How to pass Stock Market entries in Tally as Trading

Easily pass Stock Market Entries in Tally

Did you ever got confused about how to pass stock market entries in Tally as trading?

If your answer is YES, then this video is surely for you.

In this video, I have tried to clear all your doubts for creating stock market entries in Tally as a trader.

Still, if you have any doubts, just comment below and I’ll solve your doubt. ūüôā

Share the video if you like it or find it useful.

If you are an investor and NOT a trader in Stock Market, then look at this post in which I have explained Stock market Entries in Tally as an investment. 

Stock Market Entries in Tally

[responsive_video type=’youtube’ hide_related=’0′ hide_logo=’0′ hide_controls=’0′ hide_title=’0′ hide_fullscreen=’0′ autoplay=’0′]https://www.youtube.com/watch?v=TTurg_-cIU8[/responsive_video]

Read this for more clarity…

Stock market entries are one of the basic entries in Tally and if you know the basics of Tally well, you can easily pass these entries.

In this video I have explained entries for stock market as trading in Tally. What it means?

Well, it means that you are trading in stock markets and NOT investing.

In simple words, your main business is stock trading like any other business and you earn your major part of income from stock trading.

You do NOT invest your money in stocks and sit for long time. That is called investment.

Instead you trade in stocks on a regular basis and earn (or loose money ūüôĀ ) from trading.

Entire video is based on Stock Trading and NOT investing.

When you create an entry for trading in stock market in Tally, entry will be reflected in:

  • Balance Sheet
  • Profit and Loss account and
  • Stock Summary

If it is an investment in stocks, the effect will NOT be reflected in Profit and Loss account. Rather it will be reflected in just the Balance Sheet and Stock Summary.

I will create 6¬†Ledgers and a¬†Stock Item¬†in this video. I’ve listed and explained everything in the post below.

You can create ledger by following these steps:

Go to:

  • From Gateway of Tally, select Accounts Info.
  • Then select Ledgers
  • Under Single Ledger, select Create
  • Create ledger as¬†I have explained below in each ledger.

Here you can have detailed understanding of creating ledgers in Tally.

Stock Broker under Sundry Creditors (You can also create it under Sundry Debtors).

Create Stock Broker Ledger with the below configurations as shown in the picture.

Stock Broker Ledger in Tally
Creating a Stock Broker Ledger in Tally

Reason why we can create Stock Broker Ledger under Sundry Creditors or Sundry Debtors:

Let’s say, you have purchased Reliance shares and your total bill including brokerage and other expenses is of¬†‚āĻ10,000. It means you have to pay your broker¬†‚āĻ10,000.

That means for YOU, Stock Broker is currently your Creditor because you have to pay him for the shares that it has purchased on behalf of you.

Now, let’s say, you sold Reliance shares for¬†‚āĻ15,000 which you have bought in the above transaction.

That means for you, the same Stock Broker is now your Debtor¬†for¬†‚āĻ15,000 because Stock Broker has to pay money to you for selling the Reliance Shares for¬†‚āĻ15,000.

As there are hundreds of transactions through out the year, the situation of your Stock Broker as a Creditor or a Debtor constantly changes in your accounts.

Therefore, at the time of creating Stock Broker ledger, it does not matter whether you create it under Sundry Creditor or Sundry Debtor.

At the end of the year, when you are closing your books, you can check out your Balance Sheet and see what is the position of your Stock Broker.

Whether you have to pay money to your Stock Broker or vice versa you can easily alter the ledger to Sundry Creditor or Sundry Debtor.

Don’t worry, I have even explained this in the above video. ūüôā

Share Purchases under Purchase Accounts

Create Share Purchases ledger with below configurations as shown in the picture.

Make sure you have set Inventory Values are affected to YES because we will be entering Stock Items while creating journal entry for purchasing shares.

Share Purchases ledger in Tally
Creating Share Purchases Ledger in Tally

Share Sales under the Sales Accounts

Create Share Sales Ledger with below configurations as shown in the picture.

Again, make sure you have set Inventory Values are affected to YES because we will be entering Stock Items while creating journal entry for selling shares.

Share Sales ledger in Tally
Creating Share Sales Ledger in Tally

Share Brokerage under Direct Expenses

Create Share Brokerage Ledger with below configurations as shown in the picture.

Share Brokerage Ledger in Tally
Creating Share Brokerage Ledger in Tally

Share Brokerage Ledger will be used for recording share brokerage which you have to pay to your Stock Broker.

We have created a different ledger because we can record brokerage expenses separately.

On the other hand, you can also record share brokerage in the Stock Broker ledger.

STT, Service Tax & Other Charges under Direct Expenses

Create STT, Service Tax & Other Charges Ledger with below configurations as shown in the picture.

STT, Service Tax & Other Charges Ledger in Tally
Creating STT, Service Tax & Other Charges Ledger in Tally

If you are a Service Provider

If you are NOT¬†a Service Provider, skip this section and move ahead directly to “Stock Item in Tally”.

If you are a Service Provider, you can take credit of service tax paid on stock market transactions.

For that you have to record service tax separately in a new ledger named Service Tax because you are paying service tax.

With the help of a separate ledger for service tax, you do not have to count the entire service tax credit because it will automatically be calculated by Tally at the end of the year.

Whenever you create an entry you will enter service tax amount in different ledger called Service Tax so at the end of the year, the amount is already calculated.

But, first you have to Enable Service Tax feature in Tally to use it.

Go to:

  • Features from Gateway of Tally by pressing F11
  • Select Statutory & Taxation¬†from the Company Features Menu
  • Then, go to Enable Service Tax¬†and set it to YES
  • Then, press Enter¬†and set NO¬†for Set/Alter Service Tax Details
  • Now, press CRTL+A to save everything.

Now come back to the Ledger Creation Menu once again for creating Service Tax Ledger.

Service Tax under Duties & Taxes

Create Service Tax Ledger with below configurations as shown in the picture.

Service Tax Ledger in Tally
Creating Service Tax Ledger in Tally

Now that you have created Service Tax ledger as you are a Service Provider, one more thing is remaining before we can create stock market entry in Tally is the Stock Item.

Stock Item in Tally

You have to create a Stock Item in Inventory Info. for every unique scrip or stock you want to enter.

For example, in this video, I have bought shares of Reliance therefore I will create Stock Item named Reliance.

Creating-a-stock-item-in-Tally
Creating a Stock Item in Tally.

To create a stock item in Tally you will need to follow this simple process.

Go to:

  • Inventory Info.¬†from Gateway of Tally
  • Select Stock Items from the Menu
  • Then, select Create under Single Stock Item
  • Now you are in the Stock Item Creation Menu
  • Enter the name of the stock¬†which in our case here is Reliance
  • When you come to Units,¬†press ALT+C¬†to create unit.
    • Units for Stocks are numbers so we will create no.¬†for short.
    • In Symbol,¬†type no.
    • Now, press CTRL+A¬†to save the unit.
  • Now again press¬†CTRL+A¬†to save the Stock Item¬†for Reliance.

You have successfully created a stock item. Cheers ūüôā

Now if you watch the video you will fully understand the process with much more clarity and ease of concepts.

I have created the entry in the video so go ahead and watch the video to see the Final Entry.

But still if you have any questions or doubts, feel free to comment below and I will answer each and every doubt you have.

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59 thoughts on “How to pass Stock Market entries in Tally as Trading

  1. TK says:

    I have a doubt something related to this video.

    Traders who are trading in derivatives or day trading in equity treating the values little different. And they don’t make scrip wise entries, one entry a day irrespective of how many scrip they trade.

    For eg: Buying 10 shares of Reliance @ 1000 and selling them @ 1001, resulting Rs. 10/- profit. Here the entry doesn’t include the price of buy or sell, just the difference.
    Broker a/c Dr. 10
    To Margin a/c Cr. 10

    Note: They don’t pay Rs. 1000 when buying, just around 10%-20% of it’s total value. So we can’t take the whole contract value as purchase/sale value.

    Here is my doubt. Without a clear purchase/sale value, how could one prepare trading account (in final accounts). These numbers are also has to be entered under the head Sale/Purchase in ITR4 (P/L account).

    • Rishit Shah says:

      The entry you said is correct and can be passed in case of intraday trading or derivatives trading as you said.

      Your doubt is very familiar and the solution would be to pass the whole purchases and sales entries so that you get the total purchases and sales amounts.
      But if you want to pass entries without including sales and purchases amounts then I would suggest you note down the daily purchases and sales amounts therefore at the time of preparation of returns (ITR4) you have the total amount.

  2. TK says:

    If that’s the total sales value to put in ITR4 under “revenue”, then almost every trader will be liable to tax audit.
    Are you sure?

    • Rishit Shah says:

      Now, you are going into Income Tax from Tally. But that’s perfectly okay here on TallySchool. ūüôā

      For your query there are two scenarios.

      1. For delivery based trading the total sales value should be taken for consideration in audit.
      2. For non-delivery based trading the difference between sales and purchases should be taken for consideration in audit.

  3. TK says:

    Thank you.
    But still it’s not clear.
    For eg: Person A’s derivatives turnover is 1 Lakh (i.e., sum of profit + Sum of loss), but the total contract value is 10 crores.
    If I put these values in ITR, resulting figure would be loss of 9.99 crores which has to be carried forward to balance sheet in Person A’s a/c.

    • Rishit Shah says:

      I assume that derivatives about which you are talking are non-delivery based transactions. Therefore in ITR the value you have to enter in case of turnover would be 1 lakh as it is the difference between sales and purchases.

  4. Rohtash says:

    Dont we have to use Purcase and Sales or Payment Receipt voucer instead of Journal?? I am also a CA student kindly send me your contact info for more queries.

    • Rishit Shah says:

      Hi, Rohtash!
      You can also use purchase and sales ledgers alternatively instead of using journal.

      But I prefer not to use payment and receipt because there is no option to enter stocks in payment and receipt vouchers.

      You can ask your questions via Ask Me a Question page
      or you can contact me via Contact Me page. ūüôā

    • Rishit Shah says:

      Hi, Bhavesh!
      I am preparing a video tutorial currently about stock market as investment and will be posting soon.

  5. Dipen Thakkar says:

    Hello,

    In previous year, my partner make the entry of share stock entries as a Investments,,so there is a big mistake coz return is also filed.

    So i want to ask how to put that amount as a opening in current year?

  6. kunjan jain says:

    Sir, i m entering shares transactions as investment but pls share ur knowledge regarding how to create opening balance of same with the no. Of shares already bought last year

    • Rishit Shah says:

      Hi, Kunjan!
      If you have already entered the entries for shares bought last year, you do not have to enter opening balances again.
      It will appear automatically when you switch to new year.

  7. Dipen Thakkar says:

    Hi,
    As per your above ex…I want to ask one Question,

    I Purchased 10 xyz Shares @ Rs. 50/- dated 03/04/2015,- 500 Rs. & Sold 10 same Shares @ Rs. 60/- dated 23/07/2015,- 600 Rs.

    So, My Short Term Share Profit is 100 Rs.

    Now Short Term Share Profit Account is Credited but which account debited,? i am confused…
    Please let me know

    Thanks in advance…

    • Rishit Shah says:

      Hi, Dipen!
      XYZ Shares account will get debited in this case.
      You will have to create a ledger named XYZ Shares under Investment in Shares which is under Investments.

    • Rishit Shah says:

      Yes! You got it!
      You bought 10 shares of XYZ and sold 10 of XYZ so there will be no shares with you and therefore it should be reflected in your balance sheet also.

  8. Rachit Jain says:

    Hi Ritesh,
    I have started doing business in F&O Segment particularly, Now my question say for e.g. on 1/7/15 i have bought 100 futures of NIFTY @ 8500, and for this my broker have dr. me say 10% margin i.e. 85000/- (100*8500*10%), Now if i hold this for the next 15 days every day my broker will pass entries for MTM(Mark to Market) Margin, and say on 15th i square off my position on 8550 then my profit in this case will be 5000(50*100) now for the month if i incur few profit & loss in various transactions like this for e.g.
    15/7/15 – 5000 (Profit)
    17/7/15 – (2500) Loss
    20/7/15 – 10000(Profit)
    25/7/15 – (5000) – Loss
    So in all i have a total turnover of 22500 whereas my Nett P&L will be +7500.
    How to pass accounting entries for this so as to show total turnover as well as net P&L in trading account
    i am a novice to accounts please explain by passing journal entires and their effect
    Thank You for you kind support
    my email is onlyrachit@gmail.com.

    • Rishit Shah says:

      You can pass the entry in the following way, Rachit.

      Here it is.

      When you purchased Futures of Nifty in 01/07/2015:

      Futures A/c Dr. 8,50,000
      To Margin by Broker A/c 85,000
      To Broker A/c 7,65,000

      Then, when you squared up the position on 15/07/2015:
      Margin by Broker A/c Dr. 85,000
      Broker A/c Dr. 7,70,000
      To Futures A/c 8,55,000

      You can simply follow and pass the same entries for all the transactions and at the end you will get profit of +7,500.

  9. Rachit Jain says:

    Thank You, Rishit for your kind help,
    I am pretty much clear about the future transactions entries concept, meanwhile i was also wondering what entires should i pass for Options, in both the case if i am a buyer of an option then i am paying premium. e.g. i bought NIFTY 8500 PE @25, 100 units then i will have to pay 2500 should i treat this as a purchase or what ?? and when i am writer of an option first then i will be getting the premium in my brokers account so should i consider this as a sales first and then when i am squaring the positions should i account for the purchase again … please clear this concept in terms of accounting transactions (with journal entries please)
    Thanking you once again

    • Rishit Shah says:

      Hi, Rachit!
      The concept is same as Futures.
      The only thing different is when you write an option you have to consider it as sales. The stock will go negative.
      Then, when you square off the position, the stock will automatically be zero!

  10. delip says:

    intraday & future entry in tally.. turnover 1 crore n loss 50000, now what to do in tally?

    Any problem arise regarding turnover? is it necessary to show turnover in P&L or BSheet?

    • Rishit Shah says:

      You have to pass entries same as stock market.
      Yes, you have to show turnover in Profit and Loss Account which ultimately shows up in Balance Sheet.

  11. VENUGOPAL.P says:

    Sir
    I am working in government service. I have been trading since 2009. May I continue trading in futures as I am a government servant. What is ternover and how to calculate turnover. Which ITR may I use to file income tax return. Thank you sir

    • Rishit Shah says:

      Hi, Venugopal.P!
      There are no restrictions to government officials for trading in futures, but you can check your agreement and be confirmed.

      Turnover in simple language is how much you traded.

      I cannot tell you the ITR based on just this detail.

  12. VENUGOPAL.P says:

    Sir
    Suppose I buy 1lot nifty futures @8550 by paying magin 25000 and sold the same in intraday @8450 by paying margin 27500. What would be the turnover. Reply me sir. If I earned income through the salary and derivatives trading. Which ITR should I use. Thank you sir

  13. rohin malavi says:

    sir

    i have a dmat account with icici and recently i have opened a dmat account with birla portfolio services. I havw transferred some shares from icici to birla portfolio services and birla portfolio services have sold some shares.

    can u tell me as to what entries i have to pass when the shares have been transferred from icici to birla as in icici they are no holdings of that particular.

    eg Say in icici i have some shares of a company whose buy value was rs 1000. this shares are transferred to birla portfolio and they have sold at rs 2000 and in birla portfolio they have taken buy price as rs 1400 (date on which the shares got transferred) so as per birla profit is rs 400 while actual profit for me is rs 1000.

    thanks in advance

    since

    • Rishit Shah says:

      Hi, Rohin!

      You can pass a journal entry for transfer of shares from ICICI to Birla!

      Birla Dr.
      To Shares (which are in ICICI)
      Now pass simple entry for sale of shares as I have explained.

  14. Rohin malavi says:

    Sir
    Thanks for d reply but my query is

    Say i av shares of A company bought at 3000/-. Now ven i trf 2 birla d show as rs 3300 (price on day of trf). If i tke 3000 den my balance with birla vont tally as de have taken purchase pruce as 3300

    So vat i do with diff off rs 300
    It cant be termed as profit as de have nt been sold only trf from one acc to oder.

    By d way shah means gujarati

    Thanks in advance n if gujarati den tamaro khub abhar

  15. Rohin malavi says:

    Sir
    Thanks for d reply but my query is

    Say i av shares of A company bought at 3000/-. Now ven i trf 2 birla d show as rs 3300 (price on day of trf). If i tke 3000 den my balance with birla vont tally as de have taken purchase pruce as 3300

    So vat i do with diff off rs 300
    It cant be termed as profit as de have nt been sold only trf from one acc to oder.

    By d way shah means gujarati

    Thanks in advance n if gujarati den tamaro khub abhar

  16. Ankit says:

    Hi
    My understanding is that Intraday transaction shouldn’t impact your cost basis for a stock. For instance, if I hold Shares of X company @ 100 as of jan 1st and later in June if I transact Intraday. The cost basis should remain at 100. However, most reports provided by brokers use the FIFO logic and the cost basis show at an incorrect rate adjusting for intraday and not at 100.
    Does tally have a solution to this problem?

    Thanks,
    Ankit

    • Rishit Shah says:

      Hi, Ankit!

      I understand your problem.
      The thing is as per Income Tax Act, 1961 FIFO method is preferred.
      Therefore brokers will issue reports in FIFO.

      What you are talking about is stock valuation method.
      In Tally, there is an option for valuing stock at last purchase cost.
      I think that will solve your problem.

      That will take into account cost of sales as last purchase cost and so in intraday trading, your profit will show on the basis of last purchased cost which will be your intraday purchase.

  17. sanjay says:

    i want to book a bill in tally…actually i had pass the entry in purchase voucher .is it correct..or what will be the entry if it is incorrect.

  18. Jasmin Mehta says:

    Hi Mr. Rishit,

    I have a doubt. Though I am not daily trader, I am purchasing some stock for couple of months in which i may have short term capital gain and there are few shares I am keeping for long term. Sometimes I even sell it intraday if i feel mkt is uncertain. In this case should I need to do entry as per your investment video procedure or should I need to follow your trading video guideline?

  19. Mohan Govindarajan says:

    Hi
    I just entered f&o, speculative
    I know the treatment for audit sec 44ad, 44ab,
    My broker is not giving books suitable for entries.

    I need ref of good tally expert at Chennai, for passing, enteries
    DO you recommend one.

  20. RENUKA HARDASANI says:

    sir
    in this video you showed how to see the profit
    by selecting reliance from closing stock balance, in balance sheet
    but
    in my case
    I had RCOM 600 = 442 LONG TERM HOLDING + 158 SHORT TERM HOLDING
    I now sold entire quantity ie 600 shares in one go
    now balance sheet does not show the name of RCOM
    AS balance is zero
    Sir, there is any adjutment in tally, so that
    we can see zero balance stock name
    so that we can see in and out of stock of RCOM whic would enale us to see gross profit
    thanks in advance

  21. Sushil Lodha says:

    Hi Sir,
    I am Trader as well as investor in share market. Sir I want to know how to Pass the entry of Bonus Shares in Tally Because bonus shares have zero value .They are given by the co. without taking any consideration for the same
    Secondly how to enter the Right Issue Share.Kindly Explain the meaning of Right Issue & its Accounting also
    Thanks
    Awaiting for your reply

    • Rishit Shah says:

      Hi, Sushil!

      For bonus shares, there is a feature in Tally called Zero Valued Entries. Enable that and use it for bonus shares.

      The entry for rights issue is same as for normal entry because you are still paying an amount in the form of rights fee.

    • Rishit Shah says:

      Hi, Riddhi!

      You can pass the buyback entry in the same way as selling the shares.
      In this case, it will be the company instead of a seller.

      And, if you are the company, the entry will be same as purchasing the shares.

  22. Umesh Shah says:

    Dear Sir,
    I am a retired government servant.
    Over a period of time, I have accumulated shares portfolio. As I am retired from services now, I do transact in shares very frequently. I have long term, short term and once in a blue moon intra day profit as well.
    I need below 3 output from posting accounting entries in Tally
    1. Live Stock of shares at any given point of time.
    2. Running ledger balance of Broker and value of Investment at any given point of time
    3. Bifurcation of short term, long term and speculation profit at the end of each FY for taxation purpose.
    Could not understood what procedure to be followed.
    Kindly share same in detail.

  23. Abhay says:

    How to enter value of Demerged shares in Tally 9.?
    For Example Holding 50 shares of Sintex Industries @ Rs 100 each. Now Sintex Industries demerged Sintex Plastic in the ration of 1:1. Value to be apportioned out of 100 as 35% and 65%. Value is as follows :
    50 Shares Sintex Industries – 50×35 = Rs. 1750/-
    50 Shares Sintex Plastic – 50×65 = Rs. 3250/-
    Entry in tally was Sintex Industries Dr Rs. 5000/- & Cr Bank with same amounts.
    Now got 50 shares of Sintex Plastic and value of both the shares got changed.
    Please suggest entry in Tally 9 where stock register is maintained in Tally 9 by invetsor…

    • Rishit Shah says:

      Hi, Abhay!

      The entry will be as under.

      Sintex Industries Dr (new value) – 50 shares – 1,750
      Sintex Plastic Dr – 50 shares – 3,250
      To Sintex Industries (Old Value) – 50 shares – 5,000

    • Rishit Shah says:

      Hi, Doctor!

      For stock split, you need to pass a journal entry like this. Let’s say the stock is Reliance and the rate is Rs.1,000 and now it is split into two and the rate is Rs.500 per share because that is what generally happens.

      The entry will be:

      Reliance (1 share) Dr. Rs.1,000
      To Reliance (2 shares) Rs.1,000

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