Contra Entry in Tally

A contra entry in Tally records money moving between your own cash and bank accounts, using the Contra voucher (F4). Depositing cash into the bank, withdrawing cash from the bank, or transferring money from one bank account to another are all contra entries. The key point is that no income or expense happens, the total money the business has stays the same; it just changes location. That's why it gets its own voucher type, separate from Payment and Receipt.

What "contra" means

The word "contra" here means the transaction is between accounts of the same kind, cash and bank, which are both the business's own money. When you deposit ₹10,000 cash into your bank, your cash reduces by ₹10,000 and your bank balance rises by ₹10,000. You haven't earned or spent anything; you've just moved money from one pocket to another. Recording this correctly keeps both your cash-in-hand and your bank balance accurate.

When to use a Contra voucher (F4)

Use the Contra voucher for any of these:

• Cash deposited into the bank.
• Cash withdrawn from the bank (for office use).
• Transfer from one bank account to another (say current to savings, or between two banks).
• Cash transferred between two cash accounts (if you maintain more than one).

If the money involves an outside party (a supplier, a customer, an expense), it is not a contra. Paying a supplier from the bank is a Payment (F5); receiving from a customer is a Receipt (F6). Contra is strictly cash ↔ bank, your own accounts.

How to open a Contra voucher

1. From Gateway of Tally, choose Vouchers (or Alt + G ▸ "Voucher").
2. Press F4 to switch to the Contra voucher.
3. Set the date with F2 if needed.
4. Enter the ledger that receives the money (debit) and the one that gives it (credit).
5. Add a narration.
6. Save with Ctrl + A.

Worked example 1: Cash deposited into bank

You deposit ₹20,000 cash from the office into the company's bank account.

• Bank A/c Dr ₹20,000 (bank balance increases, so debit)
• To Cash A/c ₹20,000 (cash reduces, so credit)

Narration: "Being cash deposited into bank."

Your total money is unchanged, ₹20,000 simply moved from cash to bank.

Worked example 2: Cash withdrawn from bank

You withdraw ₹5,000 from the bank for office expenses.

• Cash A/c Dr ₹5,000 (cash increases)
• To Bank A/c ₹5,000 (bank reduces)

Narration: "Being cash withdrawn from bank for office use."

Note: withdrawing cash is a contra. But once you spend that cash on an expense (say rent), that spending is a separate Payment entry.

Worked example 3: Bank-to-bank transfer

You move ₹1,00,000 from your HDFC current account to your SBI account.

• SBI Bank A/c Dr ₹1,00,000
• To HDFC Bank A/c ₹1,00,000

Narration: "Being funds transferred from HDFC to SBI."

Quick reference

Real-world scenario (why contra keeps books clean)

A shop takes cash sales all day. In the evening, the owner deposits the day's cash into the bank. If the accountant records this deposit as a "receipt" or forgets it, the cash-in-hand figure in Tally won't match the actual cash box, and the bank balance won't match the passbook. Using a proper contra entry keeps both figures honest. At month end, when you do a bank reconciliation, these contra entries are exactly what you tick off against the bank statement. Clean contra entries make reconciliation quick; messy ones make it a nightmare.

Pro tips

• Ask: "Is this money moving between my own cash and bank?" If yes, it's a contra (F4).
• Record daily cash deposits promptly so cash-in-hand in Tally matches the physical cash box.
• Keep separate bank ledgers for each bank account so transfers are clear.

Common mistakes

• Using Payment/Receipt for a deposit. Depositing your own cash into your own bank is a Contra, not a Payment or Receipt.
• Mixing an expense into a withdrawal. Withdrawing cash is a contra; spending that cash is a separate Payment entry. Keep them separate.
• One bank ledger for many accounts. If you have two bank accounts, make two ledgers, or transfers get confusing.
• Forgetting to record deposits. Then Tally's cash balance won't match reality.

Key takeaways

• Contra (F4) records money moving between your own cash and bank accounts.
• Deposits, withdrawals and bank-to-bank transfers are contra entries.
• No income or expense is involved; total money is unchanged.
• Clean contra entries make month-end bank reconciliation easy.

Practice task

In your practice company, pass three contra entries: (1) deposit ₹15,000 cash into the bank, (2) withdraw ₹4,000 cash from the bank, and (3) transfer ₹50,000 between two bank accounts. Then open the Cash and Bank ledgers and check the balances moved correctly.

Get confident with every voucher type in the ADFA program at HCI.