you’re starting with existing stock, so your reports are accurate from day one
6. Optionally set a Reorder Level so Tally Prime can flag when stock is running low
7. Save

Step 5: Set Up Godowns (Multiple Locations)

If you store stock across more than one warehouse, shop, or location:

1. Gateway of Tally, then Inventory Info, then Godowns, then Create
2. Name each location clearly (for example, “Main Warehouse,” “Retail Outlet – Chandigarh”)
3. When recording purchase or sales vouchers, you’ll now be prompted to select which godown stock is moving into or out of
4. Use Stock Journal vouchers to record transfers between godowns when goods physically move from one location to another

Step 6: Record Stock Movements Through Normal Vouchers

Stock levels update automatically as you record regular transactions:

• Purchases increase stock — see our guide on how to record purchase and sales entries in Tally Prime
• Sales decrease stock
• Stock Journal vouchers handle internal transfers, consumption, or manufacturing-style conversions of raw material into finished goods
• Physical Stock vouchers let you record the results of a manual stock count and adjust for any discrepancy found

Step 7: Use Inventory Reports to Stay on Top of Stock

1. Gateway of Tally, then Display More Reports, then Inventory Books or Statement of Inventory
2. Check the Stock Summary for current quantities and values by item or group
3. Check Reorder Status to see which items have dropped below their reorder level
4. Check Ageing Analysis to spot slow-moving stock that’s been sitting unsold for a long time
5. Run a Godown-wise summary if you manage multiple locations, to see where stock actually sits

Common Mistakes to Avoid

• Skipping opening stock balances when first setting up, leaving your reports inaccurate until the next physical count corrects it
• Not setting reorder levels, so stockouts get noticed only when a customer asks for something you don’t have
• Recording purchases and sales without selecting the correct godown, which makes location-wise reports meaningless
• Inconsistent unit setup, for example mixing “Pcs” and “pcs” as if they’re different units instead of one consistent unit
• Not doing periodic physical stock counts and reconciling against Tally Prime’s recorded figures, letting small discrepancies build up unnoticed

FAQs

Can Tally Prime track stock across multiple warehouses? Yes, using the Multiple Godowns feature, which lets you record where stock moves in and out, and report on stock location by location.

Does Tally Prime support batch and expiry tracking? Yes, if you enable Maintain Batch-wise Details in Inventory Features, you can track batch numbers and expiry dates per stock item.

How do I record a stock adjustment after a physical count finds a discrepancy? Use a Physical Stock voucher to record the actual counted quantity, and Tally Prime adjusts the book quantity to match, flagging the difference.

Can I convert raw materials into finished goods in Tally Prime? Yes, using a Stock Journal voucher configured for manufacturing-style conversion, where you specify the raw materials consumed and the finished goods produced.

What happens if I sell more stock than I have available? Depending on your configuration, Tally Prime may allow negative stock with a warning, or restrict the transaction. Check your inventory settings if you want stricter control over this.