ESOP Taxation

[Former Member]

Hello All,

I have just created the new wt 9ESP and 9EST for ESOP.

When i do the payrun the amount in 9EST does not get generated.

Also, the amount in 9ESP gets added in the annual gross only for the current month and then gets removed from there.

Hence the taxation for ESOP does not work correctly.

Please suggest ho to resolve this?

Regards,

Shruti

[former_member182083]

Hello Shruti,

Kindly check you have configured ESOP as per the Note 1396661

2. Employee's Stock Option Plan (ESOP's):

1. Create Wage type to store total ESOP's perquisite amount till date:

Create a customer specific wage type, say 9ESP, to store the total

ESOP contribution till date. Ensure that this Wage Type does not

affect any part of the payroll processing. One advisable way is to

copy Wage type '/401' to '9ESP'. Set the processing class and

cumulation class settings for this wage type as below:

Processing Class Value

4 0

5 0

10 0

20 1

30 1

31 0

70 1

Cumulation Class settings:

Cumulation Class Value

27 'X'

2. Create a Wage type to store the total Tax Deducted till date:

Create a customer specific wagetype, say 9EST, to store the total

Tax Amount deducted till date. This wage type should have the same

characteristics as the Wage type created in the previous step. The

only change that needs to be done is that the processing Class

settings for Processing Class 70 and cumulation class settings must

not be configured.

3. Create a payroll rule to cumulate the Wage Type created in the

previous step to Wage Type /456( Tax deducted so far):

Create a payroll rule, say ZESO, to cumulate wage type /456 into

the Input table (IT). Once it has been done, cumulate the Wage Type

9EST created in the previous step to /456 WT. Following is the rule

that can be used for reference:

Line Var.Key CL T Operation Operation Operation

+ + +

000010 D WGTYP?

000020 **** ADDWT *

000030 9EST ELIMI * ADDWT /456ADDWT *

4. This payroll rule should be executed in the payroll schema INN1

before the payroll function INTAX is executed. For example, above

sample rule ZESO can be inserted in the payroll sub-schema 'ZNN1'

(Copy of standard sub schema INN1) before the payroll function INTAX

as:

Line Func. Par1 Par2 Par3 Par4 D Text

000780 ACTIO IN90 Capture S 89 Relief outside SAP

000790 INBTD BON1 STDR * TDS payments in regular run

000800 PIT ZESO GEN NOAB ESOP TAx Calculation

000810 INTAX Income tax calculations

000820 ENDIF Endif OffCycle run

5. The Wage Types, 9ESP and 9EST, configured in the above steps, needs

to be maintained in the Additional Payments Infotype (IT0015) with

their respective amounts maintained.

Above steps will ensure that -

o The Wage Type '9ESP' holds the Total ESOP's perquisite Amount and

it stores the ESOP contribution amounts in the cluster tables (RT

and CRT) which will be cumulated to /127(Annual Perk) Wage Type.

o The Wage Type '9EST' holds the Total Tax Amount which will be

cumulated to the Wage Type /456 (Tax deducted so far) during the

payroll processing.

*****************************************************************************************************************

You need to enter the amount in WT 9EST in IT 15, it will not be generated automatically. Check the PRCL and Cummulation class settings of WT 9ESP. ESOP is not recurring payment, it should be given on in IT 15, So it has to be entered every time.

With Regards,

S.Karthik

S.Karthik

[Former Member]

Hi Karthik,

I have made the configurations as per the note.

Also, if i enter the tax amount in 9EST it is getting cumulated in /456(tax deducted so far) hence this tax is actually not being deducted from the employee's salary in any month.

also, in the subsequent months, the amount is not visible in the /127 (Annual Perk) or Annual Gross Salary.

These are the problems i am facing.

Regards,

Shruti