Cost Centre (Cost Center) TallyPrime 7.1: Branch & Project-Wise

A client runs two branches, Pune and Nashik, and three live construction projects. The partner wants one report: what did each branch spend, and what did each project cost? Most offices build one long cost centre list mixing branches and projects, then split each expense half to the branch and half to the project. The totals come out wrong in both views, and nobody notices until the half-year review.

What is a Cost Category with Parallel Cost Centres?

A cost centre is a tag you attach to an expense: Pune Branch, Hinjewadi Tower, and so on. A cost category is a separate list of those tags. Tally lets one voucher carry an allocation in more than one category at once. Picture two spreadsheet columns, Branch and Project, filled in for every expense row. Each column sums to the same total. That is exactly what two categories give you, and one long list of centres cannot.

How to Set Up Branch and Project Cost Centres in TallyPrime 7.1 — Step by Step

1. Enable the feature. Press F11 (Features), go to the Accounting section and set Enable Cost Centres to Yes. Tally tip: if you do not see any option to use more than one cost category, set Show more features to Yes at the top of the F11 screen. In Tally ERP 9 the same switch is under F11 > Accounting Features as Maintain more than ONE Payroll / Cost Category.
2. Create two categories. Go to Gateway of Tally > Create > Cost Category (press Show More if it is not listed). Create Branches with Allocate revenue items: Yes. Create Projects with Allocate revenue items: Yes and Allocate non-revenue items: Yes. The non-revenue setting is what lets you tag a ₹3,50,000 machinery purchase or a capital work-in-progress entry to a project. Leave it at No for Branches unless you want asset purchases tagged by location too.
3. Create the centres inside each category. Use Gateway of Tally > Create > Cost Centre, pick the category first, then create Pune Branch and Nashik Branch under Branches, each Under: Primary. Repeat for Hinjewadi Tower, Nashik Warehouse and Baner Villas under Projects. Tally tip: for ten or more centres, use Chart of Accounts > Cost Centres and press Alt+H (Multi-Masters) to create them in one screen.
4. Switch it on in the expense ledgers. Go to Gateway of Tally > Alter > Ledger, open each direct and indirect expense ledger and set Cost centres are applicable to Yes. Do this only on income and expense ledgers. Leave bank, cash, party and GST input ledgers at No, or every receipt and payment line will ask for an allocation you do not need.
5. Record the voucher with both allocations. In a Payment voucher (Alt+G > Create Voucher > F5), select HDFC Bank, then Site Travel for ₹24,000. The Cost Allocation screen opens. Select Branches, allocate ₹24,000 to Pune Branch. Then select Projects in the next Cost Category line and allocate ₹24,000 to Hinjewadi Tower. Tally tip: you can split within one category, such as ₹16,000 Hinjewadi and ₹8,000 Baner, as long as that category totals ₹24,000.
6. Check the voucher before you trust the report. Open the voucher again and look at the allocation lines under the expense. You should see two category headings, each totalling ₹24,000. If you see only one heading with ₹12,000 to the branch and ₹12,000 to the project, both centres are sitting in the same category and the entry needs correcting.
7. Read the reports. Go to Gateway of Tally > Display More Reports > Statement of Accounts > Cost Centres > Category Summary. Choose Branches for location-wise spend and Projects for job-wise cost. Press Alt+F5 for the detailed view showing ledger-wise breakup. Tally tip: Cost Centre Break-up under the same menu shows every ledger booked to one project, which is the report a project manager actually asks for.

Mistakes That Cost Indian CAs Hours

• Putting branches and projects in one category. Every expense gets split between a branch and a project, so Pune shows ₹12,000 instead of ₹24,000. Fix: create the second category, move project centres into it through Alter > Cost Centre by changing the Category field, then re-allocate the affected vouchers.
• Making projects sub-centres of a branch. It looks tidy until the Nashik team buys material for a Pune project. That cost then lands under the wrong branch or forces a dummy centre. Fix: keep projects Under: Primary in their own category. Location and job are two independent questions, so give them two independent lists.
• Turning on "Cost centres are applicable" mid-year and assuming old entries follow. They do not. Vouchers passed before the change carry no allocation and sit outside every centre. Fix: after enabling, run Day Book for the earlier period, filter by the ledger, and alter each voucher to add the allocation. Do it before the September half-year figures go to the partner, not after.
• Allocating the GST amount too. When the cost centre is enabled on the input CGST and SGST ledgers, the project cost includes tax you will claim as credit. Fix: keep cost centres on the expense ledger only, so a ₹1,18,000 bill shows ₹1,00,000 against the project and the ₹18,000 input tax stays out of job cost.
• Using payroll employees as cost centres in the same category as branches. With payroll on, employee names appear as cost centres, usually under Primary Cost Category, and your branch pick-list fills with forty names. Fix: keep Branches and Projects as their own categories and leave Primary Cost Category to payroll.

Pro Tips for 2026

Give every centre a short code as an alias, like BR-PUN or PRJ-HIN. Typing four letters in the allocation screen beats scrolling a list, and the codes sort cleanly when you export. Do not delete a finished project. Vouchers are attached to it and Tally will refuse anyway. Rename it with a "Z-Closed" prefix so it drops to the bottom of the list and nobody posts to it by mistake. For a monthly MIS, open Category Summary for Projects, press Alt+E to export to Excel, and keep one sheet per month. With H1 closed on 30 September and the Q3 advance tax instalment due on 15 December 2026, that export gives you project-wise profit to estimate the instalment from real numbers instead of last year's guess.