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Cost Centre Reporting in Tally

Cost Centre Reporting in Tally

August 2, 2023

Cost centre reporting is an essential part of financial management for organizations especially in the services segment such as IT and Software, BPO, BPM, Legal, Media and Entertainment, Projects and Infrastructure, etc. It involves tracking and analyzing costs related to specific areas, projects or departments within a business. It also includes tracking budgets against the actual costs and revenues.

Tally is an accounting software that offers robust features for cost centre reporting, enabling businesses to monitor and manage their expenses effectively.

In this blog post, we will discuss how cost centre reporting works in Tally and how it can benefit your business.

What is a Cost Centre?

A cost centre is a department or area within a business that incurs costs. Within Tally you can use cost centres to capture revenues and also enable cost centres to capture balance sheet items.

When you enable the “Allocate Non-revenue items” option to “Yes” then you can even track balance sheet items with cost centres.

Examples of cost centres include production departments, marketing departments, and administrative departments. Cost centres are used to track expenses related to specific areas of the business, enabling businesses to monitor and manage costs more effectively.

What is a Cost Category?

Within Tally you will see the option to create and manage Cost Categories. The cost category option comes with a pre-defined cost category called “Primary Cost Category”. Generally businesses will use this cost category for different purposes but multiple cost categories can be used for varied reporting and tracking purposes.

How you can use multiple cost categories?

Suppose you are running a business which needs tracking by location and department both. In such cases you can define two cost categories – “Location” and “Department”. Under “Location” cost category you can create location cost centres and under “Department” cost category you can create department cost centres.

Thereafter you can make entries by tagging both location and department.

Other Use Cases for Cost Centres

You can use cost centres for tracking projects, budget code wise tracking and reporting, e.g. within a project sub-activity, machine or vehicle wise cost tracking, employee or salesperson wise cost tracking.

For software, IT, project, infrastructure, construction and other service companies, cost centre reporting is key to tracking performance of the business.

Reporting using Cost Centres

Tally also offers a range of reporting tools that businesses can use to analyze their expenses by cost centre. With Tally, businesses can generate reports that provide insights into their expenses across different cost centres. This information can be used to identify areas of the business where costs are high and make adjustments to reduce expenses.

Advanced Reporting on Cost Centres

While Tally provides basic reporting using cost centres, EasyReports is a reporting automation tool which provides users with various different types of reports and report automation functions. With drag and drop reporting you can generate reports of your choice in seconds and combine data from ledgers and cost centres to create your specific MIS formats. It can also provide budget vs actual comparisons and financial statement and summaries based on cost centres.

An example of cost centre report is shown below where you can drag and drop and create your own reporting format with filters, sorting and sub-totalling:

The following image is an example of a dashboard with cost centre data. The dashboard has drill-down features which allows you to drill down from cost dimensions directly to the ledger level (Project -> ATL/BTL -> Budget Code -> Ledger)


Cost centre reporting is an essential part of financial management for any organization. Tally offers a range of features to support cost centre reporting, enabling businesses to monitor and manage their expenses effectively. By using Tally for cost centre reporting, businesses can improve cost control, simplify accounting, and make better decisions based on accurate financial data. You can further use EasyReports to structure and automate your various cost centre reporting needs.