training -india payroll

7/31/2019 Training -India Payroll

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India Payroll

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Payroll India

This training focuses Payroll India requirements

and related functionality in SAP.


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Agenda

India Payroll Info types

India Income Tax Calculation


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Statutory Infotypes

Regulation Infotypes

Income Tax 0580 Previous Employment Tax Details

0581 Housing (HRA / CLA / COA)

0582 Exemptions (LTA, MDA, CEA, CHA)

0583 Car & Conveyance

0584 Income from other sources

0585 Section 80 Deductions

0586 Investment Details (Sec 88)0589 Individual Reimbursements

0590 Long Term Reimbursements

0591 Nominations

Professional Tax 0588 Other Statutory Deductions (PTX)

Provident Fund 0587 Provident Fund

Pension 0587 Provident Fund

Employee State Insurance 0588 Other Statutory Deductions (ESI)

Labour Welfare Fund 0588 Other Statutory Deductions (LWF)


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0580 Previous Employment Tax Details

Tax in the current financial year, by capturing the salary,

exemption, contribution, deduction details of the employeepertaining to the previous employments in the current financial

year

Previous Employment Tax Details payroll function (INPET)


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SAP system Provides the following categories of

accommodation Rented Accommodation (systems computes an exemption )

Company Leased Accommodation (CLA )

Company Owned Accommodation (COA)

If an employee has a CLA/COA benefit, the system willcompute the perquisite applicable on the COA.

Hotel Accommodation

If the employer provides a hotel accommodation to theemployee. If the stay in the hotel exceeds a fixed period, asspecified by the Government, a perquisite is applicable on thecost of accommodation.

Payroll function INHRA

0581 Housing (HRA / CLA / COA)


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0583 Car & Conveyance

Exemption on Conveyance Allowance is the lesser of:

Actual payment made to the employee for conveyance

Exemption limit (Annually Max 9600 )

In case of a physically challenged employee under section

10(14)(xi), you must maintain an entry for the employee in

Challenge infotype (0004) for the Challenge TypeDisabledSec10(14)xi (N1).

constant CHGEX -1600 maintained in table V_T511P for a

physically challenged employee

Payroll function (INCCO)


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0584 Income from other sources

2 subtypes 0001 House Property 0002 Other Sources

If an employee declare income from sources other than the currentemployment, then that income also has to be taken into consideration fortaxation during payroll run.

Other Income, Business Profits , Income from Dividends , Income fromInterests, Gift Income

The sum of amounts in these wage types is added to theAny other Income

wage type (/131). constant OTHRT (V_T511K), the rate of taxation for Other Income has

been maintained.

The entire amount that you enter as the Deduction of Interest under section24 in the Income from Other Sources infotype (0584) Income from House

Property subtype (0001), for Self Occupied \ Deemed Self Occupied HouseProperty, is tax exempt

Deduction under Section-24 payroll function (INS24) and Details ofIncome from Other Sources payroll function (INIOS)

5 5 t t 5


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5 5 ect on e uct ons an 5Section 80 C Deductions

IT0585

This is the maximum limit for which an employee can avail the taxdeduction for each type of division. An employee can contribute any

amount to a particular division. But there is a maximum amount after

which even if the employee contributes, it will not be considered for tax

deduction.

This is the percentage of the contribution that is considered for taxdeduction. This percentage depends on the purpose or recipient of the

contribution. For example, Section 80G has two divisions - Donation to

CRY and Donation to PM's Relief Fund. Donation to CRY is 50% tax

deductible and Donation to PM's Relief Fund is 100% tax deductible.

IT0586 The maximum amount on which an employee can get tax deduction is INR

1,00,000. This amount is the maximum deduction on both Section 80C and

Section 80CCC.


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IT0587 Provident Fund Contribution

Provident Fund is a statutory contribution, and consists of two parts:

Provident Fund (PF) - Both, the employee and the employer, contribute afixed percentage of the PF basis towards a Provident Fund. The minimumpercentage contributed is as specified by the authorities.

Pension Fund - The employer contributes a fixed percentage of the PF basistowards the Pension Fund of an employee. The minimum percentagecontributed is as specified by the authorities.

In addition to contributing towards PF and Pension Funds of the employee,an employer also contributes to the Employee's Deposit Linked Insurance(EDLI). An employee may choose to contribute a certain percentagetowards a Voluntary Provident Fund (VPF)

PF

Pension Fund EDLI

VPF

Function is INEPF


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IT0587 Provident Fund Contribution

Trust Types:

Excluded Trust - In this case the system will process the entire PFcontribution of the employer and employee towards the trust. The systemwill not compute EDLI, EDLI Administration charges, or Pension Fundcontribution.

Regional Provident Fund Commissioner (RPFC) - In this case, the systemwill process all the contributions (PF, Pension, EDLI) towards aGovernment trust.

Exempted Trust - In this case, the system will process the EDLI, EDLIAdministration charges and Pension Fund contribution towards aGovernment trust. The PF contribution will however, be processed towardsa trust other than the RPFC

Employee PF contribution: 12%

Employer PF contribution: 12% - Pension amount Max 541 Per Month

PF admin charges: 1.10% Employer Pension is 8.33% of Rs. 6500 = Rs. 541

EDLI contribution: 0.50% of PF salary (or Max 6500 ) = Rs. 32.50

EDLI admin charges: 0.01% of PF Salary (or Max 6500) = Rs. 65

5 t t t t


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5 t er tatutoryDeductions(PTAX/ESI/LWF)

P.Tax

Professional tax is a statutory tax that state governments levy on professions, trades,callings, and employment

Professional tax slabsEmployee salaries fall within different salary ranges orslabs, and the amount of professional tax to be paid depends on the salary range towhich the employee belongs. Every state specifies its own salary slabs and theprofessional tax rate that is applicable for a salary range.

Function INPTX

ESI

This component calculates the Employee State Insurance (ESI) contribution:

To be deducted from the salary of the employee.

To be made by the employer

ESI Basis of the employee is less than or equal to the amount stored in the ESI

Eligibility Limit constant (ESILT) at present 10,000 P.M(w.e.f 01.10.2006 ) April 1 - September 30, or

October 1 - March 31

employer ESI contribution of 4.75% of the ESI Basis ,Ee ESI contributio nis 1.75%

5 t er tat tor


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5 t er tatutoryDeductions(PTAX/ESI/LWF)

LWF

This component computes the contribution towards LabourWelfare Fund (LWF).

LWF is a statutory contribution. The state authorities

determine the rate of contribution and frequency of

contribution towards LWF


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IT 0589 Individual Reimbursements

This infotype stores employee specific eligibility amount for

reimbursements. Like Medical ,LTA if any Client specified You have maintained an employees eligibility for medical

reimbursement as INR 15,000 that is valid for one year.


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IT0590 Long Term Reimbursements

Long term reimbursements are benefits provided to the

employees over a fixed period of years. The duration of thebenefit generally varies between three to five years.Hard

Furnishing Scheme

This is a benefit provided to employees for the purpose of

acquiring movable capital items like furniture, fridge, washingmachine, television, and computer.

Soft Furnishing Schemeor Other Reimbursements


acquiring consumer capital items like carpets and curtains. Car Maintenance Scheme


maintenance of their car over a period of time.


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Nominations Infotype (0591)

According to the company rules and legal laws, an employee

has to nominate some person(s) for the transfer of benefits, inthe eventuality of the death of the employee. These nomination

details are maintained in this infotype.

Like

ESI Benefit ,Gratuity Benefit, PF Benefit ,Pension Benefit


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Statutory Reports

Regulation Monthly Annual

Income Tax Form24 (Quarterly ) Form 16 and 24Professional Tax Monthly PTax Report

Provident Fund Form 5, 10 and 12A Form 3A and 6A

Pension Form 4, 5 and 6 Form 7 and Form 8

Employee StateInsurance

Form 6 and 7 (semi-annual)

Labour Welfare

Fund

Monthly LWF Report

Companys Act Form 217(2A)


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Gratuity / Superannuation

Gratuity

Paid on termination or retirement as per company policy

Contribution only by employer

Statutory requirement: 15/26 (i.e. 4.81%) of salary

Payment of Gratuity Act, 1972Where the minimum amount that you need to contribute

towards gratuity is 4.81 percentage of the monthly basis salary of the employee.

Income Tax impact:

Exempt for employee upto 350,000.

Treated as expenditure for company and reduces income tax

Superannuation

Definition:

Superannuation is a non-statutory benefit provided to the employee on the cessation of his or her services.

The employer contributes to a Superannuation trust so as to provide for payment at the time of retirement.

Key Facts on Super Annuation :

a) Normally the Company has a link with agencies like LIC Superannuation Fund, where their contributionsare paid.

b)The Company pays 15% of basic wages as superannuation contribution.

There is no contribution from the employee.


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INDIA PAYROLL REPORTS:-

India Monthly Payroll Reports:

Provident Fund Forms 5, 10, 12A (PC00_M40_EPF)

Provident Fund Forms 5, 10, 12A - with Annexure (PC00_M40_PFE)

Pension Forms 4, 5, 6 (PC00_M40_EPN)

Pension Forms 4, 5, 6 - with Annexure (PC00_M40_PNE)

Professional Tax Report (PC00_M40_PTX) Labour Welfare Report (PC00_M40_LWF)

Gratuity Listing (PC00_M40_GRY)

Monthly Eligibility Check (PC00_M40_ESIU)

Status of Claims (PC00_M40_REMS)

Income Tax Computation Statement (ZADP_M40_ITSR)

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