How to Set Up Budgets in Tally Prime (2026)

Knowing you spent ₹3 lakh on marketing this quarter is only useful if you know whether that was the plan or a problem. Budgets in Tally Prime let you set target figures for ledgers or groups, then compare actual performance against them automatically — instead of pulling numbers into a spreadsheet every month to do the comparison manually.

This guide covers setting up budgets, comparing actuals, and using scenarios for simple what-if planning.

What You Need Before You Start

• Tally Prime installed, with your chart of accounts (ledgers and groups) already set up
• A rough plan of what you’re budgeting — typically expense and income figures by month or quarter, based on last year’s actuals or your business plan for the period

Step 1: Enable Budgets

1. Gateway of Tally, then F11 (Features), then F1 (Accounting Features)
2. Set Maintain Budgets and Controls to Yes
3. Press Ctrl+A to save

Step 2: Create a Budget

1. Gateway of Tally, then Accounts Info, then Budgets, then Create
2. Name the budget (for example, “FY 2026-27 Budget” or “Q1 Marketing Budget”)
3. Set the Period for which this budget applies
4. Choose whether this budget applies to Groups, Ledgers, Cost Centres, or a combination, depending on the level of detail you want to plan at

Step 3: Enter Budgeted Figures

1. Select the specific ledger or group you’re budgeting for (for example, “Advertising Expense” or the whole “Indirect Expenses” group)
2. Enter the budgeted amount for the period
3. Repeat for each ledger or group you want to track against a target
4. Save the budget

You can set budgets at a broad level (just total expenses) or a detailed level (each individual expense ledger) — detailed budgets give more useful variance information but take more time to set up and maintain.

Step 4: Compare Actuals Against Budget

1. Gateway of Tally, then Display More Reports, then Statement of Accounts, then look for the budget variance or comparative report (naming can vary slightly by release)
2. Select the budget you want to compare against
3. Review the variance shown — actual figures versus budgeted figures, typically with the difference and percentage variance both shown
4. Drill into a specific line for more detail if a variance looks unusual

Step 5: Set Up Cost-Centre-wise Budgets (Optional)

If you’re already using Cost Centres — see our guide on how to use cost centres in Tally Prime — you can extend budgeting to that level too, comparing actual versus budgeted spend by department, project, or branch rather than just company-wide.

1. While creating the budget, select Cost Centres as the budget type
2. Enter budgeted figures for each relevant cost centre
3. Review cost-centre-wise variance reports the same way as the ledger-level comparison

Step 6: Use Scenarios for What-If Planning

Scenarios let you model the impact of hypothetical or provisional transactions without affecting your actual books — useful for planning “what if we made this purchase” or “what if this sale goes through” type questions.

1. Gateway of Tally, then Accounts Info, then Scenarios, then Create
2. Name the scenario and decide which voucher types or specific vouchers should be included in it (for example, provisional or “what-if” entries you create separately)
3. Record provisional vouchers and mark them as belonging to this scenario rather than as confirmed actual transactions
4. View reports with the scenario applied to see the projected impact, and without it to see your actual position — switching between the two without permanently altering your books

Common Mistakes to Avoid

• Setting overly detailed budgets for every single minor ledger, creating ongoing maintenance work that doesn’t add proportionate insight
• Setting a budget once at the start of the year and never revisiting it, even as business conditions clearly change
• Not investigating variances until they’re large, instead of reviewing monthly when smaller deviations are easier to course-correct
• Confusing scenario-based provisional entries with actual recorded transactions, leading to confusion about what’s truly happened versus what’s projected
• Budgeting only expenses and ignoring revenue targets, missing half the picture of whether the business is on track

FAQs

Can I have more than one budget active at the same time? Yes, you can create multiple budgets (for example, a conservative and an optimistic version, or budgets for different departments) and choose which one to compare against in your reports.

Does Tally Prime alert me automatically if I exceed a budget? Some releases support budget controls that can restrict or warn on transactions exceeding budgeted limits at the voucher level, depending on configuration. Check your specific release’s budget control options.

Can scenarios be used for things other than financial planning, like inventory projections? Scenarios are primarily used to model the impact of provisional vouchers on your financial reports, but depending on the voucher types included, this can extend to inventory-related projections as well.

How often should I update my budget during the year? This depends on your business, but reviewing and adjusting quarterly is common practice if conditions change meaningfully from your original assumptions, rather than rigidly sticking to a once-a-year figure.

Do budgets affect my actual financial statements? No, budgets are a planning and comparison tool. They don’t alter your actual recorded transactions or financial statements — they simply provide a target to measure actuals against.