India Payroll

Payroll India
This training focuses Payroll India requirements and related functionality in SAP.

Agenda

India Payroll Info types India Income Tax Calculation

Statutory Infotypes
Regulation Income Tax Infotypes 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 0588 Other Statutory Deductions (PTX) 0587 Provident Fund 0587 Provident Fund 0588 Other Statutory Deductions (ESI) 0588 Other Statutory Deductions (LWF)
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Professional Tax Provident Fund Pension Employee State Insurance Labour Welfare Fund

0580 Previous Employment Tax Details Tax in the current financial year, by capturing the salary, exemption, contribution, deduction details of the employee pertaining to the previous employments in the current financial year Previous Employment Tax Details payroll function (INPET)

0581 Housing (HRA / CLA / COA)

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 will compute the perquisite applicable on the COA. Hotel Accommodation If the employer provides a hotel accommodation to the employee. If the stay in the hotel exceeds a fixed period, as specified by the Government, a perquisite is applicable on the cost of accommodation. Payroll function INHRA
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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 Type Disabled Sec10(14)xi (N1). constant CHGEX -1600 maintained in table V_T511P for a physically challenged employee Payroll function (INCCO)

0584 Income from other sources

2 subtypes 0001 House Property 0002 Other Sources If an employee declare income from sources other than the current employment, then that income also has to be taken into consideration for taxation during payroll run. Other Income, Business Profits , Income from Dividends , Income from Interests, Gift Income The sum of amounts in these wage types is added to the Any 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 section 24 in the Income from Other Sources infotype (0584) Income from House Property subtype (0001), for Self Occupied \ Deemed Self Occupied House Property, is tax exempt Deduction under Section-24 payroll function (INS24) and Details of Income from Other Sources payroll function (INIOS)

0585 Section 80 Deductions and 0586 Section 80 C Deductions

IT0585 This is the maximum limit for which an employee can avail the tax deduction 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 tax deduction. 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.

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 a fixed percentage of the PF basis towards a Provident Fund. The minimum percentage contributed is as specified by the authorities. Pension Fund - The employer contributes a fixed percentage of the PF basis towards the Pension Fund of an employee. The minimum percentage contributed 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 percentage towards 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 PF contribution of the employer and employee towards the trust. The system will not compute EDLI, EDLI Administration charges, or Pension Fund contribution. Regional Provident Fund Commissioner (RPFC) - In this case, the system will process all the contributions (PF, Pension, EDLI) towards a Government trust. Exempted Trust - In this case, the system will process the EDLI, EDLI Administration charges and Pension Fund contribution towards a Government trust. The PF contribution will however, be processed towards a 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

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IT0588 Other Statutory Deductions(PTAX/ESI/LWF)

P.Tax Professional tax is a statutory tax that state governments levy on professions, trades, callings, and employment Professional tax slabs Employee salaries fall within different salary ranges or slabs, and the amount of professional tax to be paid depends on the salary range to which the employee belongs. Every state specifies its own salary slabs and the professional 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%

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IT0588 Other Statutory Deductions(PTAX/ESI/LWF)

LWF This component computes the contribution towards Labour Welfare 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 the benefit 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, washing machine, television, and computer. Soft Furnishing Schemeor Other Reimbursements This is a benefit provided to employees for the purpose of acquiring consumer capital items like carpets and curtains. Car Maintenance Scheme This is a benefit provided to employees for the purpose of 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, in the 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 Income Tax Professional Tax Provident Fund Pension Employee State Insurance Labour Welfare Fund Monthly LWF Report Monthly Form24 (Quarterly ) Monthly PTax Report Form 5, 10 and 12A Form 4, 5 and 6 Form 3A and 6A Form 7 and Form 8 Form 6 and 7 (semiannual) Annual Form 16 and 24

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, 1972 Where 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 contributions are 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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