Stock market entries in Tally as an Investment

Earlier I created a video on passing stock market entries in Tally but that was from the point of view of business.

If you are trading in stock markets or securities markets, that was the video for you from which you can learn to pass entries in Tally.

But this video is for those who invest in stock markets.

There is core difference between investment and trading.

In this post I will let you know to pass entries in Tally, if you invest in stock or securities markets.

This will also include basics for all kinds of transactions in stock markets such as futures, options as well as commodities.

You need to know…

Before you go any further, here are some of the important things you need to keep in mind.

I have checked the option Integrate Account and Inventory to NO.

Accounting-Options-in-Tally

The reason for checking this option to No is simple.

If we integrate accounts and inventory, the closing stock will appear in Profit and Loss account.

But since it is our investment, it must be shown in the Balance Sheet and not in Profit and Loss account.

Try by checking the option to YES and you will know what I am talking about.

I have also created a group, three ledgers and a stock item.

Group – Investment in Shares under Investments.

Creating a Group in Tally

Here is how you can create a group in Tally:Create-a-group-in-Tally

  • Go to Gateway of Tally.
  • Then go to Accounts Info.
  • You will option of Groups, press enter.
  • You will see two options i.e. Single Group and Multiple Groups.
  • Now, if you want to create only one group, you can select Create under Single Group or else select Create under Multiple Groups if you want to create multiple groups. For example, you may invest in mutual funds, you can create a group of named Mutual Funds.

3 Ledgers

Creating ledgers in Tally is pretty simple and easy.

I have already explained about how to create ledgers in Tally in another post with a video.

  • Share Broker under Sundry Creditor or Sundry Debtor

It acts as your stock broker whatever it may be like Zerodha, Jainam and so on.

  • Share Brokerage under Capital Account because it is your investment it will be reflected under capital account and not in profit and loss account.

It is the brokerage you will pay to your broker for investing in shares.

I have kept it differently because at the end of the year, you need to know how much brokerage you have paid.

You can also include all other charges as well as taxes that your broker charges you in the brokerage.

But if you want to account for it separately, you create the ledgers for taxes as well charges in the same way as Share Brokerage under the Capital Account in Tally.

  • Reliance under Investment in Shares which we earlier created.

This is the share in which we are investing in this example.

It can be any share or option or future or commodity you have or want to invest.

Stock Item named Reliance

I have also created a stock item named Reliance so I can have a record of how many shares I have, at what price I purchased those shares and what is the value per share.

There is a big difference between Stock Item named Reliance and a ledger named Reliance.

I have created Stock Item because I want to track the inwards and outwards of the stock.

Also, by creating a stock item, you have the reports of profit margins and many other insights useful for taking business decisions.

It is also very much easy to calculate capital gains once you have created stock item because Stock Summary shows you a particular date on which you bought and sold it.

If you want to know how to create a Stock Item, please go and do read the earlier article I wrote for stock market entries in Tally.

Now we will pass the main entry which I am talking about in this post.

Passing the Stock Market Investment Entry in Tally

We will pass the Journal Entry because this entry neither involves cash or bank account.

For passing a journal entry for stock investment in Tally, follow the steps.

  • From Gateway of Tally, go to Accounting Vouchers.
  • Then select Journal or just press F7.
  • Now we will purchase Reliance share as we are making an investment in it. Select the Reliance ledger and you will the following in your Tally.
Entering Stock Item in Tally
Entering Stock Item in Tally
  • Enter the stock item named Reliance which we have created and enter the other details like Quantity and Amount. Tally will automatically calculate the rate.
  • Now, let’s assume the brokerage is ₹100 for the above transaction of ₹10,000 so we have to pay in total ₹10,100 to the broker.
  • We will select the Share Broker account and enter the amount of ₹10,100.
  • And lastly we will select the Share Brokerage account and enter the amount of ₹100.

Here is what the entry looks like in Tally.

Stock Market Investment Entry in Tally
Stock Market Investment Entry in Tally

Save this entry by pressing Enter once again and you are good to go.

Now let us have a look at the Balance Sheet and the effects of passing the entries.

Balance Sheet after the Stock Market Investment
Balance Sheet after the Stock Market Investment

You can clearly see the Investment in Shares of ₹10,000.

Now if you further go in, you will see the Reliance Share.

Let’s look at the Stock Summary and see the details.

You can go into the Stock Summary from the Gateway of Tally.

Here is what it looks like.

Stock Summary for Stock Market Investment in Tally
Stock Summary for Stock Market Investment in Tally

You can easily have a look at the Inwards, Outwards as well as the Closing Balance of the stock.

By studying this, you can also calculate the capital gains as I have said earlier.

This is how you pass the entries for stock market investment in Tally.

There are a few advantages of this technique also which I have listed down below.

Advantages of this Technique

Most basic advantage of this technique is you can pass stock market entries in Tally as an investment also.

Another advantage in Tally is that you can also compute capital gains in Tally year from year as per Income Tax Law.

The advantage which I found useful is you can have all the details of stocks right from number of shares to cost per share you bought. This is amazing and it saves time too.

The biggest advantage is that now you do not need to find another software or add-in to pass stock market entries if you are an investor. So that saves money too.

In total this technique saves money and time both.

Here is the video tutorial you are waiting for.

Stock Market Entries in Tally as an Investment

Did you thought any other way of passing stock market entries in Tally as an investment? Which was it?

Please share it in comments! 🙂

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64 thoughts on “Stock market entries in Tally as an Investment

  1. Smriti says:

    How to create opening stock of investment with units . so that it will be displayed under investment head in balancesheet

    • Rishit Shah says:

      Hi, Smriti!
      You can create Stock Investment with units by going to the Inventory Info. and creating stock items.
      But, please note that the units will be available only in Stock Summary and not in the balance sheet.

  2. Frank says:

    How do you account the various expenses in inventory like brokerage, ST, STT, SEBI chgs, Stamp Duty & Exch Trans Chgs.
    Can we create seperate heads in inventory where these exps are booked under the particular stock. Example : Reliance pur 100 @ 1000/- = 10000/- brokerage 30/- ST 4.20, STT 10/-Exch Trans Chgs 0.35, SEBI 0.02, & Stamp Duty 1/- or do we have to take one figure all inclusive and show as purchase amount 10045/- Please clarify, Thanks

    • Rishit Shah says:

      Good Question Frank!

      Well, you can do it both ways you like.
      If you like a detailed information, you can create separate ledgers for all of them and if you just like to have count on expenses you can create a ledger named “Share Brokerage and other charges” and add all the charges including brokerage and put them under Share Brokerage and other charges ledger.

      For your question in the comment, the entry would be like this:

      Reliance A/c Dr. 10,000.00
      Brokerage A/c Dr. 30.00
      Service Tax A/c Dr. 4.20
      STT A/c. Dr. 10.00
      Trans. Charges A/c Dr.0.35
      SEBI A/c. Dr. 0.02
      Stamp Duty A/c. Dr. 1.00
      To Broker 10,045.57

      All the expenses goes under the head Direct Expenses if you are a trader and Capital Account if you are an investor.
      But what I suggest, you should put the expenses under a single account as I have said earlier. That would bring you enough clarity when you see accounts.

      And if you want all the details, you always have a contract note. 🙂

  3. Frank says:

    Dear Sir,
    Thanks for your reply. I am at present using only the Finance side in Tally, I want to know how to create stock entries in the Inventory side of Tally with all the expenses involved. I am an investor and maintain P&L too, all my personal transactions are recorded namely house, land, shares and bank. Please tell me how to pass entries in Inventory so that I can keep track of the shares I hold with their individual rates. Thanks & Regards.

  4. Nirmal says:

    Hello,

    What If a person does intraday and investment trading? Should the Integrated option be Yes or No?
    And can you also show example video for sale of shares under Trading and Investment.
    Your videos are very simple and useful.

    Thanks.

    • Rishit Shah says:

      Hi, Nirmal!

      The integrated option should be No, if you are investing and not trading.
      For intraday you just have to pass entries of net profit or loss. No shares included as you have already sold it.

  5. SMRITI says:

    HEY RISHIT THANKS FOR GUIDING

    NEED YOUR HELP ONCE AGAIN

    WE HAD CREATED ALL INVENTORY IN STOCK (SHARES)
    BUT NOW WE WANT TO SHOW THAT CLOSING STOCK AS INVESTMENT IN BALANCE SHEET
    ALL PURCHASES ENTRY ARE DONE BY CREATING STOCK ITEMS

    ALL ENTRY DONE RELATED TO PURCHASE AND SALE OF SHARES
    PLEASE HELP

  6. Siddharth Ruia says:

    Can my books be maintained in such a way that stock price as shown in “Stock book” includes Share brokerage value.
    This will help me easily calculate net profit and loss on any trade. (I am investing not trading but a little scope for STCG is not to be missed.)

    Do let me know in case there is such kind of solution.

  7. ASHAY CHHAPARIA says:

    Will Brokerage Should Go In Capital Account or Include in Price Of Stock As it will effect Capital Gain if i include it in capital account

    • Rishit Shah says:

      Hi, Ashay!
      Brokerage will be included in the capital account because it is an expense for having capital gain.

      Any expense incurred to create capital gain will have to be reduced from capital gain as per IT Act, 1961.

  8. Harsh Hemani says:

    While creating Stock under investment in shares , i am not getting an option for inventory will be affected. How to get that option?

  9. Sarthak says:

    And what about stt , stamp charges , service tax will it be included in stock price ? Or shown separately

  10. AJ says:

    Hi Rishit, Indeed it was helpful.
    However, from past few years in tally, investments were shown as stock as our accountant didn’t knew how to show it as investment. Now is there a way where all stocks can be transferred to investment a/c at once. We need to preserve purchase date and price since inception. Or do we need to pass individual entry for all share investment transaction.

    • Rishit Shah says:

      Hi, AJ!
      You can note the purchase dates for your preference.
      You can pass the entry for conversion of stock in trade into an investment for recording shares as investments.

  11. AJ says:

    Hi Rishit, Indeed it was helpful. However, from past few years our accountant has been recording investment as stocks as he was unaware and we used to maintain BS and PL in excel to show it as investment. Now if we want to show it as investment from inception so purchase date and price can be retained, what we should do?
    Is there a way where it can be done at once or we need to modify each entry individually? I tried switching off the option of inventory but that does not help.

    • Rishit Shah says:

      Hi, AJ!

      You don’t need to switch off the inventory option in Tally.
      What you need to do is, you can create entries as I have explained in the tutorial in Tally from Excel.

  12. Smriti says:

    If i have done all entries through inventory.
    to show that as investment in balance Sheet you said create all items in investment for closing balance. If i continue further using method in video will it update my stock summary also ?

  13. Sagarka Meet R says:

    hello sir
    how we can reflect the opening stock value of share and how to calculate the capital gain on if purchase cost and opening stock value of such shares are different.

  14. Ramesh says:

    Hi Rishit,
    I have stocks lying with different DPs like SHCL, Karvy, Religare etc. Is there a way to generate statement of stocks lying with each DP to compare with the statements received from the DPs? I also have some physical shares purchased long ago and accounted, but not able to Demat now. how to handle such stocks in tally accounting now.

    • Rishit Shah says:

      Hi, Ramesh!

      I am telling you the easiest method for you separate stocks from different DPs.
      You can create a stock and name it along with DP.

      For example, Reliance with SHCL would be Reliance-SHCL.
      Reliance with Karvy would be Reliance Reliance-Karvy.

      The method applies to physical shares also. Don’t worry. 🙂

  15. Ramesh says:

    Thanks Rishit. before receiving your guidance, I have segregated my
    stocks under different godowns each godown representing a DP. Do you see any problem with this arrangement?
    I split companies every march. how to segregate short term and long term capital gains in this scenario? does it help if I give batch number to each stock with the date of purchase?

    • Rishit Shah says:

      Hi, Ramesh!

      I don’t see any apparent problem.
      There are literally number of ways you can do a single thing in Tally and that is its beauty.

      In fact, it is amazing to know that something like this can even be done. Thanks for sharing your knowledge.

      To calculate the capital gains, you would need to see at the stock summary and check the inwards and outwards date wise using FIFO method.

      Batch number would help if you are used to it for calculating the gains.
      Other than that, I don’t see any use of batch numbers for stock markets.

  16. Neha says:

    Hi Ritish
    how we will pass entry in Tally for Allotment of Shares (Prefrence & Equity) to Shareholders
    Bifurcation with Share Premium
    we need to CreateBoth Share Allotment & Share Premium under Share capital ???

    • Rishit Shah says:

      Hi, Neha!

      This is a pure accounting question of 11th standard. You can find it on the internet.
      Share capital and Share Premium should be under Capital Account and not Share Capital since it is not Share Capital.

  17. Vishakha says:

    Sir,
    I’ve tried different method for Mutual Fund Purchase entries and tell me weather this method is right or having flows and I am new to tally.

    Ex: investment of Rs 50000 is done in HDFC Mid cap fund @ 10rs/unit
    Stock Categories are made as you have explained in tutorial.
    Made a ledger “Mutual Fund Purchase” under purchase account and above-mentioned entry is done in purchase voucher

    Cr to Bank Acc — 50000Rs
    Dr to Mutual Fund Purchase— 50000
    Stock: HDFC Mid Cap Fund – Amt 50000 unit 5000 10Rs/unit

    Now tell me can we use this method also? If not then what are the flaws this method is having?

  18. Anurag says:

    How to reflect Profit on Long Term / short term gain(Segregated way) in our pl account.

    Further how to pass entry for both Trading & Investment Shares

      • Hardik says:

        But even for balancing the books, I need to calculate Inventory value and separate relaised gains / losses from balance inventory. Say, in case, I purchased 100 units @ 1000, and sell 50 units @ 3000, in this case, the inventory will show a negative value of (-50,000), if the gain is not recorded in books. Any way that tally calculates the same on FIFO basis?

  19. Hardik says:

    Hi,
    When I sell the shares / MF Units, how will I record the Gains? As we are not integrating Accounts and Inventory, gain / loss is not getting calculated automatically. How to calculate / record the same (FIFO basis as per Income Tax Act)?

    • Rishit Shah says:

      Hi, Hardik!

      You can still calculate the gains by looking into the Stock Summary even if you are not integrating accounts and inventory.
      Then, you can pass the gains entry on the basis of the gains that you see in the Stock Summary.

  20. prakash says:

    i am doing all by profit and loss a/c with inventory..and..at 31 march paas closing stock to investment a/c by inventory transfer to investment a/c under primary group and same ledger under income …and finaly spilit co for that year finalised a/c and print…than continiue old running co for accounting so is it right way or not please advise…

  21. prakash says:

    i am doing all by profit and loss a/c with inventory..and..at 31 march paas closing stock to investment a/c by inventory transfer to investment a/c under primary group and same ledger under income …and finally split co for that year finalised a/c and print…than continue old running co after deactive inventory transfer to investment by convert that voucher in memorandum for new accounting so is it right way or not please advise…

  22. Prakash says:

    Thanks for respons sir
    I want to show my stocks investments in balance sheet at last day. And all the year keep ainventory maintain so keep both for filing retain and maintain inventory by old continues accounting co so i have not to calculate every single stocks profit and adjustments. When ever want details can see profit and loss a/c with inventory. If any mistake by me please advise. Because i am new and using 7.2 tally.

  23. KIRAN says:

    Hello Mr. Rishit,
    I have two questions regarding SIP . Since April I have been investing some amount in SIP . I want to know how to enter this amount of investment in Tally . Also please inform how to pay income tax on this profit . Or tax is to paid at the time of redemption only??

    • Rishit Shah says:

      Hi, Kiran!

      To enter the SIP investment entry in Tally, you will have to pass the following entry.

      SIP Account (under Investments) Dr.
      To Bank Account or Broker Account

      Income Tax will only be levied when you sell the SIP or at the time of redemption.

  24. Gaurav Agrawal says:

    Hi rishit i did all the entries as per your guidance … its wonderful and Thanks a lot for the same
    I Have following question for you
    1) how to pass stock split entries
    2)How to Pass Bonus Entries
    3) How to Pass Capital gain or loss entry for bonus and stock split shares

    i want above entries from the point of view of investment

    Pls guide my email is – gaurav.agrawal87@gmail.com

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