Gratuity Calculation

[former_member712107]

Hi Gurus,

We want to calculate gratuity payment in sap and provide tax exemption for the employees who are separated with the following conditions:

1) After completion of 5 years of service, employees are eligible for gratuity payment. Part year service in excess of 6 months is also to be considered as additional year of service.

2) 15 days of Basic & Dearness Allowance into number of years of service rendered divided by 26 will be the gratuity amount with maximum ceiling of Rs.10 Lakhs. This amount will be exempt from income tax of maximum Rs.10 Lakhs.

3) We want to have the option to hold this payment for specific cases (say for example, employee did not fill the format required or Mgt want to have some discretion etc.)

Please provide the configuration/steps for fulfilling the above requirement.

Thanking you.

Regards,

Raj.

[BalaAP · Accepted solution]

Hi,

Gratuity Contribution:-

1) Cumulation class 16 to be ticked for wage types by which the "Gratuity Basis WT /116" will be calculated.

2) Maintain IT-185 Subtype 03 with approporiate values.

IMG Steps:

1) Payroll India-> Retirement Benefits-> Gratuity-> Maintain Gratuity Trust ID (Table V_T7ING3)

2)Payroll India-> Retirement Benefits-> Gratuity-> Maintain Gratuity Contrib.Freq. and Related Wage Types (Table V_T7ING5)

3)Payroll India-> Retirement Benefits-> Gratuity->Define Contribution Rates for Gratuity->V_T7ING1

4)Payroll India-> Retirement Benefits-> Gratuity-Maintain the Eligibility Years for Gratuity (Constant GRTYR)

5)Payroll India-> Retirement Benefits-> Gratuity- Check for Gratuity Contribution (PCR INGR) 6)Payroll India-> Retirement Benefits-> Gratuity-> Maintain Wage types to be Passed During Retro Runs (PCR IN51)

Maintain the following constants:

GRYCO 48.08

GRYTX 5

Calculation Part:

1) Years of service is calculated by termination workbench based on the employment start/end dates. You can also overwrite this value if required.

2) Factor 15/26 is derived by GRYCO*12/1000 = .57696

Tax Exemption:

1) Maintain cessation payment in V_T7INA9 and maintain tax code against SAGA in V_T7INT9 (if payment is as per Gratuity Act).

2) Maintain cessation payment in V_T7INA9 and maintain tax code against SNGA in V_T7INT9 (if payment is not as per Gratuity Act). You can also refer to SAP documentation/SCN threads for more details.

Regards,

Bala.

[Former Member]

Hi Raj,

For Gratuity Configuratin Please maintain the below table.

Gratuity ID: T7ING3

Gratuity Contribution frequency:T7ING5

Gratuity Contributin Rate: T7ING1

Gratuity Exemption:

Least of the three

Gratuity Received

Tax exemptin limit

Number of month of salary for every completed year of service.

Please maintain the gratuity Wage type in table T7INT9 with Tax code SAGA.

Hope this will help you.

Thanks & regards

Saroj Hial

[former_member712107]

Hi Gurus,

Thanks for all of your help and support. I am configuring in DEV and testing this in QAS.

If there are any issues, i will come back to you.

regards,

Raj

[venkateshorusu]

As far i know, We can accomplish above requirement with standard configuration go through Gratuity configuration part under India Payroll - Retirement benefits.

As usual, for Tax exemption assign a Tax code to Gratuity wage type and go through documentation INGRY to know that, in what cases exemption will be given.

Regards

Venkatesh

[venkat_polisetty]

Hi Raj,

As per my knowledge, termination workbench will calculate the Gratuity amount and same can be updated in IT0015 aong with the years of service based on that system will give the exemption.

As per your query, in some exceptional cases you want to stop his/her gratuity payments? If yes, dont update the Gratuity amount through termination work bench whenever you want to give then only you will update.

Kindly let me know If in case you need any further clarifications.

Regards,

Venkat Polisetty.