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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
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, 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)