Payroll India (PY-IN)

Payroll India (PY-IN)

Purpose

This component enables the running of the payroll for all employees in line with Indian legal and business requirements.

Implementation Considerations

The SAP HR Payroll India component must be implemented in cooperation with project teams implementing other areas of SAPHuman Resources (HR), in particular SAP HR Personnel Administration.

Integration

The SAP HR Payroll India component integrates with other SAP HR components such as Personnel Administration and Personnel Time Management. There are interfaces to Financial Accounting and Controlling. You can run payroll using a combination of SAP and third-party products.

Features

The component uses data from other areas of SAP HR for calculating all statutory and non-statutory additions and deductions for your employees. SAP HR Payroll India offers a number of standard reports used in payroll, superannuation, leave, advance payments and taxation.

In addition to the standard payroll functions, the payroll processing for India also comprises the following country-specific functions:

Indirect EvaluationBasic IncrementsDearness AllowanceHousingCar and ConveyanceLong Term ReimbursementsClaimsBonusIncome TaxSection 80Section 89(1)Third Party DeductionsIncome from Other SourcesTax on ArrearsExemptionsExemption on Leave Travel AllowanceExemption on Medical ReimbursementsExemption on Medical InsuranceExemption on Child Education AllowanceExemption on Child Hostel AllowanceExemption on Other Allowances and ReimbursementsExemption on Leave EncashmentExemption on Voluntary Retirement SchemePrevious Employment Tax DetailsProfessional TaxProvident FundEmployee State InsuranceLabour Welfare FundNominationsMinimum Net PayRecovery of Rounding off AmountsLoans EnhancementOne Day Salary DeductionMid Year Go LiveTermination Work BenchGratuitySuperannuationForm 24Form 16Form 217(A)SAP HR Payroll India supports retroactive accounting. This function automatically recalculates payroll in the event of changes to master data and time data in periods for which payroll has already been completed

Indirect Evaluation (INVAL) and 40ECS Feature

PurposeIndirect Evaluation is a method to calculate the eligible amounts for some of the wage types. INVAL is the Indirect Evaluation Module used to meet the Indian specific business requirements. INVAL calculates the eligible amounts for certain wage types that are defaulted into the Basic Pay infotype (0008) or entered in the Recur. Payments/Deductions infotype (0014) and the Additional Payments infotype (0015).When you populate the Long term reimbursements infotype (0590), the infotype checks the INVAL amounts for eligibility. The Claims programs also check the INVAL amounts while processing claims.

In addition to, or instead of, computing the eligibility as a currency value amount, INVAL can also calculate the eligibility in terms of numbers, if the wage type has been configured accordingly. For example, an employee can be eligible for 50 liters of petrol.When you are populating the Basic Pay infotype (0008), the wage types get defaulted into the infotype depending on the Pay Scale Grouping for Allowances of the employee. Pay Scale Grouping for Allowances determines the eligible wage types for the employee. For some of these wage types, which get defaulted into the Basic Pay infotype (0008), the eligible amounts also get defaulted. This happens due to Indirect Evaluation Module INVAL.For Recur. Payments/Deductions infotype (0014) and Additional Payments infotype (0015), if you enter an INVAL wage type, the eligible amount will get defaulted into the infotype. This is also due to Indirect Evaluation.In case of Basic Pay infotype (0008), Recur. Payments/Deductions infotype (0014) and Additional Payments infotype (0015), if you overwrite the Indirectly Evaluated amounts, the amounts entered by you are valid. In this case, the indicator for indirect evaluation will get cleared. Again, if you delete this overwritten amount, the default amount and the indicator for indirect evaluation will get selected. The INVAL amount for a default wage type for an employee may change in the middle of the year. In this case, you can check the eligibility amount on a particular date, by entering that date as the start date of the Indirect Evaluation field at the bottom of the Basic Pay infotype (0008).There are four module variants for INVAL:... 1. A This calculates the value of the wage type as a fixed amount. 2. B This calculates the amount as a percentage of a base wage type added to a fixed amount. More than one such amount, with same or different percentage of the base wage type, can be calculated for an INVAL wage type. In this case, the amount that will be Indirectly Evaluated will be the sum of all such calculated amounts, added to a fixed amount. For example, for the wage type M230, the different INVAL B amounts are:... a. 10% of MB10 b. 30% of M220 c. Fixed amount of Rs.1000In this case, the INVAL amount for the wage type M230 will be the sum of a, b and c. 3. C This calculates the amount as a percentage of a base wage type subject to a maximum limit. More than one such amount, with same or different percentage of the base wage type, can be calculated for an INVAL wage type. In this case, the amount that will be Indirectly Evaluated will be the sum of all such calculated amounts, subject to a maximum limit. For example, for the wage type M230, the different INVAL C amounts are:... a. 10% of MB10 b. 30% of M220 c. Limit of Rs.5000In this case, the INVAL amount for the wage type M230 will be the sum of a and b subject to a maximum of c. 4. D This calculates the amount as one or any combination of the following INVAL Module variants based on Basic salary slabs:... a. Fixed amount b. Percentage of a base wage type added to a fixed amount c. Percentage of a base wage type subject to a maximum limitIn the SAP system, INVAL D can be configured as only INVAL B or C. Once the percentage of the base wage type is calculated, the result is multiplied with a factor. This resultant amount is then added to fixed amount or is compared with a maximum limit. For example, the INVAL module variant for the wage type M210, for an employee who falls in the Basic Salary slab of Rs.10,000 12,000, is INVAL C. The INVAL amounts are: i. 10% of MB10 ii. 30% of M220 iii. Multiplication factor of 50% iv. Limit of Rs.7000In this case, the INVAL amount for M210 for the employee is the sum of i and ii, multiplied by iii and the result is subject to a maximum of iv.If you want to configure the wage type as a fixed amount for a particular slab, the wage type is configured as INVAL B. In this case, the percentage of the base wage type is multiplied with the factor of 0% and then the fixed amount added to the result. For example, the INVAL module variant for the wage type M230, for an employee who falls in the Basic Salary slab of Rs.15,000 25,000, is INVAL B. The INVAL amounts are: i. 100% of MB10 ii. Multiplication factor of 0% iii. Fixed amount of Rs.5000In this case, the INVAL amount for M230 for the employee is the value of i, multiplied by ii and the result added to iii. In this case, the INVAL amount will be the fixed amount of Rs.5000.

For defining INVAL D, instead of using only the Basic Salary to be compared with the salary slabs, you can use the user exit EXIT_SAPLHRPADINA1_006, available in the Enhancement HRINRAP5, to define additional wage types to be added to the Basic Salary. The sum of all these wage types can then be compared with the salary slabs for the computation of INVAL D. The base wage type in case of INVAL B, C or D may be the Basic Salary, the Dearness Allowance or/and any other wage type the employee is eligible for.Only those factors, which affect the compensation of the majority of employees are assigned to Pay Scale Grouping for Allowances. There are some compensation factors that affect selected employees only. These compensation factors are not considered to define the Pay Scale Grouping for Allowances. These pay parameters are configured through the Feature to determine the eligibility for RAPs Feature (40ECS). Example of such parameters are, number of dependents, marital status, years of experience in the organization.Only the wage types that are Indirectly Evaluated can be further calculated using the 40ECS feature. This feature determines the factor which is multiplied with the INVAL amount to arrive at the amount payable to the employee. For an employee, a wage type may be evaluated using INVAL. But the same wage type may be configured in the 40ECS Feature for the employee. In this case, the factor returned by the 40ECS Feature will be multiplied with the INVAL amount and the total will be defaulted into the respective infotypes. For example, an employee is eligible for a Leave Travel Allowance of Rs.24000 according to Indirect Evaluation. But you can configure the 40ECS feature, so that an employee who has children will get 25% extra for each child for a maximum of two children.Implementation Considerations If you want Indirect Evaluation for a wage type, you have to define it as a characteristic of the wage type. To do this, go to the IMG under Payroll India: Reimbursements, Allowances and Perks ( Maintain Wage Type Characteristics. You have to maintain each INVAL wage type for a Pay Scale Grouping for Allowances in the IMG for Payroll India: Reimbursements, Allowances and Perks ( Calculate Eligibility for RAPs. If you want the payroll to check the 40ECS Feature to determine the eligible amount for a particular wage type, you must configure the wage type in the IMG under Payroll India: Reimbursements, Allowances and Perks ( Calculate Eligibility for RAPs.IntegrationIn case of SAP GUIDefaulting and Indirect Evaluation for the Housing (HRA / CLA / COA) and Conveyance wage types happen only when you populate and save the respective infotypes Housing (HRA / CLA / COA) infotype (0581) and Car & Conveyance infotype (0583).FeaturesThe important pay parameters that can be configured through the 40ECS feature are: Number of children for children education allowance Number of children for children hostel allowanceIn case of these parameters, you also have to configure the relevant wage types in the IMG under Payroll India: Reimbursements, Allowances and Perks ( Calculate Eligibility for RAPs. In this table view, you must select Check for Ee characteristics in the Elig Check field. Whether a child is eligible for Child Education Allowance or for Child Hostel Allowance, or whether a dependent is eligible for any other allowance, is entered in the Family/Related Person infotype (0021). The 40ECS feature checks this infotype and accordingly calculates an eligibility amount for each of the allowances for each employee.The other parameters that can be configured through the 40ECS feature are: Country Grouping Company Code Payscale Grouping for Allowances Wage Type Job Gender Key Marital status key Region (State, Province, County) Personnel Number Start dateConstraintsIndirect Evaluation requires that the base wage type, on which the evaluation of any other wage type depends, should have been evaluated previously. For example, wage types MB10 and M230 are evaluated indirectly and M230 is evaluated as a percentage of MB10. Then, it is required that MB10 be evaluated prior to M230 in the Basic Pay infotype (0008).See also:Indirect Evaluation and 40ECS Feature DefinitionPay Scale Grouping for AllowancesBasic - General Increments Report (HINIBSG0)

Use

This function is used to perform a batch update of increments in the Basic Salary wage type in the Basic Pay infotype (0008).

Prerequisites

You must have maintained the IMG activities under Payroll India ( Basic Salary for India.

Activities

...

1. From SAP Easy Access menu, choose Human Resources ( Payroll ( Asia/Pacific ( India ( Utilities ( Basic ( General Increments.

The Basic - General Increments report screen appears.

2. Enter the Personnel number and Pay Scale Grouping for Allowances of the employees to whom you want to give increments in the Basic Salary.

3. Enter the date from which the increment has to be effective.

4. Enter the name of the batch session.

5. Choose Program ( Execute.

6. The system conducts the following eligibility checks:

a. The system checks the current Pay Scale Grouping for Allowances of the selected employees. If this Pay Scale Grouping for Allowances is not the same as that entered by you on the selection screen, the employee is rejected.

b. The system checks whether the increment Effective Date entered by you on the selection screen falls in the last split of the Basic Pay infotype (0008). If it does not, the employee is rejected.

c. Depending on the Pay Scale Grouping for Allowances of the employee, the system reads the Basic Salary and Personal Pay wage types of the employee from the table view Basic Wages (V_T7INB1). The system reads the Basic Pay infotype (0008) for the current value of Basic Salary and Personal Pay wage types.

d. Based on the current Pay Scale Grouping for Allowances of the employee, the system reads the Basic Code and the Method Type from the table view Basic Codes for Allowance Groups (V_T7INB5).

e. Based on the Basic Code and the Method Type, the system reads the table view Basic Slabs (V_T7INB7) for the salary slab in which the basic pay of the employee falls.

f. If the current basic pay of the employee is the greater than or equal to the upper limit of the highest slab, the employee is rejected.

g. If the current basic pay of the employee does not fall in any slab, the employee is rejected.

h. If the Method Type is Increment by Amount, the system adds the increment amount to the current basic pay to compute the new current basic pay.

i. If the Method Type is Increment by Percentage, the system reads the table view Basic Slabs (V_T7INB7) for the type of percentage method. Accordingly, the system calculates the new basic pay and adds it to the current basic pay to arrive at new current basic pay.

7. The list of employees eligible for the increment appears.

8. You have the following options on the output screen:

a. Increment - Select this option to process the increment for all the eligible employees. The system creates a batch session. You can execute this batch session to update the Basic Pay infotype (0008).

b. Ambiguous Cases - Select this option to display the ambiguous cases. For example, employees for whom the Effective Date that you have entered on the selection screen does not fall in the last split of the Basic Pay infotype (0008).

c. Errors - Select this option to display all error cases. For example, employees for whom the Pay Scale Grouping for Allowances is not the same as the one that you have entered on the selection screen.

The Ambiguous Cases and the Errors are for information only.

d. Download - Select this option to download the results in the desired format.

Dearness Allowance

Purpose

This component enables the computation of Dearness Allowance.

Dearness Allowance is a non-statutory allowance that you pay to an employee on a monthly basis. The payment of this allowance relates to the changes in the cost of living in a particular location. The Dearness Allowance is related to the Consumer Price Index (CPI) for a given location, and the state authorities generally revise the CPI on a quarterly basis.

A change in employee status, such as a transfer or a promotion, may affect Dearness Allowance. The allowance consists of a fixed and a variable portion.

For a non-management category, you generally call this component the Dearness Allowance. For a supervisory category, you may call it the Cost Of Living Allowance (COLA).

Integration

DA forms a part of the salary basis for the other components of Payroll India. For example, the Dearness Allowance along with the basic salary typically forms the salary basis for computation of:

Income TaxGratuityProfessional Tax Features

Batch Program - DA (Report) (HINIDAB0)This report computes the Dearness Allowance for a selected range of employees and generates a batch program. Upon execution, the batch program updates the Basic Pay infotype (0008) of the employees.

Dearness AllowanceComputations

The standard SAP system provides the following methods for the computation of Dearness Allowance:

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

You can configure the Dearness Allowance computation method through the IMG under Payroll India ( Dearness Allowance.

Housing

Purpose

This component helps you create and maintain information on the employee accommodation. You can also compute the exemptions and perquisites applicable on a housing benefit.

Integration

Income TaxDuring the computation of the annual exemptions and perquisites, the Income Tax functionality also includes the exemptions and perquisite wage types of the housing functionality.

Basic Pay infotype (0008)

When you create or modify a housing record using the Housing(HRA / CLA / COA) infotype (0581), in case of SAP GUI, the system dynamically updates the Basic Pay infotype (0008) with the new or changed wage type for Housing.

Features

The SAP system caters to the following categories of accommodation:

Rented Accommodation

In a Rented Accommodation, the employee receives a House Rent Allowance (HRA) to meet the expenses incurred by renting a residential accommodation. The system computes an exemption on the rented accommodation.

Company Leased Accommodation (CLA)

In a CLA, the company leases an accommodation and provides it as a housing benefit to the employee. Employee eligibility towards CLA depends on the Pay Scale Grouping for Allowances.

If an employee has a CLA benefit, the system will compute the perquisite applicable on the CLA.

Company Owned Accommodation (COA)

In a COA, the company owns the accommodation and provides it as a housing benefit to the employee. Employee eligibility towards COA depends on the Pay Scale Grouping for Allowances.

If an employee has a COA benefit, the system will compute the perquisite applicable on the COA.

Hotel Accommodation

In this case, 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.

If you have specified a perkable hotel accommodation in the Housing (HRA / CLA / COA)infotype (0581), the system will compute a perquisite.

You can specify the Accommodation Type for an employee, and maintain the housing details using Housing (HRA / CLA / COA) infotype (0581).

If your company has provided furniture and helper(s) as a part of the accommodation, the system will compute the applicable perquisites.

To create and process the different categories of accommodation, the SAP system provides a standard set of Accommodation Types. For example:

Rented AccommodationCompany Leased (Old)Perkable Hotel AccommodationYou have the option of creating your own Accommodation Types also. You can do so through the IMGunder Payroll India ( Housing (Define Accommodation Types.

To process the Housing functionality, the system makes use of standard configurations. You can view these configurations using the following table views:

Housing code for taxation (V_T7INR1)

Housing related statutory constants for taxation (V_T7INR5)

Codes for Housing Types (V_T7INR7)

City category for housing type (V_T7INR9)

SAP recommends that you do not change the default configurations of the tables listed above.

User Exits

If you have created your own Accommodation Types, you must also specify the computation rules for these Accommodation Types. You may also need to define your own set of validations for the Housing (HRA / CLA / COA) infotype (0581). The Housing functionality provides the following user exits:

EXIT_HINCALC0_005 User Exit in the Enhancement HRINHRA0With the help of this user exit, you can define the computation methods for the Accommodation Types defined by you. Use this exit to determine all the housing related wage types during a payroll run, in particular the exemption and the perquisite wage types.

To access this user exit through the IMG, choose Payroll India ( Housing ( User Exit: Determine Perk Value for Housing.

When you create your own Accommodation Types and specify their computation rules, you must ensure that you also specify the computation rules for the standard set of Accommodation Types. This is because the standard computation rules will no longer apply on the any Accommodation Type.

EXIT_MP058100_007 User Exit in the Enhancement HRINHRA1 With the help of this user exit, you can define a customized set of validations, to be performed in the Housing (HRA / CLA / COA) infotype (0581).

If the system performs a standard set of validations on the infotype, it may result in the generation of error messages. Using this user exit, however, you can override any error messages resulting from standard validations performed on the infotype data.

To access this user exit through the IMG, choose Payroll India ( Housing ( User Exit: Screen Validations for Housing infotype.

Constraints

In the SAP system, you can only maintain one Accommodation Type for an employee, at one point in time. For the same From Period, you cannot create Housing records in the Housing (HRA / CLA / COA) infotype (0581) that have two different Accommodation Types.

See also:Housing - Exemptions and PerquisitesCar and Conveyance

Purpose

This component enables you to process the:

Exemption on Conveyance AllowancePerquisite on Car Schemes and driver(s) provided by the company

Integration

The system reads the details for an employee maintained in the Car & Conveyance infotype (0583).

Features

Exemption

The system processes exemption on the conveyance allowance given to the employee. You must make the following configurations if you want to give a conveyance allowance and exemption to your employees:

If you require to, you can maintain new conveyance types to suit your company requirements. The SAP System provides you with some default conveyance types. To maintain new conveyance types, go to the IMG under Payroll India ( Car and Conveyance ( Define Conveyance Types (V_T7INCA).

Maintain the wage types for a Conveyance Type and a Pay Scale Grouping for Allowance through the IMG under Payroll India ( Reimbursements, Allowances and Perks ( Calculate Eligibility for RAPs (V_T7INA9).

If you want these wage types to be defaulted in Basic Pay infotype (0008), you must maintain these wage types in table view Conveyance Allowance Eligibility (V_T7INC9), through the IMG under Payroll India ( Car and Conveyance ( Assign Eligibility Criteria for Conveyance Allowance.

If you have maintained the wage type in this table view, when you save the Car & Conveyance infotype (0583) record for an employee, a dynamic action is triggered, wherein the system takes you to the Basic Pay infotype (0008). The wage type that you have maintained will get defaulted into the Basic Pay infotype (0008). If it is an INVAL wage type, the amount is also defaulted, else you have to enter an amount here and save the infotype.

Maintain the conveyance tax exemption limit of these wage types for tax code SCNV through the IMG under Payroll India (Tax ( Tax Liability on Reimbursements, Allowances and Perks (Assign Tax Code Limits to Wage Types (V_T7INT9).

You maintain payment wage types for all the Conveyance Types. But, only the Conveyance Type for which you require Exemption under Section 10, you should maintain the wage type entries in table view Taxability of Wage Types (V_T7INT9) for taxcode SCNV.

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).

Exemption on Conveyance Allowance is the lesser of:

...

...

Actual payment made to the employee for conveyance

Exemption limit

Amount maintained for tax code SCNV in table view Taxability of Wage Types (V_T7INT9).

Amount maintained in Exemption limit for challenged constant (CHGEX) of table view Payroll Constants (V_T511P) for a physically challenged employee.

Perquisite

Perquisite on Car Schemes and driver(s) provided by the company is valid only till financial year 2004 2005.

The system processes perquisites on Car Schemes that the employer provides to the employee.

You must make the following configurations to maintain a Car Scheme and calculate perquisite on it:

You must maintain the car types through the IMG under Payroll India ( Car and Conveyance ( Define Vehicle Details (V_T7INC1). The Cubic Centimeter or the Horse Power of the car that you maintain here is used during the calculation of perquisite.

The SAP System provides you with some default Conveyance Types. If required, you can maintain conveyance types to suit your company requirements. To do this, go to the IMG under Payroll India ( Car and Conveyance ( Define Conveyance Types (V_T7INCA). Select Yes for the Car Detail Flag to define the conveyance type as a Car Scheme. In this case, you can capture the details of the vehicle in the Car & Conveyance infotype (0583). The system uses these details to calculate the perquisite value of the vehicle.

For a Pay Scale Grouping for Allowance and a Car Scheme, you can maintain the eligibility of an employee for

The number of cars

The maximum amount of all the cars. This is based on the price of the cars.

To maintain this, go to the IMG under Payroll India ( Car and Conveyance ( Define Amounts and Numbers for Car Schemes (V_T7INC7). The options that you get for the Car Scheme will be the ones for which you have selected Yes as the Car Detail Flag in table view Codes for Conveyance Types (V_T7INCA).

For a Pay Scale Grouping for Allowance and a Car Scheme, you must maintain the Car Type and you can maintain the maximum age of the car, that an employee is eligible for. To do this, go to the IMG under Payroll India ( Car and Conveyance ( Assign Type and Age of Car for Car Schemes (V_T7INC3). The options that you get for the Car Type will be the ones that you have maintained in table view Car Types Master (V_T7INC1).

The system provides you with the following Car Schemes:

Company Owned Car Scheme (COCS)

In this case, the car is owned by the employer, and can be

Maintained by the employer

Maintained by the employee

The perquisite amount for COCS depends on the Cubic Centimeter of the car. These perquisite values are stored in the table view Perk Valuation for Cars (V_T7INC5). This perquisite value is valid only for the first car.

Ten percent of the total value of the second and third cars are taken as the perquisite values. This percentage is stored in the Car perk calculation rate constant (CRPRK) of table view Payroll Constants (V_T511K).

Own Your Car Scheme(OYCS)

In this case, the vehicle is owned by the employee and is maintained by the employer. The system provides for following types of OYCS:

Availing Own Your Car Scheme (OYCS)

In this case, the vehicle is a car.

Own Your Car Scheme Others (OYCS Others)

In this case, the vehicle is an automotive conveyance other than a car.

The perquisite value for Availing OYCS and OYCS Others is the actual expenditure reduced by a particular amount. This particular amount depends on the Cubic Centimeter of the vehicle and is stored in the table view Perk Valuation for Cars (V_T7INC5). Actual expenditure can be the

Reimbursements made to the employee through Additional Payments infotype (0015) or through Recur. Payments/Deds. infotype (0014).

Notional reimbursement of the expenditure through Additional Payments infotype (0015) or through Recur. Payments/Deds. infotype (0014), in case the employer incurs the maintenance expenditure directly, for which the employee does not get a reimbursement.

Maintain the actual expenditure wage types for the tax codes,

SCNE in case of Availing Own Your Car Scheme (OYCS)

SCNO in case Own Your Car Scheme Others (OYCS Others)

You can do this through the IMG under Payroll India (Tax ( Tax Liability on Reimbursements, Allowances and Perks ( Assign Tax Code Limits to Wage Types (V_T7INT9).

Legally, the Car Schemes, COCS (Old) and OYCS (Old), are not valid after September 30, 2002. In these cases, the perquisite value is calculated on the Horse Power of the car.

For a Car Scheme, the system calculates the perquisite value for an employee only if the indicator for perquisite calculation is selected in the Car & Conveyance infotype (0583).

If the company is providing the employee with a driver or drivers for a Car Scheme, there is a perquisite value attached to a driver. This perquisite amount for a driver is stored in the table view Payroll Constants (V_T511P)

Perk value of driverconstant (DRVP1)

Valid for the payroll period from October 1, 2001 onwards.

Perk value of driver (old) constant (DRVPK)

Valid for payroll period until September 30, 2001.

See also:Exemption and Perk Calculation for Car and ConveyanceCar & Conveyance infotype (0583)Long Term Reimbursements

Purpose

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. In the SAP system, you can categorize Long Term Reimbursements into the following:

Hard Furnishing SchemeThis 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 ReimbursementsThis is a benefit provided to employees for the purpose of acquiring consumer capital items like carpets and curtains.

Car Maintenance SchemeThis is a benefit provided to employees for the purpose of maintenance of their car over a period of time.

Features

Long Term Reimbursements infotype (0590) You can maintain the Long Term Reimbursement claimed by the employees in this infotype and under one of the following subtypes:

Subtype SHFS For maintaining details on the hard furnishing schemes

Subtype SSFS - For maintaining details on the soft furnishing schemes

Subtype SCAR For maintaining details on the car maintenance schemes

For more information, refer to Long Term Reimbursements infotype (0590).

Duration Companies assign a fixed period to long term reimbursements. This period is generally for three years or five years. You can configure the duration of a Long Term Reimbursement using the Determine block of years for Long term reimbursements feature (40LTR). To do so, go to the IMG under Payroll India ( Long Term Reimbursements ( Maintain block of years for Long Term Reimbursements.

The duration of a long term reimbursements can be for a:

Fixed block of years, and having a fixed end date The begin date would be from the date on which the employee acquires the asset. For a particular reimbursement however, the End Date is already fixed in the system.

Currently, this type of duration is applicable on Hard Furnishing schemes. You define the number of years in a block, and fixed End date of a block using the Determine block of years for Long term reimbursements feature (40LTR).

Variable block of years Here you specify the begin date of a soft furnishing scheme, and the duration will be for a fixed block of years, starting from this begin date. This type of duration is applicable on Soft Furnishing schemes. The Determine block of years for Long term reimbursements feature (40LTR) returns the value for the duration of the soft furnishing scheme.

Fixed block of years divided into smaller blocks The duration of the reimbursement is for a fixed block, and you in turn divide the block into smaller sub blocks or smaller validity periods. For every validity period, you define the eligible amount and the number of times that the employee can claim the long term reimbursement. This type of duration is applicable on the Car Maintenance scheme.

For example, an employee is eligible to a Car Maintenance Allowance of Rs.15,000 for a block of 3 years. The employee can claim a maximum of Rs.5,000 every year. Within a year, the employee can submit a claim only twice.

The Determine block of years for Long term reimbursements feature (40LTR) returns the value for the validity period of the main block. The Feature to determine the eligibility for RAPs feature (40ECS) returns the Begin Date and End Date for the sub blocks. It also returns the eligible amount and the number of times than an employee can make a claim in a sub block.

For every sub block, you must configure the Begin Date and End Date, the eligible amount, and the limit on the number of times an employee can make a claim. To do so, you must create your own program, and then specify the name of this program (against the wage type for Car Maintenance Scheme) in the Feature to determine the eligibility for RAPs feature (40ECS).

If you have any other schemes with a disbursement type distributed over a block on n validity periods, you can create them using your own program and specifying the name of the program in the Feature to determine the eligibility for RAPs feature (40ECS). You can create your own subtype (Z***) through the table view Subtype Characteristics (V_T591A).

Eligibility Pay Scale Grouping for Allowances determines the eligibility of an employee towards a particular type of long term reimbursement. An employee may become eligible for a particular long term reimbursement at the time of joining, or with a promotion. In the standard SAP system, the eligible amount is indicated by the HFS eligibility wage type (M213). The eligibility for this wage type is handled through Indirect Evaluation.

In the case of a Hard Furnishing Scheme, if an employee joins your company after the start of a reimbursement block period, the system will prorate the eligible amount for the remaining block period. If the employee however, becomes eligible for a particular reimbursement because of a promotion, the system does not prorate the amount for the remaining period. The employee is eligible to the entire amount.

Perquisite There is a perquisite value attached to the various long term reimbursements that you offer to an employee, and the Calculate Hard Furnishing Perk Value payroll function (INHFS) calculates applicable tax on this perquisite value.

Hard Furnishing Scheme The authorities specify a fixed percentage as the perquisite value applicable on the assets availed by the employee during a financial year. This value is stored in the Calculate Hard Furnishing Perk Value constant (HFPRC) of the table view Payroll Constants (V_T511K).

Soft Furnishing Scheme The system calculates perquisite value for the assets that an employee availed in the current financial year based on the perquisite percentage that you maintain in the Long Term Reimbursements infotype (590), subtype SSFS.

Car Maintenance Scheme There is no perquisite value associated with the Car Maintenance Scheme, or other similar maintenance schemes that you create.

See also:Long Term Reimbursements infotype (590)Pay Scale Groupings for AllowancesIndirect Evaluation

Claims

Purpose

This component enables the processing of claims submitted by an employee. Employees are eligible for certain monetary and non-monetary benefits, as a part of their compensation package. Employees submit a claim based on their eligibility, to avail these benefits.

Reimbursement allowances can be of the following types:

Amount (monetary) Monetary claims are reimbursements against a particular eligibility amount. For example, a medical reimbursement, subject to a maximum amount of Rs.15,000/-, in a given assessment year.

Unit or a number (non-monetary) Non-monetary claims are those claims that an employee typically makes for the purpose of company work. Claims of non-monetary nature are made in whole units. For example, protective clothing, briefcases, calculators, and number of litres of petrol. Claims of non-monetary nature are made in whole units.

Amount, subject to a number limit on the number of times that you can claim the allowance For example, a stitching allowance eligibility of Rs.1000/- per financial year, for which the employee can submit a claim only twice in that financial year.

Slab based claims

Some types of reimbursements have a validity period that is greater than a year, and are called Long Term Reimbursements. In this case, the employee is eligible to a certain amount, and you pay this amount to the employee across several financial years. The validity period of such reimbursements can be either a fixed block of years, or may be dependent upon some event or action.

For example, an employee is eligible for a car maintenance allowance with a validity period of four years. The validity period starts from the date of purchase of the car. For the first and second year, the employee is eligible for a car maintenance allowance of Rs.5000. In the third year, the eligibility is Rs.7,500 and in the fourth year, the eligibility is Rs,10,000.

You maintain slab based claims using the Long term reimbursements infotype (0590). For more information, refer to Long Term Reimbursements.

While submitting a claim, an employee must also submit a proof of expense (monetary benefit), or a proof of entitlement (non-monetary benefit). Some reimbursable allowances are exempt from tax for a certain limit. The employee can claim the tax exemption by submitting a proof of expense or a proof of entitlement.

Features

Reimbursement for Employees transaction (PC00_M40_REMP)

You can process claims using the Reimbursement for Employees transaction (PC00_M40_REMP). In this transaction, you can disburse claims through a:

Regular payroll run The system updates the Additional Payments infotype (0015) with the information that you enter in this report, and disburses the claim along with the regular payroll.

Off-cycle payroll run The system updates the One-Time Payments Off-Cycle infotype (0267) with the information that you enter in this report. The approved claims can be disbursed through an off cycle payment process. For example, claims may be disbursed on the same day, or all claims submitted during the week may be disbursed on one particular day of the week.

Processing of Claims

The Pay Scale Grouping for Allowances determines the Reimbursement Types for which an employee is eligible. You define the different Reimbursement Types through Tax Codes.

For more information, on Tax Code configuration, refer to the IMG under Payroll India ( Tax ( Tax Liability on Reimbursements, Allowances and Perks ( Assign Tax Code Limits to Wage Types.

The following criteria determine the processing of a claim:

Eligibility

The system determines whether an employee is eligible for a particular reimbursement or not, using Pay Scale Grouping for Allowances. A reimbursement can be either monetary or non-monetary in nature. If the reimbursement is:

Monetary in nature, the system determines employee eligibility through the Indirect Evaluation of a particular Reimbursement Type. If an Individual Reimbursements infotype (0589) exists for an employee, the system will determine the eligibility for that employee using the infotype instead of through Indirect Evaluation. You can also restrict the number of times that a claim is made within a validity period.

If there is a change in the eligible amount for the employee, the system prorates the same accordingly.

For more information, refer to Indirect Evaluation.

Non-monetary in nature, the system determines employee eligibility using Pay Scale Grouping for Allowances. If an Individual Reimbursements infotype (0589) exists for an employee, the system will determine the eligibility for that employee using the infotype instead of through Pay Scale Grouping for Allowances.

You can configure the eligibility for the non-monetary reimbursements in the RAP no field of the table view Reimbursement Allowances Perks - eligibility and calculations (V_T7INA9).

If there is a change in the Pay Scale Grouping for Allowances of the employee, the system prorates the employee eligibility to a rounded up value, as per configurations.

Monetary in nature, but with a limit on the number of times the employee can make a claim. The system determines the eligibility through a combination of Indirect Evaluation (monetary) and Pay Scale Grouping for Allowances (non-monetary).

If you want to configure your own eligibility criteria, you may do so through the user exits provided in the system. For more information, refer to the IMG under Payroll India ( Reimbursements Allowances and Perks ( User Exit: Save and Retrieve Claims Data.

For more information, refer to Pay Scale Grouping for Allowances.

Validity Period

You can configure the validity period of a reimbursement through Pay Scale Grouping for Allowances and Reimbursement Types. For a Reimbursement Type, you can define different kinds of validity periods, such as monthly, quarterly, semi annually, or annually.

For more information on configuring reimbursement wage types, and specifying their validity periods, refer to the IMGactivity under Payroll India ( Reimbursements, Allowances and Perks ( Calculate Eligibility for RAPs.

Period end treatment

At the end of the validity period of a particular Reimbursement Type, you can configure the system to treat the unclaimed balances in the following ways:

Balance disbursement The system pays the unclaimed balance to the employee.

Balance carry forward The system carries forward the unclaimed balance across one or more validity periods.

Lapse The system neither disburses the unclaimed balances of a validity period, nor does it carry it forward to the next validity period.

For more information, see Period End Treatment of Claims.

Reports

You can generate the following reports using the Claims functionality:

Status for Claims report (HINCREMS) To check the balance and the status of claims made by employees.

Claims Carry Forward Balance report (HINCREMC) To carry forward the unclaimed balances for a reimbursement wage type. You can run this report only once during validity period and it is advisable that you run it at the end of the validity period.

Claims Balance Disbursement report (HINCREMT) To disburse the balance at the end of the validity period.

Claims Balance upload program (HINUUPCF) To upload employee Claim status/balance from a local database file into the SAP system.

You typically use this report to upload Claims Balance information from a legacy system. In the event of your company going live in the middle of the financial year, or if there are any carry forward balances that need to be carried forward to the year of going live, you can use this report and upload the data.

For example, you are going live on 1st April, and there are balances of the Medical reimbursements for the previous financial year, which needs to be carried forward into the current year. You can upload this legacy information into the SAP system using the Claims Balance upload program (HINUUPCF).

User Exits

For customization purposes, you have been provided with user exits for:

Saving and printing additional claims information Using the screen enhancements provided in the Reimbursement for Employees transaction (PC00_M40_REMP), you can record additional claims information which is specific to your organization. For more information, refer to the IMG under Payroll India ( Reimbursements Allowances and Perks ( Claims ( Capture Additional Claims Disbursement Information ( User Exit: Save and Print Claims additional information.

Determining the Carry Forward Dates You can create your own company specific dates for carrying forward the unclaimed balances at the end of their validity period. For more information, refer to the IMG under Payroll India ( Reimbursements Allowances and Perks ( Claims ( User Exit: Determine Carry Forward Dates.

Saving and retrieving claims data You have an option to save the claims data generated using the Reimbursement for Employees transaction (PC00_M40_REMP) in customized tables and infotypes. For more information refer to the IMG under Payroll India ( Reimbursements Allowances and Perks ( Claims ( Badi: Save and Retrieve Claims Data.

Calculating the eligibility The standard SAP system determines the employee eligibility for a Reimbursement Type based on factors such as the Pay Scale Grouping for Allowances, Personnel number, and Tax code. You also have an option to create customized eligible amounts, or numbers, for a Reimbursement Type. For more information, refer to the IMG under Payroll India ( Reimbursements Allowances and Perks ( Claims ( User Exit: Save and Retrieve Claims Data.

Bonus

Purpose

This component enables the processing of employee bonus. You can compute both regular and off-cycle bonus.

Integration

Additional Payments infotype (0015)

The SAP system updates this infotype after a regular bonus computation.

Additional Off-Cycle Payments infotype (0267) for off-cycle bonus

The SAP system updates this infotype after an off-cycle bonus computation.

Features

India specific Bonus calculation report (HINCBON0)This report computes the employee bonus. You have the option of computing bonus:

As per the Payment of Bonus Act

On a monthly salary basis or an annual salary basis

For ex-employees

As a regular bonus or an off-cycle bonus or both

Off-Cycle Taxation

When the bonus is as an off-cycle payment, the SAP system will compute the applicable Tax Deduction at Source (TDS). The Income Tax Deduction at Source for OffCycle Bonus Payment payroll function (INBTD) determines the rate of Tax Deduction at Source (TDS) for an off-cycle bonus. This function has the following parameters:

Param 1 - Determines the TDS computation method. Param 1 can have the following values:

...

BON1 Tax at a standard company wide rate

BON2 Tax before bonus payment and at the marginal rate of tax, for individual employees. It is exclusive of surcharge.

BON3 Tax before bonus payment and at the marginal rate of tax, for individual employees. It is inclusive of surcharge.

BON4 Tax after bonus payment and at the marginal rate of tax, for individual employees. It is exclusive of surcharge.

BON5 Tax after bonus payment and at the marginal rate of tax, for individual employees. It is exclusive of surcharge.

Param 2 - Determines the Tax Code for bonus. The standard SAP system has the Tax Code for Bonus as SBON. You can maintain your own tax code for Bonus through the table view Taxability of wage types (V_T7INT9).

For an off-cycle bonus, you also have the option of maintaining your own tax rates. To do so, go to the IMG under Payroll India ( Bonus (User Exit: Determine Income Tax Rate on Bonus Paid through Off Cycle.

For more information see, Off-Cycle Activities.

Income Tax

Purpose

This component computes tax on the income received by an employee for a financial year.

Income of an employee may consist of all or any of the following components:

Regular Income - This is that part of the salary, which an employee receives every month and is projected for the entire financial year. For example, Basic Pay, House Rent Allowance, Conveyance Allowance.

Monthly regular income - Mon Reg Income wage type (/124). This wage type is the cumulation of the values of all the wage types for which you have configured the Cumulation Class as 24.

Annual regular income - Ann Reg Income wage type (/410)

The value of Ann Reg Income wage type (/410) is the sum of:

Value of Mon Reg Income wage type (/124) in the Cumulative Results Table

Value of Mon Reg Income wage type (/124) for the current period

Value of Mon Reg Income wage type (/124) for the current period, multiplied by the value of Projection Factor wage type (/401)

Value of the Projection Factor wage type (/401) is the number of remaining periods that payroll has to be run in the current financial year, for the employee.

The projection of the remaining periods can be until the end of the financial year or until the employee is terminated or the retirement date of the employee, whichever is the earliest.

System projects the annual regular income using either Actual Basis or Nominal Basis. The system by default uses Actual Basis to project annual regular income. You can access this from the IMG for Payroll India: Tax ( Maintain Annual Taxable Income.

We recommend that you use a single tax calculation method, either Actual Basis or Nominal Basis throughout the financial year, to project the annual regular income.

Irregular Income - This is that part of the salary, which an employee receives for a particular period and is not projected for the entire financial year. For example, Leave Travel Allowance, Bonus.

Monthly irregular income - Mon Irr Income wage type (/125). This wage type is the cumulation of the values of all the wage types for which you have configured the Cumulation Class as 25.

Annual irregular income - Ann Irr Income wage type (/411)

The value of Ann Irr Income wage type (/411) is the sum of:

...

Value of Mon Irr Income wage type (/125) in the Cumulative Results Table

Value of Mon Irr Income wage type (/125) for the current period

Perquisite - Example, Housing Perk, Loan Interest Advantage.

Annual Perk wage type (/127)

Annual Perk wage type (/413)

The value of Annual Perk wage type (/413) is equal to the value of Annual Perk wage type (/127).

Previous Employment Salary

Prev Gross salary wage type (/4V1)

Val of perk u/s 17(2) wage type (/4VJ)

Profts wrt sal u/s 17(3) wage type (/4VK)

These values are captured directly through the Previous Employment Tax Details infotype (0580). In case you have configured Multiple Form 16, these values are automatically captured in the system when an employee gets transferred from one group of the company to another group in a financial year.

Income from Other SourcesAny other Income wage type (/131)

This includes the income captured through Income From Other Sources infotype (0584) Other Sources subtype (0002), and the profit and loss from House Property.

Implementation Considerations

SAP provides you with the following configurations:

The slab codes are defined in the table view Slab Codes for Taxation (V_T7INT1) for a financial year/years.

The different taxation slabs for the tax codes are defined in the table view Taxation Slabs (V_T7INT3).

These are legal settings and you cannot modify them.

Integration

India Income Tax computations payroll function (INTAX) computes the tax on the income received by an employee for a financial year.

Features

The system calculates the income tax for an employee after taking into consideration the following:

Exemption

Medical Exemption - Exm.under pro.to sec17(2) wage type (/414)

Section 10 Exemptions - Exemption U/S 10 wage type (/130)

The value of Exemption U/S 10 wage type (/130) is the sum of the values of:

CEA Annual Exemption wage type (/4E1) - Exemption on Child Education AllowanceCHA Annual Exemption wage type (/4E2) - Exemption on Child Hostel AllowanceConveyance Annual Exempt wage type (/4E3) - Conveyance ExemptionHRA Annual Exemption wage type (/4E4) - Exemption on House Rent AllowanceLTA Annual Exemption wage type (/4E5) - Exemption on Leave Travel AllowancePrev exemp u/s10 wage type (/4V2) - Previous Employment Exemptions

Voluntary Ret. Exemption wage type (/4E6) - Exemption on Voluntary RetirementLeave Salary Exemption wage type (/4E7) - Leave Exemption AllowanceGratuity Cont. Exemption wage type (/4E8) - Gratuity Exemption

In addition to these wage types, you can define your own annual exemptions for allowances and reimbursements using the General Payroll function for Allowance/Reimbursement Treatment (INCTX).

Deduction

Aggregate Deduction - Aggrg Deduction wage type (/424)

...

The value of Aggrg Deduction wage type (/424) is the equal to the value of Empmnt tax (Prof Tax) wage type (/422) - Professional Tax.

Empmnt tax (Prof Tax) wage type (/422) includes the value of Prev prof. tax paid wage type (/4V3).

Chapter VI Section 80 Deductions - Agg of Chapter VI wage type (/432)

Relief

Section 89(1) Relief - Sec 89 relief wage type (/451)

The system also takes into consideration the following components of tax while processing income tax for an employee:

Surcharge on Income Tax

Surcharge of 10% is applicable on Tax payable wage type (/446) if the value of the Total Income wage type (/434) is greater than INR 10,00,000.

The total income tax (including surcharge), that is, the value of Tax payable and surcharge wage type (/450) cannot exceed the sum of:

Income tax on INR 10,00,000

Amount of income that exceeds INR 10,00,000, which is the difference between the value of Total Income wage type (/434) and INR 10,00,000.

ExampleEducation Cess

All employees have to pay an education cess of 2%. Education cess is calculated as 2% of the sum of tax payable and surcharge. The India Income Tax computations payroll function (INTAX) calculates and stores the amount of education cess in the Education Cess wage type (/449).

The value of /449 = 2% (/446 + /448).

Voluntary Tax

An employee can choose to pay certain amount of tax, which is not based on any other component. The Voluntary tax deduction rule (INVT) calculates this Voluntary Tax. The system provides you with three options for voluntary tax deduction:

Deduction of an additional tax amount in a period without changing the annual tax deduction amount. The value of Income Tax wage type (/460), calculated for the period by India Income Tax computations payroll function (INTAX), is increased by this additional amount. This additional tax that is deducted in a particular period is adjusted in the following payroll periods. You have been provided with the model wage type Voluntary Tax (MVT0) for this purpose. HR-IN: Voluntary tax deduction rule (INVT) reads the value of Voluntary Tax wage type (MVT0) and uses the applicable tax rates of surcharge and education cess to divide this amount into the following tax components:Tax payableThe tax payable value is added to the value of Monthly Tax Payable wage type (/4MT).Education cessThe education cess value is added to the value of Monthly Education Cess wage type (/4ME).SurchargeThe surcharge value is added to the value of Monthly Surcharge wage type (/4MS).Deduction of a fixed tax amount in a period without changing the annual tax deduction amount. The value of Income Tax wage type (/460), calculated for the period by India Income Tax computations payroll function (INTAX), is replaced by this fixed amount. Tax deduction in the following periods is adjusted accordingly. You have been provided with the model wage type Voluntary Tax (MVT1) for this purpose. HR-IN: Voluntary tax deduction rule (INVT) reads the value of Voluntary Tax wage type (MVT1) and uses e applicable tax rates of surcharge and education cess to divide this amount into the following tax components:Tax payableThe tax payable value replaces the value of Monthly Tax Payable wage type (/4MT).Education cessThe education cess value replaces the value of Monthly Education Cess wage type (/4ME).SurchargeThe surcharge value replaces the value of Monthly Surcharge wage type (/4MS).Deduction of a fixed amount of voluntary tax over the annual tax liability. The Voluntary tax deduction rule (INVT) generates the Additional Voluntary Tax wage type (/462) for this fixed amount. The value of Income Tax wage type (/460), calculated for the period by India Income Tax computations payroll function (INTAX), is increased by the value of Additional Voluntary Tax wage type (/462). This additional tax that is deducted is not adjusted in the following periods of the financial year. The total tax deducted in the year is increased by this fixed amount of voluntary tax. You have been provided with the model wage type Voluntary Tax (MVT2) for this purpose. The rule reads the value of Add. Voluntary Tax wage type (MVT2) and generates Additional Voluntary Tax wage type (/462). HR-IN: Voluntary tax deduction rule (INVT) then uses the applicable tax rates of education cess and surcharge to divide the value of Additional Voluntary Tax wage type (/462) into the following wage types:Voluntary Tax Payable wage type (/4LT)Voluntary Education Cess wage type (/4LE)Voluntary Surcharge wage type (/4LS)Tax on ArrearsTax on BonusThe system allows you to generate the following tax reports:

Form 16Form 24See also:Previous Employment Tax DetailsSection 80 Deduction

Purpose

Section 80 deductions are pre tax deductions from the Gross Taxable Income. Examples of components for Section 80 deductions are Contribution to certain Pension funds, Medical Premium paid, Donations to certain funds/charitable institutions and deductions for Permanent physical disability.

The SAP System provides you with the all the Section 80 subsections and the divisions of the subsections. The maximum limit of contribution for each subsection and each subsection division has also been provided by the system. This means that even if you contribute more than the limit, the payroll will consider only the limit for tax deduction.

Some of the contributions under Section 80 deductions are fully tax deductible, while some are partly tax deductible. The percentage of deduction for each of them is also configured by the SAP System.

A subsection of Section 80 may have different types of investments. Each of these different types of investments within a subsection is called a division in the SAP system.

The employee can declare the amount he or she wants to contribute towards each division of the subsection of Section 80. This can be done at any point of time in the year. You can populate this as proposed contributions in the Section 80 Deductions infotype (0585). The tax for each period will be calculated outside the payroll based on this proposed contribution. The actual contributions can also be populated in the Section 80 Deductions infotype (0585). You can calculate the tax for an employee or for all employees by considering the actual contributions of the employee. This is typically done towards the end of the year, when the employee has submitted all his declarations. If you want to calculate the tax for all or selected employees based on actual Section 80 contributions, you can run the Batch Program for section 80 (HINIS800) for those employees, instead of updating the infotype record of each employee.

Contributions to Section 80 investments can be made directly from the payroll of the employee. In this case, you must maintain the contribution details in the Membership Fees infotype (0057). In this case, the contribution amount for a particular subsection or division will be calculated by adding the contributions maintained in the Membership Fees infotype (0057) and the Section 80 Deductions infotype (0585).

Section 80C and Section 80CCCSection 80C and Section 80CCC deductions are applicable from financial year 2005 2006 onwards.

The deductions under Section 80C includes all the investments that were valid under Section 88 till financial year 2004 2005.

From financial year 2006-2007, Fixed Deposit investments are also eligible for Section 80C deductions. These deductions are applicable if the Fixed Deposit is:

For a fixed period of not less than five years

From a scheduled bank

In accordance with a central government framed and notified scheme

You can enter these deductions in the system using Section 80C Deductions infotype (0586).

The deductions under Section 80CCC includes certain pension funds.

The maximum amount of deduction available is INR 1,00,000. This includes the total of Section 80C and Section 80CCC deduction.

Integration

The payroll reads the Section 80 data from the Section 80 Deductions infotype (0585) for the purpose of tax deduction.

In case of a physically challenged employee, you have to create a Challenge infotype (0004) record and store the relevant disability information there. As soon as you save this infotype record, a Membership Fees infotype (0057) record for Section 80U deduction is created automatically for the employee. The employee gets this tax deduction each year for as long as the above two infotype records are valid.

Section 80 Contribution Detailsfunction (P0585) retrieves the data from the Section 80 Deductions infotype (0585) and updates the cluster table S80. Processing Request for Membership Fees function (P0057) retrieves the data from the Membership Fees infotype (0057) and updates the table P0057. Third Party Deductions payroll function (INTPD) reads S80 and the table P0057, and updates the cluster table S80. Section 80 Deductions for India payroll function (INS80) processes the cluster table S80 to generate the wage type for Total Section 80 deduction (/3I1). Actual Section 80 deduction wage type (/432) is the lower of the Total Section 80 deduction wage type (/3I1) and the Gross Total Income wage type (/430). Gross Taxable Income wage type (/434) is equal to Gross Total Income wage type (/430) minus Actual Section 80 deduction wage type (/432).

Features

The parameters for Section 80 subsections and divisions have been configured in the SAP System as follows:

...

1. In the table view Subsection description (V_T7INI5), the subsection descriptions have been maintained.

2. In the table view Subsection limit (V_T7INI7), the maximum limits for each subsection has been maintained.

3. In the table view Sub division description (V_T7INI8), the subsection division descriptions have been maintained.

4. In the table view Sub division details (V_T7INI9), the upper limit of contribution, the percentage to be considered for tax deduction and the validity periods for the subsection divisions have been maintained.

You do not need to configure these views.

If you are populating the Section 80 data for an employee from the Membership Fees infotype (0057), you must configure the wage types for those Section 80 subsections or divisions. To do this, go to the IMG under Payroll India: Tax ( Third Party Deductions ( Configure Wagetypes for Section 80. You can configure more than one wage type for a subsection or a division.

If you want to add any subsections or divisions to Section 80, you have been provided with a user exit EXIT_HINCALC0_003 in the Enhancement HRINITAX. You can access this from the IMG for Payroll India: Tax ( Tax Liability on Reimbursements, Allowances and Perks ( User Exit: Define User Rules for Section 80 and 88.

See also:Third Party DeductionsSection 89(1) Relief

Purpose

This component computes the relief from tax in case of

Arrears payments of past financial years. There can be situations where the payments that pertain to previous financial years are made in the current financial year. These payments typically arise due to salary revisions or bonus payments in this financial year for past financial years.

Advance payments of future financial years. There can be situations where the payments that pertain to future financial years are made in advance in the current financial year.

There can be situations where the arrears or advance salary is taxed at a higher rate in the year of receipt as compared to the year to which it pertains. In such a case, the employee is given a relief from tax. This relief is the amount of additional tax that the employee pays in the current year on account of receiving the arrears in the current period as against having received it in the year to which it pertains.

Integration

During a retroactive payroll run across financial years, the following wage types will be populated in the Difference table (DT) for the last period of the retrospective year:

Add Gross Salary wage type (/616)

This wage type stores the difference between the Gross Salary actually paid and that including the arrears payments.

CF Empmnt tax (Prof Tax) wage type (/622)

This wage type stores the difference between the Professional Tax deducted for that year and the amount that would have been deducted if the arrears were paid in the year to which it pertains.

CF Section 88 Investment wage type (/6I2)

This wage type stores the difference between the Section 88 for that year and the amount that would have been contributed if the arrears were paid in the year to which it pertains. This difference in Section 88 contribution arises due to the difference in Provident Fund contribution.

Add Tax payable and surch wage type (/650)

This wage type stores the difference between the Tax and Surcharge deducted for that year and the amount that would have been deducted if the arrears were paid in the year to which it pertains.

In the DT, the year for which the wage type pertains to is also mentioned against the wage types. For example, in the current period April 2002, if there is a retrospective run from 2000 onwards, then in DT, /616 wage type will appear for the two years, 2000 and 2001, separately. Same is applicable for the other three wage types mentioned above.

The India Income Tax computations payroll function (INTAX) reads the DT for these wage types and generates the cluster table S89. Taking the above example, in April 2002, the India Income Tax computations payroll function (INTAX) will read the DT for the above four wage types for the two years, 2000 and 2001, and will generate the cluster table S89.

In case of a retroactive run across financial years, if the Results Table (RT) does not exist For Period 12 In Period 12 for an employee, the system will stop the processing of the payroll for the employee and will display an error message. There are some exceptions:

In case of a retroactive run across financial years for an employee who was terminated before Period 12 of the year for which the retrospective payroll run is being executed, the Results Table (RT) does not exist For Period 12 In Period 12. In this case, the values of the above four wage types in the DT will be incorrect. The Modify DT with the latest available results in the 'for year' for S89 operation (INDTL), however, corrects the values of these wage types in DT. This operation is called by the Personnel calculation rule IN91 (IN91) of the Retroactive accounting INDIA schema (INNR).

In case of a retroactive run across financial years for an employee who joined the organization in Period 12, and whose payroll was not run in Period 12, the Results Table (RT) does not exist For Period 12 In Period 12. In this case, you must set the value of the Cross fin Yr retro from March constant (CYFRM) of table view Payroll Constants (V_T511K) to 1. The default value of this constant is 0. You can do this in the IMG under Payroll India ( Tax ( Section 89(1) Relief ( Configure Cross Financial Year Retro for March.

Features

In case of Rebates and Statutory Deductions, the previous year's original amounts are taken into consideration while recalculating tax for that year. The extra amount is carried forward to the current period and treated accordingly. For example, while calculating tax for the previous year by including the arrears payments, the amount deducted as Professional Tax remains unchanged. The additional amount that should have been deducted if the arrears payments had been made in the previous year, is stored in the Professional Tax Difference wage type (/622). This amount is treated as part of the current year's Professional Tax amount for calculating current year's tax including arrears.

In case of Exemptions, the arrears payments made in the current year for the previous year is also taken into consideration while recalculating tax for that year. For example, while calculating tax for the previous year including the arrears payments, the House Rent Allowance (HRA) exemption is recalculated for the previous year.

You can choose, at the implementation level, to provide Section 89(1) Relief to your employees. In the Sec 89 Switch Implement. level constant (S89SW) of the table view Payroll Constants (V_T511K),

Set the Value field to 1, if you want to provide Section 89(1) Relief to your employees.

Set the Value field to 0 or leave the field blank, if you do not want to provide Section 89(1) Relief to your employees.

To do this, go to the IMG under Payroll India ( Tax ( Section 89(1) Relief ( Maintain Sec89(1) Switch at Implementation Level.

You can provide Section 89(1) relief to certain employees, even if you have chosen not to provide the relief to your employees at the implementation level. To do this, in the Other Statutory Deductions infotype (0588) 0004 subtype, select the indicator for Section 89(1) eligibility at employee level

Third Party Deductions

Purpose

This component provides for the calculation of Section 80 deduction and Section 88 rebate when payments to external parties are made directly from the payroll of the employee. For example, LIC Premium, Mediclaim. These deductions are in addition to the declarations that an employee makes for the Section 80 and Section 88 contributions through Section 80 Deductions infotype (0585) and Investment Details (Sec88) infotype (0586), respectively. You do not require to maintain the details in these two infotypes for the the Section 80 and Section 88 deductions processed through the payroll.

For Third Party Deductions, you can make an entry through Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014), Additional Payments infotype (0015) and Membership Fees infotype (0057).

If the Third Party Deductions are made through Membership Fees infotype (0057), along with the past and the present payments, the projected payments will also be considered while calculating tax. The amount the employee proposes to contribute in the future months of the financial year is also taken into consideration, by the system, while calculating the total Section 80 and Section 88 contributions.

If you make the Third Party Deductions through Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014) or Additional Payments infotype (0015), the system will only consider the past and present contributions while calculating tax and not the projected contributions.

Integration

The different types of deductions through Membership Fees infotype (0057) have to be maintained as subtypes of the infotype. To do this, go to the IMG under Payroll India ( Tax ( Third Party Deductions ( Define Membership/Deduction Types.

If you are making Third Party Deductions through the Membership Fees infotype (0057), you must maintain the wage type for this infotype through the IMG for under Payroll India ( Tax ( Third Party Deductions ( Check entry permissibility for Membership Fees Infotype (0057).

The Third Party Deductions payroll function (INTPD) reads the internal tables S80, S88, P0057 and the wagetypes in the internal table, and updates the internal tables S80 and S88.

Feature

If you are making Third Party Deductions and you want the system to calculate tax after taking Section 80/Section 88 contributions into consideration, you must configure the wage types for the different:

Divisions or the subsections through the IMG for Payroll India ( Tax ( Third Party Deductions ( Configure Wagetypes for Section 80.

Types of contributions through the IMG for Payroll India ( Tax ( Third Party Deductions ( Configure Wagetypes for Section 88.

See also:Membership fees infotype (0057)Income from Other Sources

Purpose

This component helps you to consider for taxation, the income that is incurred from sources other than that from your employment, in the current financial year.

The SAP System divides the income from other sources into:

Income from House Property

Income from Other Sources

Implementation Considerations

If an employee chooses to declare income from sources other than that from current employment, then that income also has to be taken into consideration for taxation during a regular payroll run.

Integration

The system reads the details from the Income from Other Sources infotype (0584).

The Income From Other Sources payroll function (P0584) reads the Income from Other Sources infotype (0584) and generates the internal table IOS. Deduction under Section-24 payroll function (INS24) and Details of Income from Other Sources payroll function (INIOS) read the Internal Table and the internal table IOS for the Income from House Property subtype (0001) and Income from Other Sources subtype (0002) data, respectively and generates the following wage types in the Internal Table:

/3O1 - Annual Lettable Value

This is the amount that you have entered as the Final Lettable Value in the Income from Other Sources infotype (0584) Income from House Property subtype (0001), for either Partly Let Out House Property or Wholly Let Out House Property.

/3O2 - Business Profits

This is the amount that you have entered as the Business Profits in the Income from Other Sources infotype (0584) Income from Other Sources subtype (0002).

/3O3 - Long Term Capital Gains (Normal Rate)

This is the amount that you have entered as the Long Term Capital Gains (Normal Rate) in the Income from Other Sources infotype (0584) Income from Other Sources subtype (0002).

/3O4 - Short Term Capital Gains

This is the amount that you have entered as the Short Term Capital Gainsin the Income from Other Sources infotype (0584) Income from Other Sources subtype (0002).

/3O5 - Income from Dividends

This is the amount that you have entered as the Income from Dividends in the Income from Other Sources infotype (0584) Income from Other Sources subtype (0002).

/3O6 - Income from Interests

This is the amount that you have entered as the Income from Interest in the Income from Other Sources infotype (0584) Income from Other Sources subtype (0002).

/3O7 - Other Income

This is the amount that you have entered as the Other Income (Unspecified) in the Income from Other Sources infotype (0584) Income from Other Sources subtype (0002).

/3O8 - Deductions u/s 23

/3O9 - Deduction u/s 24 (Interest)

This is the amount that you have entered as the Deduction of Interest under section 24 in the Income from Other Sources infotype (0584) Income from House Property subtype (0001).

/3OA - Deduction u/s 24 (House Repairs)

This is the amount that you have entered as the Deduction on Account of Repairs under section 24 in the Income from Other Sources infotype (0584) Income from House Property subtype (0001), for either Partly Let Out House Property or Wholly Let Out House Property.

/3OB - Deduction u/s 24 (Others)

This is the amount that you have entered as the Deduction on Account of Other Expenses under section 24 in the Income from Other Sources infotype (0584) Income from House Property subtype (0001), for either Partly Let Out House Property or Wholly Let Out House Property.

/3OD - Long Term Capital Gains (Special Rate)

This is the amount that you have entered as the Long Term Capital Gains (Special Rate) in the Income from Other Sources infotype (0584) Income from Other Sources subtype (0002).

/3OS - Short Gains on Listed Sec

This is the amount that you have entered as the Short Term Capital Gains (Listed Securities) in Additional Payments infotype (0015) for the wage type associated with the tax code STCG.

/3OG Gift Income

This is the amount that you have entered as the Gift Income in Additional Payments infotype (0015) for the wage type associated with the tax code SGFT.

The sum of amounts in these wage types is added to the Any other Income wage type (/131). The amount in this wage type is added to the amount in Income under Head Salaries wage type (/426) to form the Gross Total Income wage type (/430). Section 80 Deductions are made from Gross Total Income wage type (/430) to form the Gross Total Income wage type (/434). Before calculating tax on total income, the system deducts the amounts in Long Term Capital Gains Normal Rate wage type (/3O3), Long Term Capital Gains Special Rate wage type (/3OD), Short Gains on Listed Sec wage type (/3OS) and Other Income wage type (/3O7) from the Gross Total Income wage type (/434). The tax calculated on Long Term Capital Gains, Special and Normal Rate, Short Term Capital Gains on Listed Securities and Other Income are added to the normal tax to form the Tax on Total Income wage type (/436).

Features

The parameters for Income from Other Sources have been configured in the SAP System as follows:

...

1. In case of Let out House Property (Wholly or Partly), the Deduction on Account of Repairs under section 24 is limited to a percentage of the Final Lettable Value. This percentage may vary across financial years. In the Repairs under Section 24 constant (REP24), of the table view Payroll Constants (V_T511K), this percentage has been maintained.

2. In the table view Payroll Constants (V_T511P), the maximum amount of interest for which you can get tax exemption under section 24 has been maintained. This amount may vary depending on the financial year during which the loan was taken. Following constants have been maintained for the different interest exemption amounts:

...

a. LNS01 - Rs.30,000

b. LNS02 - Rs.75,000

c. LNS03 - Rs.100,000

d. LNS04 - Rs.150,000

e. LNSMX - There is no limit in this case. 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.

3. In the table view Payroll Constants (V_T511K), the rate of taxation for Long Term Capital Gains have been maintained in the following constants:

...

a. LCNRT - Long Term capital Gains (Normal Rate)

b. LCSRT - Long Term capital Gains (Special Rate)

4. In the ST Cap. Gain rate (Listed Sec) constant (SCGRT) of table view Payroll Constants (V_T511K), the rate of taxation for Short Term Capital Gains on Listed Securities has been maintained.

5. In the Other Income - rate constant (OTHRT) of the table view Payroll Constants (V_T511K), the rate of taxation for Other Income (Unspecified) has been maintained.

You can maintain whether a Loan Type is valid for Section 24 exemption. To do this, go to the IMG under Payroll India ( Company Loans ( Master Data ( Maintain Deduction Details Under Section 24.

For details on configuring the IMG activity, refer to the IMG documentation.

Tax on Arrears

Purpose

This component provides for the arrears generated during the retrospective regular payroll run, to be taxed in the payroll run in which the arrears are paid.

The arrears, arising due to salary increments, long term settlements or revision of loss of pay, are generally a high value figure. Spreading the tax on arrears over the remaining payroll periods of the financial year results in high tax incidence on the employee in the subsequent periods, with insufficient payments to match. In such a case, this functionality provides for the arrears generated during the retrospective payroll run to be taxed in the payroll run in which the arrears are paid.

Integration

During a retroactive payroll run, the arrears are stored in the Stat.net recalc.diff. wage type (/551). The Calculate Arrears for Taxation rule (INAR) reads, in the original period the Stat.net recalc.diff. wage type (/551) for each of the payroll periods and stores the total arrears in the temporary variable table. Determine TDS rate and Calculate Tax on Arrears rule (INTD) calculates the tax on arrears, stored in temporary variable table, at the rate brought forward by the Determine TDS % for arrears operation (INTDS) and stores this tax in the Income Tax wage type (/460).Features

If the total arrears generated in the regular run exceeds a particular amount, then the arrears is taxed by the Determine TDS rate and calculate Tax on Arrears rule (INTD). You must maintain this particular arrears amount in the Arrear amount limit constant (ARLMT) of table view Payroll Constants (V_T511P). You must maintain the Determine TDS rate and Calculate Tax on Arrears rule (INTD) for the parameter of the Determine TDS % for arrears operation (INTDS). You must configure the Determine TDS % for arrears operation (INTDS) to determine the tax rate, based on any of the following parameters:...

a. BON1 - Standard tax rate at company level configured in Arrear Payment - TDS % constant (ARTDS) of table view Payroll Constants (V_T511K). b. BON2 - Marginal tax rate (excluding surcharge) before arrears, of an employee. c. BON3 - Marginal tax rate (including surcharge) before arrears, of an employee. d. BON4 - Marginal tax rate (excluding surcharge) after arrears, of an employee. e. BON5 - Marginal tax rate (including surcharge) after arrears, of an employee. i. You can maintain the Arrear Payment - TDS % constant (ARTDS) and Arrear amount limit constant (ARLMT) in the IMG under Payroll India ( Tax ( Tax on Arrears ( Maintain Tax Limit and Tax Rate for Arrears Payment.

ii. You can maintain the Determine TDS % for arrears operation (INTDS) in the Determine TDS rate and Calculate Tax on Arrears rule (INTD) in the IMG under Payroll India ( Tax ( Tax on Arrears ( Maintain Schema for Tax on Arrears.

Employees, who have a low salary and have no tax liability, tax on arrears will not be calculated even when the parameter for the Determine TDS % for arrears operation (INTDS) is maintained as BON1.

Exemptions

Purpose

This component comprises of:

Exemption on Medical Reimbursements and Medical Insurance Premiums

Exemption on Leave Travel Allowance

Exemption on Child Education Allowance and Child Hostel Allowance

Exemption on Other Allowances and Reimbursements

Exemptions on Leave Encashment

Exemption on Voluntary Retirement Scheme

Exemptions on Housing

Exemptions on Conveyance

Exemption on Leave Travel Allowance (LTA)

Purpose

This component calculates the tax exemptions applicable to Leave Travel Allowance (LTA).

Your organisation can give LTA to the employees in the following ways:

...

By specifying an annual (normally, but not necessarily) amount for LTA and making payments against claims submitted by the employee.

By giving the employee a certain amount as LTA on a monthly or a periodic basis.

For more information on LTA reimbursements, see the Claims section.

Integration

Whenever an employee submits the travel tickets for LTA exemption as proof, you must create an Exemptions infotype (0582), LTA subtype record for the employee. You must create one record for every trip for which the employee is claiming an exemption.

You can make the payments for LTA through the Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014), Additional Payments infotype (0015) or Additional Off-Cycle Payments infotype (0267).

You must update the Previous Employment Tax Details infotype (0580) with the following LTA Exemption details:

The number of times the employee has claimed LTA Exemption in the current block of four years.

Whether the employee has carried forward a trip for LTA exemption from previous block of four years to the current block.

Payroll functions WPBP, P0014, P0015 and P0267 read the Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014), Additional Payments infotype (0015) and Additional Off-Cycle Payments infotype (0267), respectively for LTA and populates the Input Table with LTA wage types. The total amount of payments in the curent period is stored in the LTA reimbursement wage type (/3L1).

To read infotype 0582 payroll function (P0582) reads the Exemptions infotype (0582) and forms the Internal Table EXM.

To calculate LTA exemption amount payroll function (INLTA) reads the:

...

Input table and the CRT for the LTA wage types for the total LTA payments in the current financial year.

EXM for the total amount of the tickets submitted as proofs.

The lesser of the amounts in a and b above, is the total LTA Exemption for the financial year.

Features

...There is no LTA exemption amount limit stipulated by the government. An employee can get an exemption of the entire allowance amount.

An employee can claim the LTA exemption for only two trips in a block of four years. The Begin Date and End Date of this block is maintained in the constants, LTA Slab Begin Year (LTABG) and LTA Slab End Year (LTAEN) respectively, of the table view Payroll Constants (V_T511K).

An employee can claim the LTA Exemption for self and for the dependents.

The employee has to submit the tickets as proof to avail of the tax exemption. The details of the declaration are populated in the Exemptions infotype (0582), LTA subtype.

If the employee has not claimed the LTA Exemption for one or both the trips in the current block, LTA Exemption for one trip can be carried forward to the next block. But this Exemption has to be claimed in the first year of the next block, otherwise the LTA exemption that is carried forward lapses.

Exemption against LTA is the lesser of:

...

Total LTA payments made for the financial year through Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014), Additional Payments infotype (0015) or Additional Off-Cycle Payments infotype (0267).

Total amount of the travel tickets submitted as proof of travel and entered in the Exemptions infotype (0582), LTA subtype.

You must populate the Exemptions infotype (0582), LTA subtype with the details of the travel tickets submitted as proof to avail of the LTA exemption.

Example

...An employee is eligible for an LTA of Rs.24,000 annually for the financial year 2002 - 2003. In the current block 2002 - 2005, he/she has carried forward one trip from the previous block. The employee submits the travel tickets of Rs.26,000 for the journey undertaken between the January 2, 2002 - January 19, 2002. The employee gets an exemption of Rs.24,000, which is the minimum of the eligible LTA and the travel tickets submitted as proof. This exemption is against the carry forward trip from the previous block.

An employee is eligible for an LTA of Rs.36,000 annually for the financial year 2002 - 2003. In the current block 2002 - 2005, he/she has carried forward one trip from the previous block. The employee submits the travel tickets of Rs.20,000 for the journey undertaken between the January 2, 2002 - January 19, 2002. He/she also submits another set of travel tickets of Rs.15,000 for the journey undertaken between April 10, 2002 - April 28, 2002. The employee gets an exemption of Rs.35,000, which is the minimum of the eligible LTA and the total amount (Rs.20,000+Rs.15,000) of the travel tickets submitted as proof. This exemption is against the carry forward trip from the previous block and one trip of the current block.

See also:Defining Exemption on Leave Travel Allowance (LTA)Exemptions infotype (0582) LTA subtypeExemption on Medical Reimbursement

Purpose

This component calculat