on 03-02-2015 12:08 PM
Dear Experts @ SCN,
Am a time consultant but recently have started working on payroll too. I work for Indian payroll.
The purpose of posting this thread is to know the income tax/TDS configuration and understanding it in SAP.
Therefore, I request you all to provide me the details on knowing the configuration of income tax/TDS in Indian payroll.
accepting some good replies to this thread.
Cheers!!!
Tahir
My first advice would be to check in Google , next search in the forum you will find lot of threads
iif they are not useful to you i will provide you the information on the same
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Go through below information.
Annual taxable income consists of:
This is part of salary employee receives every month at current place of employment and is projected for either till the end of the current financial year or till the date of cessation of employment, whichever is earlier. For example, Basic Pay, Conveyance Allowance.
This is part of salary employee receives for a particular period and it is not projected for the entire year. For example, Bonus, Leave Travel Allowance.
This is value of the perquisites given to an employee. For example, the perk value associated with the car given to the employee by the employer.
Different tax rates are specified by the Government for this income. For Example, Business Profits, Lottery.
Tax is computed for every month of the year.
Tax rates are applicable on annual taxable income.
&procedure&
This payroll function processes tax on the income earned by the employee.
Total Income wage type (/434) is rounded off to the nearest multiple of Rs.10.
Total Income wage type (/434) comprises of the following components, which are taxed at different tax rates:
Note: In case the annual income of an employee falls in the non-taxable income slab, and the employee has any of the above capital gains income, the taxable amount of the capital gains is reduced by the amount of non-taxable income slab upper limit. Normal income and remaining amount of the capital gains is taxed. If there is more than one capital gains income, then the one with the highest tax rate is given priority for this benefit.
Tax payable and surcharge wage type (/450) is rounded off to the nearest rupee.
Rounding off monthly tax amounts rule (INTR) does the rounding off of the Income Tax wage type (/460) to the nearest rupee in all payroll periods, except for the last payroll period.
This payroll function calculates the monthly values for the following components:
<DS:RE.HINCF240>Print Program for Form 24 report (HINCF240) reads these monthly values and reports them on Form 24Q e-file.
The monthly values are calculated as follows:
a) Edu Cess Ded Till Date wage type (/4TE) = Prev Employment Edu Cess wage type (/4PE) + value of Monthly Education Cess wage type (/4ME) deducted till date.
b) Monthly Education Cess wage type (/4ME) = (Education Cess wage type (/449) - Edu Cess Ded Till Date wage type (/4TE) - Tax payable part of Section 89 relief wage type (/451)) / Projection Factor.
o Monthly Higher Edu Cess wage type (/4MH)
The value of this wage type is derived from the Monthly Education Cess wage type(/4ME). This wage type is derived only if the Secondary and Higher Education Cess wage type (/447) exists.
o Monthly Surcharge wage type (/4MS)
a) Surcharge Ded Till Date wage type (/4TS) = Prev Employment Surcharge wage type (/4PS) + value of Monthly Surcharge wage type (/4MS) deducted till date.
b) Monthly Surcharge wage type (/4MS) = (Surcharge Payable wage type (/448) - Surcharge Ded Till Date wage type (/4TS) - Tax payable part of Section 89 relief wage type (/451)) / Projection Factor.
o Monthly Taxable Income wage type (/4MI)
The system provides the closest approximation to the monthly gross income. This value is calculated as follows:
Assuming that the Gross Total Income (GTI) is represented as:
- Gross Total Income wage type (/434) for April = G1 * 12
- Gross Total Income wage type (/434) for May = G1 + G2 * 11
- Gross Total Income wage type (/434) for June = G1 + G2 + G3 * 10,
where, Gn is the Monthly Gross Income for the nth period.
Now, to calculate the value of G1 (Monthly Gross Total Income for April), the system divides the Annual Gross Total Income by the projection factor. Once G1 is available, the system can calculate further values using the following formula:
- G2 = ((G1 * Projection factor of previous period) + (GTI of current period - carried forward amount in the In Period due to retroactive run) - GTI of previous period) / Projection factor of current period.
Here, before computation, the GTI for current period and previous periods are reduced by the irregular incomes earned during that period because the irregular income is a one time payment. Also, as in the equation, the carried forward amount in the current period is not considered for the computation. This amount is also a one time payment and is added separately to the computed value.
- Monthly Taxable Income wage type (/4MI) = G2 (as computed above) + Mon Irr Income wage type (/125) + Carried forward amount (BF Basic Arrears wage type (/ZBS) + irregular income carried forward, if any)
Information got it from the system Go to PE04 and check the details.
Regards
Venkatesh
Hello Venkatesh,
This is really good,,, thank you so very much.
Now I have run payroll for a employee (below is his salary slip), My client says that the TDS deduction should be 1033/- but in SAP its been reflecting as 1446/- How can I know whats going wrong here.?
I can share my payroll log if u want me to share that too.
Please help me knowing this.
Regards
Tahir
As far i understand tax is getting calculated on 172710 i.e 372710-200000 = 172710*0.1 = 17271 since it is getting calculated as 1446 where in normal case tax slab should 2,50,000 go to table V_T7INT1 check slab codes with the validity period 01.01.2014-31.12.9999 it should be SL31,SL32,SL33 and SL34 and check the slab rates for the same in table V_T7INT3 2,50,000 nil for men and women.
Regards
Venkatesh
Hello Venkatesh,
As u had asked, I checked both the tables and I could not find either of SL31,SL32,SL33 and SL34 maintained in both the tables. After SL30, its SR01. Below are the screen shots captured for the respective tables for your perusal.
Requesting you to guide me maintaining these in the said tables plz.
Screen shot for V_T7INT1
Screen shot for V_T7INT3
regards
Tahir.
So nice of u Venkatesh,
I did the way u had asked me to. Maintained both the tables. U can find the screen captures below for both the tables. But the result is same. The amount reflecting against IncomeTax is still 1446/-.
Do u want me to look some where else as well??
Screen shot for V_T7INT1
Screen shot for V_T7INT3
Screen shot of PaySlip (the payroll is run for Aug' 14)
Plz Help me Venkatesh
regards
Tahir
Hello Venkatesh,
I followed the note 2041819 and did the configurations as were reflected in the same note (As u had suggested me to).. But I guess, the results are still not correct,, Now the Income Tax is coming too less.. Can u plz suggest me what else is to be checked? .. Below is the screen capture for your reference post applying the note 2041819.
regards
Tahir
Cheers Venkatesh, I was bothered about the calculations, If u have checked and said that the calculations are correct then I ll have a demo on this before the client and if client agrees then will mark ur reply as CORRECT ANSWER and shall close the thread,
Thank you so much, you are really quick in responding..
regards
Tahir
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