How to Handle Bank Overdraft (OD) Account Ledger Issues in Tally ERP 9?

Tally ERP 9 supports to operate the transactions of various types of Bank Accounts like Current Account and Over Draft Accounts. Most of us know the procedure for entering transaction in Tally for Current and Savings Bank Accounts. But what’s the matter about the Bank OD Account Payments and Receipts entry? How the Tally Software come to know that the Ledger is of Bank Open Cash Credit (OCC) Account, if we create a normal Bank Ledger and do the entries as we do?

Why OD Account should not be created under Bank Account Group?

This question strikes for every one who wants to create a OCC Bank Ledger in Tally and simply takes the normal Bank Account Group from the list of Predefined Groups. Have you ever questioned yourself what the effect of your OD Bank Account in the Financial Statement? In fact the normal Bank Account ledger will be shown under the Current Assets in Balance Sheet, but where as the Over Draft Bank Account is not an Asset to the company it is a Liability to the company, upto what extent the amount has been used by the Enterprise for the specific period.

This Question was raised by +Karunakaran Narayan in Offline Chat Support on 20th January 2014. His Question was “Could you guide me how to pass the entries for bank overdraft account in tally. For Ex : Bank will provide OD Limit 2lakh”

Hence, we should not take the Bank Account Group and instead we must take the Bank OD A/c or Bank OCC A/c Group from the list of Predefined Groups. By doing so, your OD Bank Account Ledger will be shown under Loans (Liabilities) of Liabilities side in Balance Sheet of the Firm.

Bank Overdrat Account Ledger Creation

I hope you are familiar with Ledger creation in Tally, if not i recommend you to read How to create a Ledger in Tally article and come back for major alteration for making effect of Overdraft Account for your Bank Ledger.

While creating the ledger you have to select the Bank OD A/c or Bank OCC A/c Group from option Under and the rest of the options will same and no need to change.

Is there specific Voucher Types for Receipts and Payments of OD Account?

The answer is No. You can proceed with the as usual Voucher Types. If you to allow only OD Account should be selected for either payment or receipt then you have to create a User Defined Voucher Type. Otherwise everything is same with respect to normal Bank Ledger.

How to set Bank OD Limit for Ledger in Tally?

Really sorry to say that as per now there is no such facility provided by the Tally Software. Hence, we can’t set the OD Limit for Bank Ledger in Tally ERP 9 Software. As +Karunakaran Narayan asked that his Bank sanctioned 2 Lakh limit for OD Account. It can’t be set in Tally. And we hope this will be available in the next version of the Tally ERP 9.