How to Set Up Multi-Currency and Record Forex Gain/Loss in Tally Prime

Businesses engaged in import, export, or international service billing need to record transactions in foreign currencies like USD, EUR, or GBP. Tally Prime's multi-currency feature handles these transactions and automatically calculates forex gain or loss.

This guide walks through enabling multi-currency, setting up foreign currency ledgers, and recording the associated journal entries.

1. Enabling Multi-Currency in Tally Prime

1. Go to Gateway of Tally → F11 (Company Features) → Accounting Features.
2. Set "Allow Multi-Currency" to Yes. Save the settings.
3. Navigate to Gateway of Tally → Create → Currency. Create the required foreign currency (e.g., US Dollar - USD).
4. Set the Standard Rate (used as the default) and optionally set Selling Rate for exports.

2. Recording Foreign Currency Invoices

When creating a sales invoice for an export customer:

1. Open a Sales Voucher (F8). Select the party ledger (export customer).
2. In the invoice header, change the Currency field from INR to USD (or the applicable foreign currency).
3. Enter the product details and rate in USD. Tally will show both the foreign currency amount and the INR equivalent at the current standard rate.
4. Verify the exchange rate applied matches the RBI reference rate for the invoice date.

3. Booking Forex Gain or Loss on Settlement

When the customer pays and the exchange rate has changed since the invoice date:

1. Record a Receipt Voucher (F6). Link it to the original invoice using Bill-wise reference.
2. Enter the amount received in USD. Tally will compute the INR equivalent using the current rate.
3. The difference between the INR at invoice rate and INR at receipt rate is automatically posted to the Forex Gain/Loss account.

Ensure you have a dedicated "Forex Gain/Loss" ledger created under Indirect Income (for gain) or Indirect Expenses (for loss), or use a single combined ledger under Indirect Expenses which Tally adjusts for gains/losses.

4. Period-End Revaluation of Open Balances

At month-end or year-end, unrealised forex differences on open foreign-currency balances must be revalued. In Tally Prime, use Gateway of Tally → Display → Statements of Accounts → Outstanding → Bills Outstanding to identify open foreign currency receivables and payables. Record a journal entry to adjust their INR value to the closing exchange rate.