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Cash deposits, withdrawals and transfers between own bank accounts are booked as payments or receipts, or booked on only one side, leaving unmatched lines.
A contra entry debits one cash or bank account and credits another; both sides must appear in the right ledgers and on the right bank statements.
Use the contra voucher type only between cash and bank ledgers; record the UTR or deposit slip number in the narration.
Every self-transfer appears once as a debit and once as a credit, and both bank reconciliations clear the pair.
A contra entry records money moving between two cash or bank accounts of the same business. Both the debit and the credit fall on cash or bank accounts, so nothing is earned or spent and profit is not affected. The money has only changed pockets.
Which transactions need a contra entry?
Three everyday transactions are contra entries:
- Cash deposited into the bank. Debit Bank, credit Cash.
- Cash withdrawn from the bank for office use. Debit Cash, credit Bank.
- A transfer between two bank accounts of the business, by NEFT, RTGS, IMPS or cheque. Debit the receiving bank, credit the sending bank.
The word comes from the manual three-column cash book, where both sides of the entry sit in the same book (in the cash column and the bank column) and were marked “C” for contra. In TallyPrime the contra voucher opens with F4, and it lets you pick only cash and bank ledgers.
Worked example: a cash deposit and an RTGS transfer
On 12 June, the shop deposits ₹2,00,000 of cash takings at the branch. On the same day, the accountant moves ₹5,00,000 from the current account at Bank A to the cash credit account at Bank B by RTGS, to reduce the interest on the cash credit.
| Date | Debit | Credit | Amount | Narration |
|---|---|---|---|---|
| 12 June | Bank A current account | Cash | ₹2,00,000 | Cash deposited, slip no. 4471 |
| 12 June | Bank B cash credit account | Bank A current account | ₹5,00,000 | RTGS transfer, UTR in narration |
After these two entries the cash balance is ₹2,00,000 lower and the Bank A balance is ₹3,00,000 lower (₹2,00,000 in, ₹5,00,000 out). The Bank B cash credit balance (a liability) is ₹5,00,000 smaller. Total money in the business is unchanged, and the profit and loss account has not moved.
RTGS is meant for larger payments. RBI sets the minimum RTGS amount at ₹2,00,000, so smaller transfers usually go by NEFT or IMPS.
Contra vs payment vs receipt vs journal
| Voucher | Accounts touched | One-line rule |
|---|---|---|
| Contra | Cash and bank only, on both sides | Money moves between your own cash and bank accounts |
| Payment | Credit cash or bank; debit a party or expense | Money leaves the business |
| Receipt | Debit cash or bank; credit a party or income | Money comes into the business |
| Journal | Usually no cash or bank | Adjustments: depreciation, provisions, corrections, non-cash transfers |
If one side of your entry is not a cash or bank account, it is not a contra.
Why do contra entries leave unmatched lines in a bank reconciliation?
Contra entries are a frequent cause of reconciliation trouble, for four reasons:
- Timing between two banks. Bank A shows a ₹3,50,000 debit on 30 June, but Bank B credits it on 1 July. At 30 June, Bank B’s reconciliation has a deposit in transit between your own accounts.
- One-sided booking. The accountant books the transfer in Bank A’s ledger but posts the other side to a suspense or party account instead of Bank B.
- Wrong voucher type. A cash deposit booked as a receipt from a customer inflates sales receipts and leaves the cash ledger wrong.
- Cash deposit charges. Banks may charge for cash deposits beyond a free limit. The charge appears on the statement but not in your contra entry, leaving a small unmatched debit.
A simple check at month end: list all contra entries between bank accounts and confirm that each one appears as a debit on one statement and a credit on the other. A transfer that appears on only one statement is either still in transit or wrongly booked.
What to read next
- Next in this series: Multi-bank reconciliation in India
- What is bank reconciliation?
- Receipt, payment, contra and journal vouchers explained
- Account reconciliation software in India
For businesses with several bank accounts, TransactIG matches bank statement lines to the entries in your books, places unmatched lines, including stray self-transfers, in an exception queue and produces audit-ready exports.