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SAP - Payroll

Agenda

Background

Payroll Concepts

Payroll Coverage - Detailed

SAP India 2001, India Payroll Core , P.Rajesh 2

Functional Procedure

The Process

Master Data

Payroll

Post Payroll Reports

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Process Flow
INPUT
Master data
Time Data
Past Data
Cumulations

CALC
Gross
Earnings
Perks

RESULTS
Net

Cluster

OUTPUT

Statutory Reporting
Monthly
Half yearly
Annual

RT
CRT

Income Tax
Prof Tax
PF
Recoveries

Interfaces
FI/CO posting
Bank transfer

Payment of taxes
Statutory payments

Third party deductions

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Factors influencing HR Localisation

Legal & Statutory

Common

Requirements

Business Practices

Industry
Specific Practices

Private Sector

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HR

Geographic
Variations

Public Sector

Payroll Coverage
- Overview

Payroll functional coverage - Legal

Income Tax
Professional Tax
Provident Fund
Payment of Gratuity
Payment of Bonus
ESI

Labour Welfare Fund

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Payroll functional coverage - Business

Previous Employment Tax

Loans

Income from other sources

Furniture

Basic salary & increments


Housing
Car & Conveyance

allowances

Medical & other

Claims processing

reimbursements

Flexible Packages

Leave Travel Allowance

Full & Final settlement

Dearness Allowance
Other allowances

Other non -annual

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Integration with SAP FI/CO


Reports

Payroll India - Vital statistics

Modified International infotypes


12 India specific infotypes
60 Indian tables
Rules, schemas, Payroll Driver

4 Indian valuation methods

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Payroll reports

Form 5

Wage Type Statement

Form 10

Wage Type Distribution

Form 16

Payroll Journal

Form 24

Payroll Annual Display

Form 7 (ESI)

Post Payroll Check

Form 6 (ESI)

Printing

Form 3A

Post Payroll

Form 6A

Data Medium Exchange

Ptax returns

Cash Breakdown List

Form 217 2(A)

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PAYROLL
CONCEPTS

Wage structure - concepts

1 2
Wage Types 1..n

Allowance Grouping

Taxable/Non Taxable
Recurring /Non Recurring
Attendance Based?
Calculation / Entry

%# +
Parameters like Location, Grade etc..

Employee

$ Earning/Deduction
Payable/Non Payable

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Payroll - General Functionality

$
1 2

Gross payroll accounting with automatic wage calculation

Full gross/ net retroactive accounting

Freely definable pay slip

Data exchange with banks, insurance


agencies, etc.

%# +

Direct integration to FI and CO

Online or batch processing

Parallel payroll runs (on different Appl. Servers)

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Indirect Valuation Module VARIANT A

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Indirect Valuation Module VARIANT B & C


Inval B
M230 = 50% (MB10 + MD10)
+ 500

Inval C
M230 = Minimum of {
MD10)

50% (MB10 +

& 500 }

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Indirect Valuation Module VARIANT D

INVAL B & C
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Micro Level Indirect Valuation


e.g. Children education allowance Rs 250 per child
INVAL A,B,C or D

Feature 40ECS
Returns a Factor

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PAYROLL
COVERAGE DETAILED

Organisational Assignment

Enterprise Structure
Personnel Structure

Organisation
Structure

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Personal Data - IT 0002

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Payroll Status - IT 0003

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Planned Working Time - IT 0007

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Basic Pay - IT 0008

Pay Parameters

Wage Types

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Bank Details - IT 0009

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Recurring Payments/Deductions - IT 0014

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Additional Payments - IT 0015

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Contract Elements - IT 0016

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Monitoring Dates - IT 0019

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Family/Related Person - IT 0021

Childrens Education
/ Hostel Allowance
Exemption

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Membership Fees - IT 0057

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Personal IDs - IT 0185

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Master Data (Indian)


IT 580

Previous Employment Tax Details

IT 581

Housing (HRA/CLA/COA)

IT 582

Exemptions

IT 583

Car & Conveyance

IT 584

Income From Other Sources

IT 585

Section 80 Deductions

IT 586

Investment Details (Section 88)

IT 587

Provident Fund Contribution

IT 588

Other Statutory Deductions

IT 590

Long Term Reimbursements

IT 591

Nominations

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Previous Employment Tax Details


PF contributed
Sec 10 exemptions availed
Medical exemption claimed
LTA availed
Tax deducted so far

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Income from other sources

House property details

Business profits

Capital gains

Dividends

Interests

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Housing

Eligibility details

House Rent Allowance

Rent details

Co. Leased Accommodation

Co. Owned Accommodation

Differential payment

HRA exemption amount

Calculation of perk value in case

of leased accommodation

Value of helper

Value of furniture

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Leave Travel

Annual Reimbursement based on eligibility

Definition of block of 4 years

Travel Details

Link to Leave

Carry forward of LTA

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Medical Reimbursement

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Car & Conveyance - IT 0583

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Investments

Investments made by employee for


getting tax exemptions or rebates
maintain the Section 80/88 limits

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Hard Furnishing Scheme

Perk value of assets can be maintained

Maintenance of block of years

Amount check against eligibility

Perk calculation for the year


based on the total value

Other non - annual


reimbursements

Transfer of asset

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Provident Fund

Multiple trusts

Choice of Basis

Contributions from Employer

Contributions from Employee

Payment to pension

Voluntary Provident Fund

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Other Legal Requirements

ESI

Professional Tax

Labour Welfare fund

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Professional Tax

Coverage of Multiple methods for processing


Frequency - Monthly, Half yearly, Annual
Salary definition - Wage types, Actuals
Retroactive processing
Forms for returns

Coverage of states
Tamilnadu
Gujarat
Maharashtra
Madhya Pradesh
Karnataka
West Bengal

Andhra Pradesh
Kerala

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Nominations

ESI benefit

Gratuity benefit

Provident Fund benefit

Pension benefit

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Income tax

As per Indian tax laws


Calculation of the tax based on the investments made and the standard
deduction

User definable tax slabs and percentages

Tax calculation based on actual investment or Proposed investment

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Company Loans
Classify

a loan as an Installment or Annuity loan.

Configuration of Interest Calculation method.


Configuration of Interest Calculation days.
Configuration of Interest rates
Configuration of frequencies for repayment and interest
Loan payment / repayment can be via payroll / external means.
Disbursement of the approved loan amount in installments.
Display the Proposed Disbursement Plan for the employee for the loan
being created.
Computation of interest rate advantage on interest free or subsidized
loans.
Cumulation of Interest rate advantage as above to annual perk amount.
Computation of Penal Interest due to Foreclosure of loans .

Simulation of loan repayment Plan.


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Company Loans
Eligibility Checks during Loans Info type Creation:
Define Loan Grouping for India
dependent on loan type and ALGRP

Define Loan Grouping for India dependent on


loan type and ALGRP

Check for the following during a new loan creation

Minimum Experience

Maximum Age

Months allowed between Current and Previous


loan

Number of outstanding loans allowed at a time

Maximum number of loans allowed during the


entire service

Total Outstanding loan amount allowed

Approved loan amount a minimum of Salary , %


asset value and a fixed amount definable by
customer.

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Maintain Loan Eligibility Checks and limits

Company Loans

New Options in Loans Info type:

1. Calculate Repayment Installment

2. Display Proposed Disbursement Plan

3. Simulate Penal Interest due to loan foreclosure

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Company Loans
Reports for Company Loans:
Loan Summary Report :
For a given period and loan types,the
report displays various details like interest,
principal, interest subsidy etc. employee wise.

2. Batch Program for Penal Interest due


to Loan Foreclosure:

This report is used to update the Additional Payments Info type


(0015) with the Penal Interest Amount in case of loans foreclosure

SAP India 2001, India Payroll Core , P.Rajesh 56

Off Cycle Payments


Info type 0267 for capturing
Off cycle payments

Off cycle for Bonus type runs


have been enabled

Professional Tax computation


for bonus payments in off
cycle is considered

Tax on bonus can be


computed using different
methods

Reimbursements can be paid


in off cycle payments using
claims module

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Off Cycle Work Bench

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Third Party Deductions

Infotype 0057

Deduction in Payroll

Frequency of the Payment


can be defined

Linkage to Sec88 Rebate in


Payroll

Linkage to Sec80
Exemptions in Payroll

Different Payee options

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Third Party Deductions

Deductions

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Claims Processing
Processing reimbursements to the employee in regular or off cycle payroll run

Eligibility Types

Amount

e.g. Rs. 24000 for Medical Reimbursement

Numbers

e.g. 250 Liters of petrol

Amount subjected to number of times e.g Stitching allowance eligibility upto Rs. 1000 can be
claimed in a year and can be claimed twice
Validity periods for each reimbursement type can be configured

Monthly, Financial year, Calendar year, customer definable year ..etc


Capture company specific additional data for each reimbursement.

Upload balances at the beginning of the validity period

Check on balance available against component - Carried Forward & Current Year eligibility

Validity period (Year) end processing options

Payment of outstanding balance, Taxation of Amount


Carry forward of the balance to the next year

Lapse

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Claims Processing Data Entry

Data Upload from


External File

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Claims Processing Results

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Claims Processing Balance Reporting

Claims Processing Balance Reporting

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One Day Salary Deduction


Configurable at the pay
scale grouping for
allowances.

Pay Period and the Year


for the deduction can be
defined.

Different calculation
methods for basis

Factor

Can be configured for


Employers equal
contribution.

Can be customized for


Section 80/88 exemption

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Salary Packaging
Companies switching from traditional pay structure to Flexible pay

Total Package offering and Cost to the company

Flexible arrangement for employees to choose from a range of benefits

together with a cash salary and fixed set of components.


Take home pay analysis for employee.

Salary packaging combines data from all sources into a manageable central

location and then updates data when process of Salary packaging is


complete.
Employee Self Service

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Salary Packaging
Grouping

of components
at organization level
Common Interface for all
type of payments and
eligibility

e.g. Employee can opt for


Leave Travel allowance only
if he is eligible
Mandatory components
and fixed % of some
components

Maximum and Minimum


limits

Customer specific
checks

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Salary Packaging

Single

Interface for Infotypes

Eligibility

and limits validity

Payroll

simulation for take


home pay analysis
Individual

claims

eligibility definition for

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TDS on BONUS

Tax deducted at source during offcycle runs for bonus payments.

Maintain Bonus payments in Infotype 0267.


Methods of Tax
Calculation

Tax at a standard
rate to be used across
a Company.

Tax at the individual


employee's marginal
rate of tax (excluding
surcharge or including
surcharge) before the
payment of bonus or
oThere are 5 different methods to compute TDS. The choice of which methodafter the payment of
bonus
first parameter maintained in the schema against function INBTD.
oMultiple bonuses can be paid in the same offcycle run.

oCustomer Exit provided to override TDS computed by SAP.

SAP India 2001, India Payroll Core , P.Rajesh 69

Rounding off net pay

Rounding options
can be configured at
the Pay Scale for
allowances Grouping
level.

Configurable
rounding Options

Configurable
recovery of rounded
off options

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Dearness Allowance

Fixed DA,Variable DA
Configurable Index codes for various Consumer Price
Indices.

Methods of calculating DA.


Non-Slab based calculation.
Basic slab based calculation.
Incremental basic slab based calculation.
CPI slab based calculation.
Incremental CPI slab based calculation.
Basic slab based calculation, subject to minimum
value

A report program generates a batch session, which will

populate the Basic Pay Infotype (IT0008) with relevant


wagetype and amount for DA (both fixed and variable) by
reading the configuration tables.
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DA calculations
Calculation rules defined for
a Allowance Grouping

Fixed DA

Variable DA

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CPI Value for the DA Index codes

Basic Increments
Increment method based on
Amount
Percentage

Definable Basic codes for Increment methods.


Slabs can be defined for basic codes
For Percentage based increment, the increment can be calculated as a Percentage of
Average of Minimum Basic and Maximum Basic of slab,
Minimum Basic of slab,
Current Basic

Customer Configurable Increment Criteria


Promotion criteria is based on
Minimum age for promotion
Minimum experience in the current Payscale Group and Payscale Level
Minimum appraisal points
Confirmation Status

Report program will create a Batch session to update the basic wagetype and delimit Basic Pay

Infotype (IT0008) with the reference date.

SAP India 2001, India Payroll Core , P.Rajesh 73

Basic Increments
Increment method assigned to a basic
code and Allowance Grouping

Amount based increment given


for a set of employees

Basic pay and personal pay


Wagetype assigned to an allowance
grouping

Basic slabs with the increment range and amount


SAP India 2001, India Payroll Core , P.Rajesh 74

Superannuation

Customer definable

Superannuation trust IDs for


the various trusts.

Employers Contribution
percentage

Frequency of contribution
(Monthly/Annual)

Contributions can be for


calendar year or financial

Option for making provisions

for monthly contributions

SAP India 2001, India Payroll Core , P.Rajesh 75

Mid Year Go Live

Going Live on India Payroll

How ?
From 1st April
Mid year - effective from April
Mid year using schema INLK
Legacy data
Tax calculation

Reports and legal forms

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Mid Year Go Live


Pre go live periods

T558B

Value from the legacy


system

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T558C

Payroll run with


schema INLK

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Sample Payslip

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THANK YOU

SAP India 2001, India Payroll Core , P.Rajesh 80