How to Create Cost Centre and Cost Category in Tally Prime?

Cost Center and categories are useful for organization that required allocation of resources to parallel sets of Cost centers. Such organization usually is project oriented.

Most organization not needed cost categories. The proper uses of cost centers itself would offer the same benefits. Cost categories could increase the data entry work and make it more complicated.  Hence, opting for cost categories, evaluate you needed this option. Always attempt to first use cost centers.

A cost center is any unit of an organization to which transactions (generally, revenue) can be allocated. When only cost or expenses are allocated to these units, they are referred as cost centers.

How to Activate cost center and cost category in tally prime?

Gateway of tally—–>Create —–> Show more ——> Show inactive —-> Select Below options

  • Accounting master
    • Cost Category
    • Cost center

Creating Cost center and Cost Category: –

Create following Cost Category.

  1. Brach
  2.  Department

Create following Cost Centers.

Categories: – Branch

  1. Mumbai (Under Primary)
  2. Delhi (Under Primary)
  3. Kolkata (Under Primary)

Categories: – Department

  1. Sales (Under Primary)
  2. Finance (Under Primary)
  3. Marketing (Under Primary)

Ledger Creation: –

Gateway of tally——> Create —–> Ledger

Note: – Press F12 (Configure) ——> Apply Cost Centers For ledgers—–> Yes

  • Name: -Office Expenses
  • Under: -indirect expense
  • Cost Centers are applicable——> Yes

Voucher Creation: –

Gateway of tally ——-> Vouchers ——-> Payment Voucher (F5)

Payment Voucher (F5): –

Account: – Cash or Bank

Particulars: -office expenses

Amount: – 5000

Cost categories: –

Name of Cost Center / Amount


Mumbai 5000


Sales 1500

Finance 2000

Marketing 1500

To view the expenses,

Gateway of tally——> Display more reports—–> Statement of accountants——> Cost center —-> Ledger Break-Up——> Office Expenses

Cost Categories & Cost Center Assignments: –

  • Salary Expenses paid Rs. 20000 by cheque (Ch.No.741852) out of that expenses 12000 for main office and remaining 8000 for branch office. In cost center 12000 paid to Hardik and 8000 to Chetan.
  • Salary paid Rs12000 to employees by cheque (Ch. no.458745)

                        Acct Dept.

                                     Rahul     Rs.5800

                                    Akash    Rs.6200

  • Salary paid by Cash to employees Rs.6250

Mkt Dept.

                                    Rohit    Rs.2800

                                     Amit       Rs.3450

  • Paid Rs 75000 towards rent out of witch Rs 30000 was paid towards Gurgaon office and Rs 45000 towards Mumbai office use cost center vide check number 000002 dated 05-07-2017
  • Paid Rs 50000 towards Electricity Bill out of which Rs 30000 was paid by Nidhi and Rs 20000 by Gauri use cost center vide check number 000002 dated 05-07-2017