Inter-Company Transactions in TallyPrime: Record Both Sides Right
When group companies buy from, sell to or lend to each other, both books must agree. How to record inter-company transactions in TallyPrime.
Group businesses constantly trade within the group: one company manufactures and another sells, one pays expenses for the other, or one lends to another. Each of these inter-company transactions must be recorded in both companies' books, and the two sides must agree. When they do not, consolidation and audits become slow. This guide covers how to record inter-company transactions in TallyPrime and keep both sides matched.
Common inter-company transactions
| Transaction | Company A records | Company B records |
|---|---|---|
| Sale of goods or services | Sales invoice to B | Purchase from A |
| Expense paid on behalf | Payment, debited to B | Expense, credited to A |
| Loan | Loan given to B | Loan taken from A |
| Repayment or settlement | Receipt from B | Payment to A |
How to record both sides in TallyPrime
- Create a ledger for each group company in the other's books, under the right group: debtors or creditors for trading, loans for lending.
- Record the transaction in the originating company first, for example the sales invoice in Company A.
- Record the mirror entry in the other company with the same document number, date and amount.
- Use bill-wise references on both sides, so open items can be matched invoice by invoice. Our guide to bill-wise outstanding in TallyPrime explains the setup.
- Write narrations that point to the other side, for example "Mirror of A's invoice 118".
The GST points to check
- Separate companies are simply buyer and seller, so normal GST invoicing applies.
- Branches of the same business with different GST registrations are treated as distinct persons, and supplies between them generally need a tax invoice even without consideration.
- Input tax credit in the buying entity depends on the selling entity's invoice appearing correctly in its returns.
These are general points. Confirm the treatment of your group's transactions with your CA.
Monthly inter-company matching
- In each company, note the balance of the other company's ledger at month end.
- The balances should be equal and opposite. If not, list open items on both sides.
- Match invoice by invoice. Typical gaps are entries recorded in only one company, or with different dates or amounts.
- Correct the missing side before closing the month.
Reducing double entry
Recording every transaction twice is where errors come from. AndurilTech lists an add-on named Intercompany Voucher Transfer; read its product page for how it moves vouchers between companies and which release it supports. For group-level reports, see our guide to multi-company consolidated reports in Tally. Bank-side matching follows the same discipline as our guide to bank reconciliation in TallyPrime.
Frequently asked questions
How do I record a sale between two group companies in TallyPrime?
Open each company separately. Record a sales invoice in the selling company with the other company as the customer, and a matching purchase in the buying company with the first company as the supplier, using the same invoice number, date and amount.
Is GST charged on transfers between branches of the same business?
Branches with different GST registrations are treated as distinct persons under GST, so transfers between them generally need a tax invoice even without consideration. Confirm the treatment for your case with your CA.
How do I check that both companies agree?
Each month, compare the balance of the other company's ledger in each set of books. The two balances should be equal and opposite. Investigate any difference invoice by invoice.