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 Evaluation
Basic Increments
Dearness Allowance
Housing
Car and Conveyance
Long Term Reimbursements
Claims
Bonus
Income Tax

Section 80
Section 89(1)
Third Party Deductions
Income from Other Sources
Tax on Arrears
11 Exemptions
11 Exemption on Leave Travel Allowance
11 Exemption on Medical Reimbursements
11 Exemption on Medical Insurance
11 Exemption on Child Education Allowance
11 Exemption on Child Hostel Allowance

11 Exemption on Other Allowances and Reimbursements

11 Exemption on Leave Encashment
11 Exemption on Voluntary Retirement Scheme
11 Previous Employment Tax Details
Professional Tax
Provident Fund
Employee State Insurance
Labour Welfare Fund
Nominations
Minimum Net Pay
Recovery of Rounding off Amounts
Loans Enhancement
One Day Salary Deduction
Mid Year Go Live
Termination Work Bench
Gratuity
Superannuation
Form 24
Form 16
Form 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

Purpose
Indirect 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.1000
In 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.5000
In 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 limit
In 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.7000
In 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:
1.
i. 100% of MB10
2.
ii. Multiplication factor of 0%
3.
iii. Fixed amount of Rs.5000
In 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.

Integration
In case of SAP GUI
Defaulting 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).

Features
The 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 allowance

In 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 date

Constraints
Indirect 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 Definition
Pay Scale Grouping for Allowances

Basic - 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.

7.

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.
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 Tax
Gratuity
Professional 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:

11
11
11
11
11
11

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 Tax

During 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.
11 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.
11 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.
11 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 Accommodation
Company Leased (Old)

Perkable Hotel Accommodation

You 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
tables listed above.

not change the default configurations of the

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 HRINHRA0

With 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.

11 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 Perquisites

Car and Conveyance

Purpose
This component enables you to process the:
Exemption on Conveyance Allowance
Perquisite 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).
11 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).
11 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.

11 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
till financial year 2004 2005.

driver(s) provided by the company is valid only

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

11 The number of cars

11 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.
11 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

11 Reimbursements made to the employee through Additional Payments

infotype (0015) or through Recur. Payments/Deds. infotype (0014).
11 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,

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

11 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)
11 Perk value of driverconstant (DRVP1)
Valid for the payroll period from October 1, 2001 onwards.
11 Perk value of driver (old) constant (DRVPK)
Valid for payroll period until September 30, 2001.
See also:
Exemption and Perk Calculation for Car and Conveyance
Car & 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 Scheme
This 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 Reimbursements
This is a benefit provided to employees for the purpose of acquiring consumer capital items
like carpets and curtains.
Car Maintenance Scheme
This is a benefit provided to employees for the purpose of maintenance of their car over a
period of time.

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 Allowances
Indirect 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:
1. 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 (nonmonetary).
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.

2. 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.

3. 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:

11 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.

11 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.

1. Income from Other Sources

Any 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:
1. The slab codes are defined in the table view Slab Codes for Taxation (V_T7INT1) for
a financial year/years.
2. 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

Allowance
CHA Annual Exemption wage type (/4E2) - Exemption on Child Hostel
Allowance
Conveyance Annual Exempt wage type (/4E3) - Conveyance Exemption

HRA Annual Exemption wage type (/4E4) - Exemption on House Rent

Allowance
LTA Annual Exemption wage type (/4E5) - Exemption on Leave Travel
Allowance
Prev exemp u/s10 wage type (/4V2) - Previous Employment Exemptions
Voluntary Ret. Exemption wage type (/4E6) - Exemption on Voluntary
Retirement
Leave Salary Exemption wage type (/4E7) - Leave Exemption Allowance
Gratuity 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

11 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
paid wage type (/4V3).

type (/422) includes the value of Prev prof. tax

11 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.
Example

Education 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:

11 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:
1. Tax payable
The tax payable value is added to the value of Monthly Tax Payable wage type
(/4MT).
1. Education cess
The education cess value is added to the value of Monthly Education Cess
wage type (/4ME).
1. Surcharge
The 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:
1. Tax payable
The tax payable value replaces the value of Monthly Tax Payable wage type
(/4MT).
1. Education cess
The education cess value replaces the value of Monthly Education Cess wage
type (/4ME).
1. Surcharge
The 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). HRIN: 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:
1. Voluntary Tax Payable wage type (/4LT)
1. Voluntary Education Cess wage type (/4LE)
1. Voluntary Surcharge wage type (/4LS)
Tax on Arrears
Tax on Bonus

The system allows you to generate the following tax reports:

Form 16
Form 24

See also:
Previous Employment Tax Details

Section 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 80CCC
Section 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 Deductions

Section 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:
11 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).
11 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 OffCycle 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 OffCycle 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 subtype
Exemption on Medical Reimbursement
Purpose
This component calculates the tax exemptions against Medical Reimbursements.
You can give Medical Reimbursements to your employees in the following ways:

...
By specifying an annual (normally, but not necessarily) amount for Medical Reimbursement
and making payments against claims submitted by the employee.
By giving the employee a certain amount as medical allowance on a monthly or a periodic
basis.
For further information on
section.

Medical Reimbursements, see the

Claims

Integration
Whenever an employee submits the bills for medical exemption as proof, you must create an
Exemptions infotype (0582), MDA subtype record for the employee. You can create a record for
each bill submitted by the employee or you can create a record by cumulating all the bills,
submitted as proof for medical exemption.
You can make the payments for Medical Reimbursement through the Basic Pay infotype (0008),
Recur. Payments/Deds. infotype (0014), Additional Payments infotype (0015) or Additional OffCycle Payments infotype (0267).
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 Medical Reimbursements and populates the Input
Table with Medical Reimbursement and Medical Reimbursement to be treated as Medical
Insurance wage types. The system stores the Medical Exemption that is brought forward from the
previous employer in the Input Table against the Previous Employment Medical Exemption wage
type (/4V6). Medical reimbursement payroll function (INMED) reads the Exemptions infotype
(0582), MDA subtype record, the Input Table and the Cumulative Results Table, and generates
the Medical Reimbursement Exemption wage type (/3M1).

Features
...
Medical Reimbursement is tax exempt up to a maximum limit as per the Income Tax Act. To
configure this maximum limit go to the IMG under Payroll India Tax tax Liability on
reimbursements, Allowances and Perks Assign Tax Code limits to Wage types.
The employee has to submit the medical bills as proofs to avail of the tax exemption. The
details of the declaration are populated in the Exemptions infotype (0582), MDA subtype.
Exemption against Medical Reimbursement is the minimum of:

...
Total Medical Reimbursement 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 medical bills submitted as proofs and entered in the Exemptions
infotype (0582), MDA subtype.
Maximum limit of the exemption against Medical Reimbursements as configured in
point 1, above.
You must populate the
Exemptions infotype (0582), MDA subtype
with the details of the medical bills submitted as proofs to avail of the medical
exemption on Medical Reimbursements.
You have been provided with an option, whereby, you can ignore the entries in the
Exemptions infotype (0582), MDA subtype, by sending a parameter, X, to the
Medical reimbursement payroll function (INMED). In such a case, exemption on
Medical Reimbursement is the lesser of a and c, above.
An employee may be allowed to claim Medical Insurance premium against the Medical
Reimbursement limit set by the employer. Hence, for the purpose of claim, this Medical
Insurance premium amount is treated as Medical Reimbursement. But for the purpose of
taxation, this amount is treated as Medical Insurance premium. To give this benefit to an
employee, you must:

...
Select the indicator for Medical Insurance Exemption in the Exemptions infotype
(0582), MDA subtype record in which you enter the details of this proof.
Enter the constant 1, as the Assignment Number in the Additional Payments infotype
(0015) record through which you make the payment for this claim.

Example
The tax exemption limit for Medical Reimbursement is Rs.15,000. An employee is eligible to a
medical allowance of Rs.20,000 and he or she submits proofs of Rs.10,000 for the financial year.
In this case, the employee gets a tax exemption of Rs.10,000, which is the minimum of the above
three amounts.

See also:
Medical Reimbursement Definition

Medical Exemption
Incremental Medical Perk
Medical Insurance
Exemptions infotype (0582) MDA subtype
Exemption on Medical Insurance Premium
Purpose
This component calculates the tax exemptions against Medical Insurance premiums.
You can provide Medical Insurance to your employees in the following ways:

...
By specifying an annual amount for Medical Insurance and making payments against claims
submitted by the employee.
By giving the employees a certain amount as Medical Insurance allowance on a monthly or a
periodic basis.

Integration
Whenever an employee submits a bill for medical premium as proof, you must create an
Exemptions infotype (0582), MDA subtype record for the employee.
You can disburse the payments for Medical Insurance through the Basic Pay infotype (0008),
Recur. Payments/Deds. infotype (0014), Additional Payments infotype (0015) or Additional OffCycle Payments infotype (0267).
The To read infotype 0582 payroll function (P0582) reads the Exemptions infotype (0582), MDA
subtype record and populates the details in internal table EXM. Payroll functions WPBP, P0014
and P0015 read the Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014) and
Additional Payments infotype (0015), respectively and populates the internal table. Medical
reimbursement payroll function (INMED) reads EXM and the internal table and generates the
Medical Insurance wage type (/3M2).
Payroll functions WPBP, P0014 and P0015 read the Basic Pay infotype (0008), Recur.
Payments/Deds. infotype (0014) and Additional Payments infotype (0015), respectively for
Medical Insurance premium payments and populates the Input Table with Medical Insurance and
Medical Reimbursement to be treated as Medical Insurance wage types. Medical reimbursement
payroll function (INMED) reads the Exemptions infotype (0582), MDA subtype record, the Input
Table and the Cumulative Results Table, and generates the Medical Insurance Exemption wage
type (/3M2).

Features
...
Reimbursement of premiums, paid by the employee, for the Medical Insurance policy on
the health of the employee or his or her family members is tax exempt.
The employee must submit the Medical Insurance premium bills as proof to avail of the tax
exemption. You must enter the bill date, exemption amount and select the dependents for
whom the bills are submitted, in the Exemptions infotype (0582), MDA subtype. You must
select the indicator for Medical Insurance Exemption in this infotype record.
Exemption against Medical Insurance is the lower of:

...
Total Medical Insurance 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 Medical Insurance premium bills submitted as proof and entered
in the Exemptions infotype (0582), MDA subtype.
The reimbursement of Medical Insurance premium does not form part of the Gross Taxable
Income of the employee. If the employee has claimed, as Medical Insurance premium, an
amount that is greater than the bills submitted as proof, the excess amount is added to the
Gross Taxable Income.
You have been provided with an
option, whereby, you can ignore the entries in
the Exemptions infotype (0582), MDA subtype, by sending a parameter, X, to the
Medical reimbursement payroll function (INMED). In such a case, exemption on
Medical Insurance is the total Medical Insurance payments made for the financial
year.
An employee may be allowed to claim Medical Insurance premium against the Medical
Reimbursement limit set by the employer. But for the purpose of taxation, this amount is
treated as Medical Insurance premium. To give this benefit to an employee, you must

...
Select the indicator for Medical Insurance Exemption in the Exemptions infotype
(0582), MDA subtype record in which you enter the details of this bill.
Enter the constant, 1, as the Assignment Number in the Additional Payments infotype
(0015) record, through which you make the payment for this claim.

Example
An employee is eligible to a Medical Insurance allowance of Rs.20,000 and he or she submits
Medical Insurance premium bills as proof of Rs.16,000 for the financial year. In this case,
Rs.4,000 is added to the Gross Taxable Income of the employee.

See also:
Medical Insurance Definition
Medical Exemption
Medical Reimbursement
Exemptions infotype (0582) MDA subtype
Claims

Exemption on Child Education

Allowance/Child Hostel Allowance

Purpose
This component calculates the tax exemption on Child Education Allowance (CEA) and
Child Hostel Allowance (CHA).
Integration
The Children Education Allowance exemption payroll function (INCEA) can generate the
following wage types depending on the parameter setting:
/4CE Monthly exemption on education of children
/4CH Monthly exemption on hostel accommodation of children
/4E1 Annual exemption on education of children
/4E2 Annual exemption on hostel accommodation of children
Parameter Setting

Description

Wage Types Generated

EAA

Consider Exemptions infotype

(0582), subtypes SCEA and
SCHA entries on an annual
basis and treat the
components as an allowance,
that is, the components are
projected for the financial year
to arrive at the annual
exemption.

/4E1, /4E2

EAR

Consider Exemptions infotype

(0582), subtypes SCEA and
SCHA entries on an annual
basis and treat the
components as a
reimbursement, that is, only
year-to-date values are
considered to arrive at the
annual exemption.

/4E1, /4E2

EMA

Consider Exemptions infotype

(0582), subtypes SCEA and
SCHA entries on a monthly
basis and treat the
components as an allowance,
that is, the components are
projected for the financial year
to arrive at the annual
exemption.

/4CE, /4CH, /4E1, /4E2

EMR

Consider Exemptions infotype

(0582), subtypes CEA and
CHA entries on a monthly
basis and treat the
components as a
reimbursement, that is, only
year-to-date values are
considered to arrive at the
annual exemption.

/4CE, /4CH, /4E1, /4E2

XOA

Ignore Exemptions infotype

(0582), subtypes SCEA and
SCHA entries and treat the
components as an allowance,
that is, the components are
projected for the financial year
to arrive at the annual
exemption.

/4E1, /4E2

XOR

Ignore Exemptions infotype

(0582), subtypes SCEA and
SCHA entries and treat the
components as a
reimbursement, that is, only
year-to-date values are
considered to arrive at the

/4E1, /4E2

annual exemption.
' '

Default parameter

/4CE, /4CH, /4E1, /4E2

Ignore Exemptions infotype

(0582), subtypes SCEA and
SCHA entries and treat the
components as an allowance,
that is, the components are
projected for the financial year
to arrive at the annual
exemption.

Features
...
The number of children eligible for the tax exemption on CEA and CHA is the lesser of:

...
Number of children entered and declared as eligible for the allowance component in
Family/Related Person infotype (0021) subtype 2.
Maximum number of children, for whom the exemption can be availed on the
allowance component, as per the Income Tax Act. This number is stored in the No
children exmpt for CEA/CHA constant (NOCHL) of table view Payroll Constants
(V_T511K).
A fixed amount of CEA and CHA are tax exempt for a child per month, as per the Income
Tax Act. To configure this maximum limit, go to the IMG under Payroll India Tax Tax
Liability on Reimbursements, Allowances and Perks Assign Tax Code Limits to
Wagetypes.
The employee has to submit the expenditure as proof to avail of the tax exemption. The
details of the declaration are populated in the Exemptions infotype (0582), CEA and CHA
subtypes.
Exemption against CEA and CHA is the minimum of:

...
Total CEA and CHA payments made for the month or the financial year through Basic
Pay infotype (0008), Recur. Payments/Deds. infotype (0014), Additional Payments
infotype (0015) orOne-Time Payments Off-Cycle infotype (0267).
Total expenditure submitted as proofs and entered in the Exemptions infotype (0582),
SCEA and SCHA subtypes.
Number of children eligible for the exemption multiplied by the amount per child fixed
by the government for each of the two components, respectively. In this case, the
exemption amount will be the number in point 1 multplied by the amount in point 2,
above.
You have been provided with an
option, whereby, you can ignore the entries in
the Exemptions infotype (0582), SCEA and SCHA subtypes, by sending a
parameter to the Children Education Allowance exemption payroll function (INCEA).
In such a case, exemption on Child Education and Child Hostel Allowances is the
lesser of a and c, above.
The CEA Annual Exemption wage type (/4E1) and CHA Annual Exemption wage type
(/4E2) are calculated by projecting the CEA Monthly Exemption wage type (/4CE) and CHA
Monthly Exemption wage type (/4CH) respectively.

 The annual projection of Child Education and Child Hostel Allowances is limited to the
earlier of:

End of the financial year

End Date of the Family/Related Person infotype (0021) subtype 2 record.
See also:
Defining Exemptions on Child Education/Child Hostel Allowances
Exemptions infotype (0582) SCEA/SCHA subtypes

Exemption on Other Allowances and

Reimbursements

Purpose
This component is used to calculate tax exemption on any allowance or reimbursement that your
company may want to give to the employees.
You must use this component only:
For those tax exemptions that have not been provided as a standard by the system. For
example, Exemptions on Leave Travel Allowance, Medical Reimbursement, Medical
Insurance, Child Education Allowance, Child Hostel Allowance.
When the tax exemption is not a fixed amount and varies from one employee to the other
depending on the proof of expenditure provided by the employee.

Integration
The General Payroll function for Allowance/Reimbursement Treatment payroll function (INCTX)
calculates the tax exemption on any allowance or reimbursement that you may want to give
to your employees.
The system reads the Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014)
or Additional Payments infotype (0015) for the payments made for the allowance or
reimbursement.
The system reads the exemption amount from the subtype of Exemptions infotype (0582),
created by you through table view Subtype Characteristics (V_T591A).

Features
...
When the employee submits the proof of expenditure, you must enter the amount in the
subtype created by you for Exemptions infotype (0582).
Exemption on the allowance or the reimbursement is the minimum of:

...
Allowance or reimbursement made through the Basic Pay infotype (0008), Recur.
Payments/Deds. infotype (0014) or Additional Payments infotype (0015).
Total amount of exemption entered in the subtype created by you for Exemptions
infotype (0582).
Maximum limit of exemption maintained in table view Taxability of Wage Types
(V_T7INT9).

See also:
Exemption on Other Allowances and Reimbursements Configuration

Leave Encashment
Purpose
This component computes exemptions on the Leave Encashment received by an
employee at the time of separation from employment.
The system computes exemption on Leave Encashment as the minimum of:
1.
2.
3.
4.

Leave Encashment Amount

Exemption limit
Product of the Average Monthly Salary and the Multiplication factor
Product of Average Monthly Salary and Number of months of leave encashed

For more information, see Exemptions on Leave Encashment

Integration

Termination Workbench This functionality computes the Leave Encashment amount for
the employee.

Income Tax The exemption on Leave Encashment is reported by the Income Tax
functionality under Section 10 Exemptions.

Previous Employment Tax Details Infotype (0580) If an employee has claimed an

exemption on Leave Encashment in a previous employment, you can capture the
exemption amount in this infotype. The system will deduct this claimed amount from the
maximum exemption limit, and then compute the current exemption.

Exemption on Voluntary Retirement

Scheme

Purpose
This process describes the computation of the exemptions, on the amount received by an
employee under a Voluntary Retirement Scheme (VRS).
Process Flow
Voluntary Retirement Service Taxationpayroll function (INVRS) computes exemptions on
the VRS at the time of termination. It computes the exemption on VRS as a minimum of
the following factors:
...
1. VRS payments received
2. Tax limit
3. Number of months of salary payable for every completed year of service
4. Product of the Number of months of Salary from VRS date to Normal Retirement Date
and the Current nominal basis

VRS payments received

Gratuity contribution taxationpayroll function (INGTX) checks the internal table IT for
the VRS wage type and obtains the amount received as VRS Payment.
The Termination Workbench computes the amount payable as VRS and stores the wage
type for VRS in the Additional Payments infotype (0015).
You can also directly enter the VRS amount in the Additional Payments infotype (0015).
...
1. During payroll processing in the termination period, the Processing request for
additional payments payroll function (P0015) reads the Additional Payments infotype
(0015) and stores the wage type for VRS in the internal table.
2. Before checking the internal table for the VRS wage type and amount, the Voluntary
Retirement Service Taxation payroll function (INVRS) checks the table view Taxability of
wage types (V_T7INT9) for the VRS tax code, SVRS and the wage type that is associated
with this tax code. Voluntary Retirement wage type (MVR0) is the model wage type that is
associated with tax code SVRS.
After identifying the VRS wage type, associated with the tax code SVRS, the Voluntary
Retirement Service Taxation payroll function (INVRS) looks for this VRS wage type in the
internal table and obtains the VRS payment amount.

To identify the tax

code for VRS and the VRS wage types
associated with the tax code, the Voluntary Retirement Service Taxation
payroll function (INVRS) checks the table view Taxability of wage types
(V_T7INT9). It also determines the eligibility for VRS through Pay Scale
Grouping for Allowances from the table view Reimbursement Allowances
Perks - eligibility and calculation (V_T7INA9).
Ensure that you have configured the eligibility wage type (MVR0) as
Cessation Payment in the table view Reimbursement Allowances Perks eligibility and calculation (V_T7INA9). Cessation Payment is an option
under the Reimbursement/ allowance/perk indicator.

Tax limit
...
1. Voluntary Retirement Service Taxation payroll function (INVRS) checks for the
maximum amount of VRS that can be exempt from tax. The maximum limit is as specified
by the authorities. You can view the maximum limit for the tax code SVRS using the table
view Taxability of wage types (V_T7INT9).
2. If the employee received an exemption on the VRS amount from a previous
employment, Voluntary Retirement Service Taxation payroll function (INVRS) will not
process an exemption on VRS in the current employment.
You can maintain the VRS
exemption, claimed in a previous employment
using the Previous Employment Tax Details infotype (0580). The VRS Exemption
wage type (/4V9) stores the exemption amount previously claimed.

Number of months of salary for every completed year of service

The number of months of salary for every completed year of service is computed as the
product of 1, 2 and 3:
...
1. No. of years of continuous service
The Termination Workbench calculates the number of years of service based on the
employment Start Date and End Date. In the Termination Workbench, you have the option
of overwriting the value computed by the Termination Workbench.
You can also make the payment on VRS through the Additional Payments infotype (0015).
2. Multiplication Factor for VRS
The Multiplication factor is a predefined number of months of salary, taken for each year of
service. The Month Factor Pre VRS Service constant (MFPVR) of table view Payroll
Constants (V_T511K) stores the Multiplication factor for VRS and as of year 2001-2002,
the value of the factor is three.
3. Latest Nominal basis
The system takes the Basic and Dearness Allowance components of an employee's salary
as the VRS basis. The Voluntary Retirement Bas. wage type (/129) stores this computed
VRS basis amount. The Nominal Cumulations rule (IN72) checks the Basic and Dearness
Allowance wage types for the Processing Class 72 and cumulates them into the Voluntary
Retirement Bas. wage type (/129).
The Voluntary Retirement Service Taxation payroll function (INVRS) takes the last nominal
basis as the current nominal basis and for obtaining the same, it makes use of the Last
nominal basis rule (INLN).

Product of the Number of months of Salary from VRS date to Normal Retirement Date
and the current nominal basis
The system computes the remaining period of service by taking the difference between
the:

Date of actual termination

Date on which the employee would have normally retired, if the employee had
not opted for the VRS
Voluntary Retirement Service Taxation payroll function (INVRS) computes the value by
dividing the remaining number of days by 30.5 and then rounding off the value to the
nearest lower integer.
You can create and maintain the date of normal retirement in the Date Specifications
infotype (0041). Ensure that you select the Date Type as N0.

After selecting the minimum of the four exemption factors, the Voluntary Retirement
Service Taxation payroll function (INVRS) generates the Voluntary Ret. Exemption wage
type (/4E6), in which it stores the exemption on VRS.
Voluntary Retirement Service
Taxation payroll function (INVRS) computes
exemption on VRS only when at least one of the following conditions applies:

 The employee has completed 10 years of service in the company.

The Min Age for VRS exemption constant (VRSYR) of table view
Payroll Constant (V_T511K) stores the value for the number of years
in service.
The employee has reached the age of 40.
The Determine VRS Eligibility rule (INVR) performs the check for these two
conditions, and processes the Voluntary Retirement Service Taxation payroll
function (INVRS) only when the employee meets at least one of the two conditions.

Retroactive Computation
Voluntary Retirement Service Taxation payroll function (INVRS) computes exemption
on VRS only in the month of termination.
Result
When you process payroll for the employee in a period after termination, the system will
import the VRS exemption results from the termination period into the period under
consideration.
The Processing the last results table payroll function (PLRT) makes use of the B/F
Termination related exemptions for Payroll after termination rule (INTT) to import the
results. The rule checks the Last Results Table (LRT) for the VRS wage type and imports
them into the current period. The system does not make any changes in the imported
results.

Previous Employment Tax Details

Purpose
This component provides for the computation of:
Tax in the current financial year, by capturing the salary, exemption, contribution, deduction
details of the employee pertaining to the previous employments in the current financial
year.
Tax exemption when the employee separates from the current employment, by capturing
certain lifetime exemptions from all previous employers.

Integration
You must create a Previous Employment Tax Details infotype (0580) record

For an employee, whenever a new employee joins your organisation

For all employees who have joined your organisation in the past from some other
employment, when you are going live with the SAP System.

The Previous Employment Tax Details payroll function (P0580) reads the Previous
Employment Tax Details infotype (0580) and populates the details in the internal table PET.

The value entered as the number of times the employee has claimed LTA
exemptions, gets stored in the PET internal table as LTAEX field. This LTAEX

field indicates the number of times the employee has claimed LTA Exemption
with his previous employers for the current block of four years. When you create
an Exemptions infotype (0582) LTA subtype record for an employee, the system
will check the LTAEX field to see if the employee has claimed an LTA Exemption
for this block of four years in his or her previous employment.
The indicator for whether the employee has carried forward an LTA claim from
the previous block of four years, gets stored in the PET internal table as a
checkbox. This indicates whether an LTA Exemption has been carried forward for
the employee from the previous block of four years pertaining to his or her
previous employers. If you create an Exemptions infotype (0582) LTA subtype
record for an employee in the first year of the new block of four years, the system
will check the PET internal table to see if the checkbox has been selected or not.
If the checkbox has been selected, the exemption granted will be against the
carried forward LTA Exemption from the previous block of four years.
Previous Employment Tax Details payroll function (INPET) processes the internal table
PET and generates the following wage types:

...
1. Prev Gross salarywage type (/4V1) - This wage type stores the amount
entered as the salary as per provisions under section 17(1). The amount in
Prev Gross salary wage type (/4V1) is added to the current Gross Salary
wage type (/416).
2. Val of perk u/s 17(2)wage type (/4VJ) - This wage type stores the amount
entered as the value of perquisites under section 17(2). The amount in Val of
perk u/s 17(2) wage type (/4VJ) is added to the currentGross Salary wage
type (/416).
3. Profts wrt sal u/s 17(3) wage type (/4VK) - This wage type stores the
amount entered as the profits in lieu of salary under section 17(3). The
amount in Profts wrt sal u/s 17(3) wage type (/4VK) is added to the current
Gross Salary wage type (/416).
4. Prev exemp u/s10wage type (/4V2) - This wage type stores the amount
entered as the exemptions under section 10. The amount in Prev exemp
u/s10 wage type (/4V2) is added to the current Section 10 exemption wage
type (/130).
5. Prev prof. tax paidwage type (/4V3) - This wage type stores the amount
entered as the Professional Tax. The amount in Prev prof. tax paid wage type
(/4V3) is added to the Professional Tax annual deduction wage type (/422).
6. Prev PF contributedwage type (/4V4) - This wage type stores the amount
entered as the Provident Fund. The amount in Prev PF contributed wage
type (/4V4) is added to the Annual Provident Fund contribution wage type
(/3F6).
7. Prev Tax Deductedwage type (/4V5) - This wage type stores the amount
entered as the total Income Tax paid by the employee. The amount in Prev
Tax Deducted wage type (/4V5) is added to the Total tax deducted so far
wage type (/456).

8. Prev Medical Exemptwage type (/4V6) - This wage type stores the amount
entered as the medical exemption claimed by the employee. The amount in
Prev Medical Exempt wage type (/4V6) is added to the Medical
Reimbursement wage type (/414).
9. Leave Encashment Exemtwage type (/4V7) - This wage type stores the
amount entered as the sum of all leave encashment exemptions availed.
Leave Encashment Exemt wage type (/4V7) gets processed only on the event
of the separation of the employee from your organisation. The value of this
wage type gets deducted from the maximum exemption limit for leave
encashment exemption.
10.Gratuity Exemptionwage type (/4V8) - This wage type stores the amount
entered as the total gratuity availed. Gratuity Exemption wage type (/4V8)
gets processed only on the event of the separation of the employee from your
organisation. The value of this wage type gets deducted from the maximum
exemption limit for gratuity exemption amount.
11.VRS Exemption wage type (/4V9) - This wage type stores the amount
entered as the Voluntary Retirement Scheme (VRS) exemption amount
availed. VRS Exemption wage type (/4V9) gets processed only on the event
of the separation of the employee from your organisation. No tax exemption
is given, in case the employee has availed of the same with any of the
previous employers.
12.Prev Employment Edu Cess wage type (/4PE) - This wage type stores the
value of education cess deducted for the financial year at previous place of
employment. Previous Employment Tax Details payroll function (INPET)
reads the value of Edu Cess Deducted field in Previous Employment Tax
Details infotype (0580) to generate this wage type. HR-IN: India Income Tax
computations payroll function (INTAX) reads the value of this wage type
and adds it to the value of Edu Cess Ded Till Date wage type (/4TE) to
generate the Monthly Edu Cess wage type (/4ME).
13.Prev Employment Surcharge wage type (/4PS) - This wage type stores the
value of surcharge deducted for the financial year at previous place of
employment. Previous Employment Tax Details payroll function (INPET)
reads the value of Surcharge Deducted field in Previous Employment Tax
Details infotype (0580) to generate this wage type. HR-IN: India Income Tax
computations payroll function (INTAX) reads the value of this wage type
and adds it to value of Surcharge Ded Till Date wage type (/4TS) to generate
the Monthly Surcharge wage type (/4MS).
14.Prev Emp Tax Payablewage type (/4PT) - This wage type stores the value of
tax payable deducted for the financial year at previous place of employment.
Previous Employment Tax Details payroll function (INPET) reads the values
of Income Tax Deducted, Education Cess Deducted and Surcharge Deducted
fields in Previous Employment Tax Details infotype (0580) to generate this
wage type. HR-IN: India Income Tax computations payroll function
(INTAX) reads the value of this wage type and adds it to the value of Tax

Payable Ded Till Date wage type (/4TT) to generate the Monthly Tax
Payable wage type (/4MT).
See also:
Previous Employment Tax Details infotype (0580)

Professional Tax
Purpose
This component provides functions and processes that compute the professional tax
deductions of an employee. Professional tax is a statutory tax that state governments levy
on professions, trades, callings, and employment. Professional Tax functionality in the
SAP system, only covers the Professional Tax applicable on employee salaries.
Individual State Governments decide the rules applicable for computing the professional
tax in their state. The Central Government, under the Constitution of India, fixes the limit
on professional tax that the State Governments can charge.
Integration
Income Tax The system estimates the annual professional tax of an employee and
deducts it from salary as per Section 16(ii) of the Income Tax Act.
Features
The system determines the professional tax payable by an employee, based on the
following factors:
Professional tax basis Comprises those salary components on which a professional tax is
applicable. The salary components to be included for calculating the professional tax basis
depend on the state. The different components are:

Basic pay
Dearness allowance
Medical reimbursement perquisite
Housing
Profits in lieu of salary
Other remuneration that an employee receives regularly
Bonus
Medical Reimbursement The system includes the medical reimbursement amount which
exceeds the amount exempt from Income Tax (as fixed under the Income Tax Act), as a
part of the professional tax basis.
Housing Allowance In case of a company leased or a company owned accommodation,
the system checks the difference in housing allowance and the rent. If you pay an
employee the positive difference between housing allowance and rent, then, the system
includes this amount for calculating the professional tax basis.
Bonus - If the employment is in a state that specifies bonus as a component of the
professional tax basis, then the system includes the same for professional tax basis
calculations.

Basis type This is the type of basis considered while computing professional tax. Basis
type can be:

Nominal basis The system considers the salary of an employee, while

calculating professional tax. It does not take into account the actual number of
days that the employee attended work within the given payroll period.
Due basis The system considers the actual amount that an employee receives as
the basis amount for professional tax calculations. Most states specify Due basis
for professional tax calculations. You can configure this for individual states.

Computation frequency This is the frequency with which the system computes
professional tax basis for an employee. The computation frequency may span across one
or more payroll periods, and the state specifies the frequency. For example, the frequency
may be:

Monthly Where the professional tax basis computation occurs every month.
Half yearly Where the professional tax basis computation occurs twice in a year,
and each computation spans six payroll periods.
Annual Where the professional tax basis computation occurs only once in a year
and the computation spans the twelve payroll periods.

Deduction frequency This is the frequency with which the system deducts the
professional tax of an employee. The computation frequency may span across one or more
payroll periods, and is state specific. For example, the deduction frequency may be:

Monthly Professional tax is deducted every month.

Quarterly Professional tax is deducted once in a quarter and spans three payroll
periods.
Half-yearly Professional tax is deducted twice a year, and the computation spans
six payroll periods.
Annual Professional tax is deducted once in a year, and the computation spans
the twelve payroll periods.

Exemptions Some states exempt certain categories of employees from paying

professional tax. For example, in Karnataka, the following categories of employees are
exempt from professional tax:

Blind, deaf or dumb employees

Employees who are 65 years of age

Professional tax slabs Employee salaries fall within different salary ranges or slabs, and
the amount of professional tax to be paid depends on the salary range to which the
employee belongs. Every state specifies its own salary slabs and the professional tax rate
that is applicable for a salary range. The system calculates the professional tax amount
accordingly.
Arrears or the retrospective professional tax When arrears are paid to an employee, the
system determines the professional tax amount to be paid for previous periods by
performing retrospective calculation. The system computes the retrospective professional
tax in two ways, and the method it uses depends on the state. The two methods are:

Gross Carry Forward The system recalculates the professional tax basis for the
past periods. It carries forward the difference in the professional tax basis for each
retrospective calculation period into the current processing period, and sums it up
into the current processing period.
Deduction Carry Forward The system recalculates the professional tax amount
for the past periods. It carries forward the difference in the professional tax

amount for every retrospective period into the current processing period, and then
sums it up for the current processing period.
When there is a retrospective
change of state, or a change in the
professional tax liability of an employee, the system always uses the deduction carry
forward method for retrospective professional tax computations.
Reports The system generates professional tax statements in a format prescribed by the
concerned state authorities.
In some states, you need to pay tax as per the state act, but submit the returns at the local
municipality or corporation level. The system generates the professional tax statements
accordingly.

See also:
Professional Tax Computation
Defining Professional Tax
Professional Tax Report (HINCPTX0)
Other Statutory Deductions Infotype (0588), Subtype (0003)

Provident Fund
Purpose
This component helps you create and maintain information on employee Provident Fund.
Provident Fund is a statutory contribution, and consists of two parts:
Provident Fund (PF) - Both, the employee and the employer, contribute a fixed
percentage of the PF basis towards a Provident Fund. The minimum percentage
contributed is as specified by the authorities.
Pension Fund - The employer contributes a fixed percentage of the PF basis towards
the Pension Fund of an employee. The minimum percentage contributed is as
specified by the authorities.
In addition to contributing
towards PF and Pension Funds of the
employee, an employer also contributes to the Employee's Deposit Linked
Insurance (EDLI). An employee may choose to contribute a certain percentage
towards a Voluntary Provident Fund (VPF)
Using the Provident Fund component you can create, maintain, process the
following for your employees:

PF
Pension Fund
EDLI
VPF

Integration
The Income Tax functionality refers to the wage types of the PF component (annual
values) while processing rebates under Section 88.

Features
Trusts and Trust Types
You maintain the PF and the Pension funds of the employee(s) in PF and Pension Fund
trusts. In the SAP system, you can categorize these trusts as belonging to one of the
following Trust Types:

Excluded Trust - In this case the system will process the entire PF contribution of
the employer and employee towards the trust. The system will not compute EDLI,
EDLI Administration charges, or Pension Fund contribution.
Regional Provident Fund Commissioner (RPFC) - In this case, the system will
process all the contributions (PF, Pension, EDLI) towards a Government trust.
Exempted Trust - In this case, the system will process the EDLI, EDLI
Administration charges and Pension Fund contribution towards a Government
trust. The PF contribution will however, be processed towards a trust other than
the RPFC
To configure the different types of trusts and the contribution percentages towards the
different PF components, go to the IMG under Payroll India Statutory Social
Contributions Provident Fund.

Provident Fund Contribution infotype (0587)

You can maintain the PF details for an employee using this infotype. You can maintain
details such as the:

11 Basis for Employee contribution

11 Basis for Employer Contribution
11 Trust ID of the PF and Pension Fund trusts, in which your company
maintains employee PF
11 VPF amount
11 Employee Identification Number in the PF and Pension Fund Trusts
Reports
You can generate annual and monthly reports for both PF and Pension Fund contributions.
Provident Fund

11 Use the Employees' Provident Fund - Reports (HINCEPF0) generate the

following monthly PF forms:
11 Form 5 - You can generate this for employee(s) who qualify for the PF,
Pension Fund and EDLI membership for the first time.
11 Form 10 - You can generate this report for employees leaving the
service, or leaving the PF trust for which you are generating the report,
in the current payroll period.
11 Form 12A - This report is a monthly report on the wages paid and
recoveries made in the current payroll period, as the Employee and
Employer's contribution.
11 Use the PF Report (HINCEPF1) to generate the following annual PF
forms:
11 Form 3A - Use this report to obtain a statement on the PF contributions
made towards Un-exempted establishments. This is an annual report.

11 Form 6A - This report provides consolidated contribution statement for

the financial year.
Pension Fund

11 The PF reports( for exempted trust ) Report (HINCEPN0) to generates the

following monthly Pension Fund forms:
11 Form 4 - This report provides details of employee(s) joining the
Pension Fund trust during the current payroll period.
11 Form 5- You can generate this report for employees leaving the
service, or leaving the Pension Fund trust, for which you are
generating the report, in the current payroll period.
11 Form 6 - Use this report to obtain information on the contribution
made by the employer, in the current payroll period.
11 Use the Pension Reports (HINCEPN1) to generate the following annual
Pension Fund forms:
11 Form 7 (PS) - Use this report to obtain information on the employee(s)
who qualified for membership to the Employee Pension Fund.
11 Form 7 (FPF) - Use this report to obtain information on the
employee(s) who qualified for membership to the Family Pension
Fund.
11 Form 8 (PS) - This report provides consolidated information on the
contribution made by employees towards the Pension Fund.
11 Form 8 (FPF) - This report provides consolidated information on the
contribution made by employees towards the Family Pension Fund.
To generate the
Monthly reports on Employee PF and
Employee Pension Fund contribution from the SAP Easy Access,
choose Human Resources Payroll Asia/Pacific India
Subsequent Activities Per Payroll Period Legal Reports.
To generate the Annual reports on Employee PF and Employee
Pension Fund contribution from the SAP Easy Access, choose Human
Resources Payroll Asia/Pacific India Subsequent
Activities Annual Legal Reports.
User Exits

11 When an employee joins mid-month or if there was a loss of pay for an

employee, the system by default will prorate the Employer Pension Basis.
You can override this prorating of the employer Pension Basis by
maintaining the EXIT_HINCALC0_002 User Exit in Enhancement
HRINCEPF.
To access the same in the IMG, choose Payroll India Statutory Social
Contribution Provident Fund Override Employer Pension Basis.

11 The standard SAP system follows a Deduction Carry Forward method for
retroactive PF processing.
If you want the system to perform the retroactive PF computations by the Gross
Carry Forward method, you can do using the EXIT_HINCALC0_007 User Exit in
the Enchancement HRINCGCF.
To access the same in the IMG, choose Payroll India StatutorySocial
Contribution Provident Fund User Exit: Computation of PF by Gross
Carry Forward Method.
11 The Annual PF Report (HINCEPF1) and Annual Pension Report
(HINCEPN1) display data from March of the previous financial year to
February of the current financial year. If however, your company went live
with the SAP system in April, you will need to upload the PF and Pension
Fund data for March.
To upload legacy data for the Annual PF Report (HINCEPF1), use the
HR_IN_PF_REP_MARCH Business Add-in GET_MARCH_DATA Method.
To upload legacy data for the Annual Pension Report (HINCEPN1), use the
HR_IN_PF_REP_MARCH Business Add-in GET_MARCH_DATA_PEN
Method.
To access them in the IMG, choose Payroll India Statutory Social
Contribution Provident Fund Add-In: March Data Upload for Annual PF/
Pension Report
See also:
Defining Provident Fund
Processing Provident Fund

Employee State Insurance

Purpose
This component calculates the Employee State Insurance (ESI) contribution:
To be deducted from the salary of the employee.
To be made by the employer.

Eligibility
An employee is eligible for ESI only if:

Other Statutory Deductions infotype (0588) subtype ESI (0001) record exists for
the employee.
ESI Basis of the employee is less than or equal to the amount stored in the ESI
Eligibility Limit constant (ESILT) of the table view Payroll Constants (V_T511P).
This amount is set by the government.

ESI Basis is the sum of basic

salary, dearness allowance, all allowances
and overtime. Overtime is excluded from ESI Basis for the calculation of ESI
eligibility but is included for the computation of ESI contribution.
If the average wage per day of the employee is less than or equal to the amount stored in
the Min.Avg.Wage per day constant (ESIMN) of the table view Payroll Constants
(V_T511P), the system calculates only an employer ESI contribution of 4.75% of the ESI
Basis.
Average wage per day for an
employee is ESI Basis Nominal wage type
(/113) divided by the value in the No.of days in month for calc constant (DYSMN) of
table view Payroll Constants (V_T511K).
If the employee is eligible for ESI in any one month of the ESI contribution period, then the
employee is eligible for all the subsequent months in that contribution period.

Integration
Employees' State Insurance Contribution India payroll function (P0588) reads the Input
Table P0588 and updates the Input Table ESI. Employees' State Insurance Contribution
India payroll function (P0588) determines the following:
Number of ESI days - Reads the Other Statutory Deductions infotype (0588) subtype ESI
(001).
ESI Grouping of the employee - Reads the table view Personnel area/subarea Grouping
for Employees' State Insurance (V_7IN0P_ESI).
ESI contribution percentages - Reads the table view Employees' State Insurance
Contribution Rates (V_T7INE3).

Employees' State Insurance Contributionspayroll function (INESI) reads the Input Table
and ESI, and updates the Input Table. This function:
Reads the following wage types:

ESI Basis wage type (/112) - This is the actual ESI basis. This includes loss of pay
and overtime. This wage type is calculated by the Gross input and storage rule
(X023). Based on the specification of Processing Class 20 and if the Cumulation
Class 12 of the wage type is selected, the Gross input and storage rule (X023)
includes the value of the wage type in the ESI Basis wage type (/112).
ESI Basis Nominalwage type (/113) - This wage type does not take into account
loss of pay or overtime. Eligibility for ESI is calculated on the amount in this
wage type. This wage type is calculated by the Nominal Cumulations rule (IN72).
Based on the specification of Processing Class 72, the Nominal Cumulations rule
(IN72) includes the value of the wage type in the ESI Basis Nominal wage type
(/113).

Generates the following wage types:

In case of an original payroll run

Actual ESI Basis wage type (/3EA) - This is the effective ESI basis, on which
the ESI contributions are calculated.
/3EA = (Amount in /112)
(Number of Calendar days).

multiplied by (Number of ESI days) divided by

The system reads the Number of ESI days from the Other Statutory Deductions
infotype (0588) subtype ESI (0001).
If the number of days for which an employee is eligible for ESI is same as the
number of calendar days in a period, Actual ESI Basis wage type (/3EA) will be
same as ESI Basis wage type (/112).

Ee ESI contribution wage type (/3E1) - This is the employee ESI contribution
calculated on Actual ESI Basis wage type (/3EA).
Er ESI contribution wage type (/3E2) - This is the employer ESI contribution
calculated on Actual ESI Basis wage type (/3EA).
11 In case of a retroactive payroll run

CF ESI basis wage type (/AEA) - This is the difference in the values of Actual
ESI Basis wage type (/3EA) for the retrospective run and previous payroll run.
BF ESI basis wage type (/ZEA) - This is the cumulation of the values of all
the CF ESI basis wage types (/AEA) generated during a retrospective payroll
run. This wage type is generated during an original payroll run.
Ee ESI Refund-Monthly wage type (/AER) - This is the refund amount for the
retrospective period. If there is retrospective deletion of Other Statutory
Deductions infotype (0588) subtype ESI (0001) record during a retrospective
payroll run, there may be a refund of ESI contribution made by the employee.
Ee ESI Refund-Total wage type (/ZER) - This is the cumulated values of all
the Ee ESI Refund-Monthly wage types (/AER) generated during a
retrospective payroll run. The value of this wage type is brought forward to
the current payroll period for a refund.

Features
The ESI contribution periods with their respective benefit periods
Contribution Period

Benefit Period

April 1 - September 30

January 1 - June 30

October 1 - March 31

July 1 - December 31

Employee makes a contribution of 1.75% of the ESI Basis.

Employer makes a contribution of 4.75% of the ESI Basis.
You have been provided with a user exit EXIT_HINCALC0_001, in the enhancement
HRINCLWF, if you want to change the ESI Grouping for an employee. You can configure
this user exit in the IMG under Payroll India Statutory Social Contribution Employees'
State Insurance User Exit: Determine Personnel Subarea Grp for ESI and LWF.

See also:
Employee State Insurance Set Up
Retroactive Employee State Insurance Calculation
Form 6 and 7 for Employees' State Insurance report (HINCESI0)
Other Statutory Deductions infotype (0588) subtype ESI (0001)

Labour Welfare Fund

Purpose
This component computes the contribution towards Labour Welfare Fund (LWF).
LWF is a statutory contribution. The state authorities determine the rate of contribution and
frequency of contribution towards LWF.

Features
Other Statutory Deductions infotype (0588), LWF (Labour Welfare Fund) subtype
(0002)
In this infotype, you select the eligibility of an employee towards LWF such as the LWF
frequency, LWF computation rates and the Validity date.

Labour Welfare Fund legal reports (HINCLWFI)

Using this report you can generate the LWF form for submission to the authorities. The
SAP system generates the LWF statements in the format prescribed by the concerned
state authority.
LWF Computations
The states specify their individual rates for LWF computation, the frequency of LWF
contribution and Validity Date for LWF contributions.
For example, the LWF contribution frequency in Tamil Nadu is annual and it takes place in
the ninth period. The validity date for Tamil Nadu is 31st December. In Kerala, the deduction
frequency is bi-annual, and it takes place in the third period and the ninth period. The third
period has the validity date as 30th June.
You can configure details through the IMGunder Payroll India Statutory Social
Contribution Labour Welfare Fund.
Termination
The method of computing LWF in case of a termination differs from one state to another.
The individual states also specify the method of computing LWF contributions, in case of a
termination.
For example, if an employee in Kerala leaves the organization before 30 th June, the system
will not compute the LWF contribution for the employee. In the case of Tamil Nadu
however, the system will compute the LWF contribution even if the employee leaves before
the 31st December.
Retrospective LWF calculations
A retrospective change in Other Statutory Deductions infotype (0588), LWF (Labour
Welfare Fund) subtype 0002 does not result in retroactive LWF calculations.
User Exit
In the Standard SAP system, you can define the Labour Welfare Groups for the employees
based on their default Personnel Area and Personnel Subarea.
If you wish to override the default LWF Personnel Subarea grouping, you can do so
through a customer exit.
For more information, see the IMGunder Payroll India Statutory Social Contribution
Labour Welfare Fund User Exit: Determine Personnel SubArea Grp for ESI and LWF.

Nominations Infotype (0591)

Definition
This infotype stores the nomination details of employees for the following benefits:

Employee State Insurance

Gratuity

Maternity Act

Provident Fund

Pension

Use
According to the company rules and legal laws, an employee has to nominate some person(s) for
the transfer of benefits, in the eventuality of the death of the employee. These nomination details
are maintained in this infotype.
The nomination details have to be maintained:

When the employee joins the organization.

As and when the employee is covered under one of the above benefits.

When the employee wants to change the nomination details.

Structure
You are provided with the following subtypes to store the nomination details for the
different benefits:

ESI Benefit (BNES)

Gratuity Benefit (BNGR)
Maternity Act Benefit (BNMB)
PF Benefit (BNPF)
Pension Benefit (BNPN)
For a subtype,

You must enter the name of the nominee and the percentage of the benefit that
goes to the nominee.

The sum of the percentage share must be equal to 100.

Minimum Net Pay

Purpose
This component sets a minimum wage for the employees, while processing payroll.
Minimum net processing supports only non-statutory deductions.

Implementation Considerations
The deductions, which need to be considered for minimum net processing, should be
configured for Priorities and Arrears. You can do this in the IMG under Payroll India (
Deductions ( Arrears and Priorities .
Features

The minimum wage for an employee can be configured in two ways:

As a percentage of a particular wage component - You can maintain the

percentage in the Minimum Net Pay - Percentage constant (MNPPR) of table
view Payroll Constants (V_T511K). By default the particular wage component is
taken as the Total gross amount wage type (/101).

As a fixed amount - You can maintain this fixed amount in the Minimum net
pay - Fixed Amount constant (MNPAM) of table view Payroll Constants
(V_T511P).

You must configure the Minimum Net Pay - Percentage constant (MNPPR) and/or the
Minimum net pay - Fixed Amount constant (MNPAM) in the IMG under Payroll India (
Deductions ( Minimum Net Pay Maintain Value for Determination of Minimum Wage.
If you maintain both of the above
mentioned constants, the amount in the
Minimum net pay - Fixed Amount constant (MNPAM) is taken as the minimum wage.

You have been provided with a Business Add-In (Add-In), HR_IN_MINIMUM_NET. You
can use this Add-In to calculate the minimum wage of an employee according to your own
requirements, that differ from the standards. For example, you want to configure the
minimum wage as a percentage of a particular wage component. In this case, you can set
the particular wage component through this Add-In.
You must configure the Business Add-In, HR_IN_MINIMUM_NET , through the IMG under
Payroll India ( Deductions ( Minimum Net Pay Add-In: Minimum Net Pay Value.

See also:
Arrears Processing for Deductions

Recovery of Rounded Off Amounts

Purpose
This component:

Rounds off the Net Pay wage type (/560) to a suitable denomination as configured by you.

Recovers the rounded off amounts from the Net Pay wage type (/560).

Features
The Rounding off & recovery of rounded amt payroll function (INROR) generates the
following wage types:

Recovery of round off amt wage type (/ROR) - This wage type stores the
rounded off amounts of Net Pay wage type (/560) for a payroll period. The system
generates this wage type during every payroll run including an off-cycle payroll
run.
The cumulated values for this wage type, stored in the Cumulative Results Table,
depends on the cumulation settings in table view Cumulation of Wage Types
(V_T54C3).

Rounding off adjustment wage type (/ROA) - This wage type stores the
recovery of the rounded off amounts.
You have been provided with four types of recovery options:
11

Monthly
The system generates the Rounding off adjustment wage type (/ROA) during
each of the regular payroll runs.

Annual
The system generates the Rounding off adjustment wage type (/ROA) in the
first regular payroll run of the subsequent financial year.

Calendar Year
The system generates the Rounding off adjustment wage type (/ROA) in the
first regular payroll run of the subsequent calendar year.

Indefinite
The system does not generate any Rounding off adjustment wage type (/ROA).

No recovery
The system does not round off the Net Pay wage type (/560).

The system does not generate the Rounding off adjustment wage type (/ROA)
during an off-cycle payroll run. The system generates this wage type in an offcycle payroll run only when the recovery option in the table view Recovery of
rounding off amounts (V_T7INY1) is changed since the previous payroll run.
During a retrospective payroll run, the Recovery of rounded amount rule (INRR) brings
forward the Rounding off adjustment wage type (/ROA) and the Recovery of round off amt
wage type (/ROR) to the current period Results Table.
The system subtracts the value of the Rounding off adjustment wage type (/ROA) from
the Net Pay wage type (/560). That is,

Net Pay wage type (/560) = Net Pay wage type (/560) Rounding off adjustment
wage type (/ROA)
The system then rounds off the Net Pay wage type (/560) to a suitable denomination as
configured by you, to generate the Recovery of round off amt wage type (/ROR).

See also:
Recovery of Rounded Off Amounts Setup

Loans Enhancement - India

Purpose
This component explains the additional Company Loans features for Payroll India.
Features
Modifications to the Loans infotype (0045)
The following options have been added as conditions of the Loans infotype (0045) for
India:

Tranche
Penal Interest Simulation

Reports

Loans Summary report (HINCLON1)

Batch Program for Penal Interest (Loans) report (HINILON0)

Business Add-Ins (Add-In)

HR_IN_LOANS_VALIDATE
11 HR_IN_PENAL_INTEREST

Calculate Interest Rate Advantage as Perquisite

Interest Rate Advantage on Company Loans as Perkpayroll function (INLON) calculates
Interest Rate Advantage, if applicable, on all loan types for the employees for whom you
are processing the payroll.

For a loan type, you can configure Loan Conditions such as:
The Debit and Reference Interest Rates
11 Whether the system should calculate the Interest Rate Advantage
To configure this, go to the IMG under Payroll India Company Loans
Master Data Create Loan Conditions.
11 If you have configured the system to calculate the Interest Rate Advantage,
Interest Rate Advantage on Company Loans as Perk payroll function
(INLON) calculates this Interest Rate Advantage.
11 You can configure the Taxation of interest rate advantage rule (INJ2) for this
Interest Rate Advantage to cumulate in:
Loan-Int. Rate adv Taxed wage type (/3J1), if you want the Interest Rate
Advantage to be taxed.
The value of Loan-Int. Rate adv Taxed wage type (/3J1) is then cumulated in
Annual Perk wage type (/127).
11 Loan-Int. Rt adv notTaxed wage type (/3J2), if you do not want the
Interest Rate Advantage to be taxed.
To configure this rule, go to the IMG under Payroll India Company Loans
Calculation Interest Rate Advantage Taxation.

See also:
Loans

One Day Salary Deduction

Purpose
This component allows voluntary salary deduction for an employee for one or more days.
This component also computes the employer contribution for the same amount as that
contributed by the employee.
One day salary deduction is required in situations such as, contribution to Prime
Minister's Relief Fund, Charitable Cause.
Features
For a Pay Scale Grouping for Allowances, you can maintain the following details for one
day salary deduction:

Year and Period in which to calculate the salary deduction

Calculation Indicator, which could be any one of the following:

11
11
11
11

Nominal Salary/Calendar Days

Nominal Salary/Working Days
Actual Salary/Calendar Days
Actual Salary/Working Days

1DSD Basis Actual wage type (/137) - This is the actual salary for One Day Salary
Deduction. This includes loss of pay and overtime. This wage type is calculated by the
Gross input and storage rule (X023) of Monthly factoring and storage (cumul.of gross
amount) schema (INAL). If the Cumulation Class 37 of any wage type is selected, the
Gross input and storage rule (X023) cumulates the value of the wage type in 1DSD Basis
Actual wage type (/137).
1DSD Basis Nominal wage type (/136) - This is the nominal salary for One Day Salary
Deduction. This wage type does not take into account loss of pay or overtime. This wage
type is calculated by the Nominal Cumulation for 1 day salary deduction rule (IN77) of
Monthly factoring and storage (cumul.of gross amount) schema (INAL). For the Processing
Class 77 of any wage type, if the Specification is set to 1, the Nominal Cumulation for 1
day salary deduction rule (IN77) cumulates the value of the wage type in 1DSD Basis
Nominal wage type (/136).
The ASOLL and KSOLL fields of the WPBP Internal Table determine, for an employee, the
number of working days and calendar days respectively.
Factor, which is the number of days of salary that has to be deducted. This factor can
be one, less than one or more than one.
Whether the employer contributes the same amount as that contributed by the
employee, or not
You can maintain all this through the IMG under Payroll India One Day Salary Deduction
Maintain Details for One Day Salary Deduction.

See also:
One Day Salary Deduction Calculation

Mid Year Go Live

Purpose
This component helps in transferring legacy payroll results data to the SAP system and in
creating payroll results from the transferred legacy data. Mid Year Go-Live functionality
is useful if you are implementing SAP Payroll India in the middle of a financial year.
In India, the income tax assessment year is from the 1st April to the 31st March and you
calculate all applicable taxes on employee salary for this period. When you implement
SAP Payroll India in the middle of a financial year, you also need to transfer payroll
results for those periods of the financial year that lie before the period, in which you are
implementing the SAP Payroll India.
Pre-go-live: This term refers to
the periods, for which payroll results are
available in the legacy system and need to be transferred to SAP system.
Go-live: This term refers to the period, in which you process the first productive
payroll run.

Features

Using the Mid Year Go Live functionality, you can upload the final payroll results from your
legacy data systems into the SAP system. The final payroll results are the actual payments
and deductions of an employee salary. They must include statutory, non-statutory
deductions (including third party deductions), arrears and the contributions of the employer.

For transferring your legacy data and uploading the same into the SAP system, you are
provided with the:

HR Template - Payroll.xls (Microsoft Excel) file, containing templates that

drive the data load programs, for converting the legacy data.

Data load program(HINUULK0 ) that facilitates the transfer of data into the
SAP system. It loads the data saved in the spreadsheet into the Payroll Account
Transfer: Payroll Periods table (T558B) and Payroll Account Transfer: Old Wage
Types table (T558C) in the SAP system. These are the data conversion tables for
the Mid Year Go Live functionality.

Standard executableschema (INLK) that formats the uploaded legacy data,

into SAP Payroll Period results and stores the results in relevant payroll cluster
tables.

Constraints
For retrospective calculation of payments and deductions, the earliest date that you can
set is the start date of the period, in which you are processing the first productive payroll
run. You can however, manually capture any adjustments for the past periods in specific
wage types.
See also:
Transferring Legacy Payroll Results

Transferring Legacy Payroll Results

Purpose
This process describes the method of transferring your legacy payroll results into the SAP
system. It discusses the various processes involved in uploading the payroll results into
the SAP system, and in converting the data into SAP payroll results.
The following are the main stages in the process of transferring the legacy payroll results:
...
HR Template - Payroll.xls file, wherein you enter the legacy payroll results.
Data transfer INLK Payroll Tables T558B and T558C Upload program (HINUULK0), which
reads the payroll results information from the spreadsheet template, and uploads it into the
Payroll Account Transfer: Payroll Periods table (T558B) and Payroll Account Transfer: Old
Wage Types table (T558C). The system reads these tables for the purpose of payroll
conversion.
Transfer of payroll account from Table 5558B,C - India schema (INLK), which when run as a
part of the payroll program, HINCALCO,

...
Reads the payroll conversion tables Payroll Account Transfer: Payroll Periods (T558B)
and Payroll Account Transfer: Old Wage Types (T558C)
Converts the payroll results stored in these tables into SAP payroll clusters.

Prerequisites
...
You have completed the entire configuration, with respect to Payroll India. The Payroll
Periods are set up from the earliest hire date to the present.
Valid employee records exist for the following infotypes:

Actions infotype (0000)

Organizational Assignment infotype (0001)
Personal Data infotype (0002)
Planned Working Timeinfotype (0007)
Basic Pay infotype (0008)
Bank Details infotype (0009)
Family/ Related Personinfotype (0021)
Previous Employment Tax Details infotype (0580)
Housing (HRA/CLA/COA) infotype (0581)
Exemptions infotype (0582)
Car & Conveyanceinfotype (0583)
Income from Other Sources infotype (0584)
Section 80 Deductionsinfotype (0585)
Investment Details (Sec 88) infotype (0586)
Provident Fund Contribution infotype (0587)
Other Statutory Deductions infotype (0588)
Individual Reimbursements infotype (0589)

Long Term Reimbursements infotype (0590)

These records must exist from the begin date of the first pay period that you are
loading into the SAP system. The legacy upload process refers to these infotype
records for validation. These validations are date driven and applicable for all the
pay periods that you are converting. You must check all of the above mentioned
infotype records for data validity periods. All data must be valid from the first pay
period of the employee with the exception of Actions infotype (0000),
Organizational Assignment infotype (0001)and Personal Data infotype (0002).
In these three infotypes, the date is as per the Hiring action.

The Payroll Control Records are set for retro-calculation only from the go-live date.
Hiring of an employee in the SAP
system creates the Payroll Status infotype
(0003) for that employee. The system updates the Earliest MD Change field of this
infotype with the start date of the Actions infotype (0000) record of the employee. If
you try to calculate retrospectively, the system attempts a retrospective calculation
on the payroll results uploaded from legacy systems, leading to an error in
computation.
You have generated the payroll periods for all payroll areas, and payroll control records exist
for these areas.

Process Flow
...
HR Template - Payroll.xls file - In this file you enter payroll results for the pay periods that you
want to upload into the SAP system. This spreadsheet template file consists of two
worksheets:

Worksheet 558b, where you define the payroll periods for which you are
transferring the payroll results. You must define these payroll periods for
individual employees. In this sheet you also specify the payroll periods that are
for a regular payroll run and those that are for an off cycle payroll run. In this
sheet, you indicate the chronological sequence of payroll runs to be loaded for the
employee.
It is recommended that you
load one payroll area at a time into the payroll
conversion tables. Dividing the data into smaller groups can help reduce the
processing time, and avoid data entry errors.

Worksheet 558c, where you define the wage types for which you are transferring
payroll results. For every payroll period that you define in the 558B, you must
create corresponding wage type entries in 558C.
The system validates the
wage types against the Wage Type Valuation
table (T512W). Therefore, ensure that these wage types exist in the system
before starting your legacy payroll results transfer.

When you save your entries, the in built macro in the HR Template - Payroll.xls
file saves the two worksheets into separate tab-delimited text files (T558B.txt and
T558C.txt). Ensure that you save the file using the Save for transfer option
available in the worksheet 558B.

 When saving text files

to your local hard drive, the total path
name must not be longer than 128 characters, or the data conversion
INLK Payroll Tables T558B and T558C Upload program
(HINUULKO), will not be able to read the full path or filename.
When you select the Save for transfer option, any data existing earlier
in the same file is replaced with the new data that you have inserted.
You will not get any message or warning.
Data Load Program (HINUULK0) - This program reads the data saved in the two text (.txt)
files T558B.txt and T558C.txt, and uploads them into the SAPconversion tables. It saves
the data from the T558B.txt file into the Payroll Account Transfer: Payroll Periods table
(T558B) and data from T558C.txt file into the Payroll Account Transfer: Old Wage Types
table (T558C).
Transfer of payroll account from Table 5558B,C India schema (INLK) - When you run the
Payroll Driver HINCALCO with the special results Transfer of payroll account from Table
5558B,C India Schema (INLK), the schema reads the conversion tables for pay period
and wage type information, and generates payroll result clusters.
The Transfer of payroll account from Table 5558B,C India schema (INLK) utilizes a
function TRANS, during the conversion process. This function reads the wage type and
payroll period information from the conversion tables, and stores them in the internal
tables. The schema then further processes the information to form the payroll results. While
creating wage types in the internal tables, the function TRANS, assigns relevant country
specific split indicators to the wage types. You, thus, have the flexibility of capturing
configurations for Provident Fund, Professional Tax, Employee State Insurance and Labour
Welfare Fund, thereby enabling report generation.
The rules of the Transfer of
payroll account from Table 5558B,C India
schema (INLK) are applicable on the standard wage types of the SAP system. You
must copy and modify the same for your equivalent wage types.

Once the Transfer of payroll account from Table 5558B,C India schema (INLK)
completes the conversion program, it is recommended that you verify the data for
accuracy. You can examine data for individual employees using the Cluster Display IN
(Payroll Results, India) program (HINCLSTR).
If the data is accurate, you may delete the data in the conversion tables, and load the
payroll results for the remaining legacy payroll periods. If there are errors in conversion
delete the payroll results and re-execute the data load process.
For more information, refer to the IMG under Payroll India Legacy Data Transfer.
SAP recommends that you do
not use the Transfer of payroll account from
Table 5558B,C India schema (INLK), after you have processed a regular payroll
run in the SAP system.

Post conversion processing

For all employees for whom you have uploaded the payroll results, you must set the
following to the Go-Live Date:
Earliest Retro Recalculation date
Earliest Master Data Change date
Earliest Master Data Change Bonus date

Termination Workbench
Purpose
This component helps in terminating an employee from the payroll.
The Termination Workbench computes the various types of payments due to, or payable by the
employee at the time of termination. For example, Gratuity, Superannuation, Leave Encashment
or any pending Reimbursable allowances.
The termination of employment may be due to the:
Resignation of an employee
Retirement of an employee
Voluntary retirement or premature retirement by an employee
For information on setting up the Termination Workbench functionality in the SAP system, refer to
the IMG under Payroll India Termination Workbench.

Integration
1. Contract Elements infotype (0016) Where you maintain the details of the employment
contract, between the company and the employee. Termination Workbench determines the
notice period for termination using this infotype.
2. Date Specificationsinfotype (0041) Where you maintain the date of Normal Retirement of
the employee. Termination Workbench computes the relief on Voluntary Retirement Service
benefit for the employee using the data maintained in this infotype.
3. Personal IDsinfotype (0185) Termination Workbench obtains the Gratuity and
Superannuation Trust details for the employee from the infotype.
4. Additional Paymentsinfotype (0015) After the transaction is complete, Termination
Workbench updates the payment records in the Additional Payments infotype (0015). The
updated amounts are disbursed to the employee through the payroll run, along with other
components of the salary.
5. Actions infotype (0000) When an employee is terminated using the Termination Workbench,
the Termination Workbench delimits the employee in the Actions infotype (0000).

Features
The Termination Workbench comprises of the following processes:

Termination transaction (PC00_M40_TERM)- Using this transaction you can specify the
details of employee Gratuity, Superannuation, Leave Encashment, Voluntary Retirement
Services and Reimbursable Allowances.
The transaction reads the relevant infotypes and determines the amounts payable to the
employee. For example, amounts payable as Gratuity, Superannuation, Notice Pay and
Leave Encashment. You can modify these amounts using the transaction. When you
execute the transaction, it updates the relevant wage types in the Additional Payments
infotype (0015). This transaction also creates a batch session for delimiting the infotype
records.
Batch Input Monitoring transaction (SM35) Using this transaction, you can execute the batch
session created by the Termination transaction (PC00_M40_TERM). Upon execution, the
batch session delimits the infotypes configured for delimiting, in the infogroup.
For more information on configuring the infogroup, refer to the IMG under Payroll India
Termination Workbench Define Infogroups.
The batch session also delimits the employee in the Actions infotype (0000). You can set
the Return Action Type for Termination Workbench feature (40TRM) for the Action Type to

be defaulted in Actions infotype (0000) when the infotype record gets delimited. You can do
this in the IMG under Payroll India Termination Create reasons for Personnel Actions.
Payroll when you execute the payroll for the period in which the employee was terminated,
the payroll processes the amounts payable at the time of termination. For example, Notice
Pay, Gratuity, Superannuation and Leave Encashment. The payroll also calculates the
applicable exemptions.

See also:
Termination Workbench Definition
Termination Workbench Computations

Gratuity
Purpose
This component is used to process employee gratuity.
Gratuity is a statutory benefit provided by an employer on cessation of employee services. In the
SAP system, you can configure the payment of Gratuity as per one of the following methods:

Payment of Gratuity Act, 1972 Where the minimum amount that you need to contribute
towards gratuity is 4.81 percentage of the monthly basis salary of the employee.

Company policy When the company policy provides gratuity benefits that are better than
the benefits provided as per the Gratuity Act.
Gratuity is generally applicable to employees who have been in service for a minimum stipulated
period. The employer regularly contributes towards a gratuity trust, to provide for payment at the
time of cessation of services. Gratuity received by an employee is taxable partially.

Integration

Payroll Process Employee gratuity is computed by the system as a part of the regular
payroll process.

Income Tax As gratuity is taxable partially.

Termination Workbench This functionality computes the gratuity payable to an

employee at the time of cessation of employment.

Features
...
1. Personal IDs infotype (0185), Gratuity for India subtype (03)
In this subtype, you maintain the employee Identification Number for Gratuity, and the
name of the trust, to which you are contributing for employee gratuity.
2. Gratuity Listing report (HINCGRY0)
Using this report you can generate a Gratuity list. This list details an employee wise
contribution towards a gratuity trust.

See also:
Gratuity Definition
Gratuity Process

Gratuity Definition
Purpose
This process describes the configurations necessary for the Gratuity functionality.
Prerequisites

You have configured the Pay Scale Grouping for Allowances for the employees. This
configuration is required for the system to identify employee eligibility for gratuity.

You have configured the wage types that form the Gratuity basis through the table view
Processing Classes, Cumulations, and Evaluation Classes (V_512W_D). The Gratuity
Basis wage type (/116) stores the basis for gratuity.

Process Flow
...
1. Define the trust(s) in which your company maintains employee gratuity amount. You
must define the name of the trust, and the Trust ID
To do so, go to the IMG under Payroll India Retirement Benefits Maintain Gratuity
Trust ID
The Personal IDs infotype (0185) Gratuity for India subtype (03), displays options as per
the Trust IDs that you have configured in this IMG activity.

The system calculates gratuity as

per the Gratuity Act. If the rate of gratuity
provided by the company is higher, the system will instead, compute gratuity as
per the company rules.
2. Define the types of gratuity contribution and the wage types associated with the
different types of gratuity contributions. Contributions to gratuity can be on a monthly or on
an annual frequency.
For more information, refer to the IMG under Payroll India Retirement Benefits
Maintain Gratuity Contrib. Freq. and Related Wage Types.
In the IMG activity, you have the option of creating customer specific wage types for
gratuity. You can do so by copying the following default wage types:

/3G1 Stores the monthly gratuity contribution

/3G2 Stores the annual gratuity contribution
/3G3 Stores the sum of splits in the gratuity period

3. Specify the percentage of gratuity basis that the system must use for gratuity
computations.
To specify the percentage, go to the IMG under Payroll India Retirement Benefits
Define Contribution Rates for Gratuity.
4. Specify the minimum number of years that the employee must work in the company, to
become eligible for gratuity.
To specify the minimum number of years of service criteria, go to the IMG under Payroll
India Retirement Benefits Maintain the Eligibility Years for Gratuity.
While processing payroll, the system checks the min. no. of years constant (GRTYR),
which you maintain using this IMG activity, for eligibility.

Configurations for Retrospective Calculation

If you have created customer specific wage types, then you must:
...

1. Add the customer specific wage types to the To check whether Gratuity contributions
took place rule (INGR).
During retrospective calculations, the system either imports or does not import the gratuity
wage types from the previous results, based on this rule.
To add the wage types to the To check whether Gratuity contributions took place rule
(INGR), go to the IMG under Payroll India Retirement Benefits Check for Gratuity
Contribution.
2. Add the customer specific wage types to the Passing wage types from ORT to IT for
Gratuity Retro rule (IN51).
You might have already contributed towards gratuity in the previous payroll run for the
period. In this case, you can set a rule that the employer need not contribute again, during
the retrospective payroll run.
To add the wage types to the Passing wage types from ORT to IT for Gratuity Retro rule
(IN51), go to the IMG under Payroll India Retirement Benefits Maintain Wagetypes to
be passed during Retro Runs.

Gratuity Process
Purpose
This process describes the gratuity calculations performed by the system during a payroll
process.
Prerequisites

You have set the configurations necessary for the functioning of Gratuity in the SAP
system: You can configure the functionality using the IMG under Payroll India
Retirement Benefits Gratuity.

You have maintained employee records in the Personal IDs infotype and Gratuity for India
subtype (003).

You have configured the wage types that form the basis for gratuity contributions in the
table view Processing Classes, Cumulations, and Evaluation Classes (V_512W_D). The
Gratuity Basis wage type (/116) stores the gratuity basis amount.

Process Flow
While processing gratuity contributions during a payroll run, the SAP system:
...
1. Checks the eligibility of the employee towards gratuity. Eligibility of the employee
towards gratuity is as per the Pay Scale Groupings for Allowances.
The system also performs a check on the minimum number of years of service that the
employee should have put in, to become eligible for gratuity.
The Number of Gratuity years constant (GRTYR) in the table view Payroll Constants
(V_T511K), stores the value for the minimum number of years, and the system makes use
of the Determine Gratuity eligibility rule (ING0) to read this constant.
You can maintain the value in the constant through the IMG under Payroll India
Retirement Benefits Maintain the eligibility years for Gratuity.
2.

Checks the Type of Contribution (Yearly or monthly)

The company may contribute towards Gratuity on a monthly basis, or on an annual basis.
You can set the annual contribution towards gratuity to either a financial year or a calendar
year.
To set the Type of Contribution, use the IMG activity under Payroll India Retirement
Benefits Maintain Gratuity Frequency of Contribution and Related Wage Types.
3. Computes the gratuity amount. During computations, the system checks the table view
Gratuity Details Maintenance (V_T7ING1) for the value configured, and computes gratuity
accordingly.
For example, if in the table, you have maintained the gratuity contribution amount as 4.81
percentage of the gratuity basis, the system will compute 4.81 percentage of the gratuity
basis, as the employer contribution towards gratuity.
Computation of the basis for gratuity depends on the Type of Contribution. If the
contribution type is:

Monthly The system will compute gratuity every month, and store the
amount in the Grat Contrib -monthly wage type (/3G1).

Annual The system will compute gratuity only at the end of the gratuity
period. The system can compute the gratuity every month, but will take the
amount into consideration only at the end of the gratuity period. The Grat Contrib
- annual Wage Type (/3G2) stores the annual gratuity contributions.
If there are splits in the gratuity period, the system will create a provisional Grat
Prov-split period Wage Type (/3G0), for every split and then store the sum of all
the splits in the Grat Prov sum of split wage type (/3G3).

Exemptions on Gratuity
Purpose
This section describes the process followed by the SAP system, while computing
exemptions on Gratuity.
Process Flow
Gratuity contribution taxationpayroll function (INGTX), computes the exemptions on the
gratuity, received by an employee at the time of termination or retirement.
Exemption on gratuity is available in cases of:
Termination
Retirement
In both termination and retirement, exemption is given on Gratuity in the following cases:

11 Termination/retirement period is the same as the Gratuity payment period

11 Termination/retirement period is before the Gratuity payment period in the
same financial year or another financial year. All payments made after
termination/retirement are exempted from tax subject to the Gratuity
exemption limit.
Exemption on Gratuity is not given in the following cases:

11 Gratuity payment period is before the Termination/retirement period.

11 Termination/retirement period is before the Gratuity payment period but the
Gratuity payment is made in a financial year, which is after the

termination/retirement year. Also, the payment is made with effect from a

period (falling in a year before the financial year), in which the actual
payment is made. In this case, Section 89(1) Relief on the Gratuity is given
to the employee.
For example, the employee was terminated in February 2003. Gratuity payment is
made to the employee in June 2004 with effect from March 2003. In this case, the
employee does not get Gratuity exemption, instead the employee gets Section
89(1) Relief on the Gratuity payment.
Gratuity contribution taxationpayroll function (INGTX) computes the exemption on
gratuity as a minimum of the following three factors:
...
Gratuity payments received
Tax limit
Number of months of salary for every completed year of service

Gratuity payments received

Gratuity contribution taxationpayroll function (INGTX) checks the internal table for the
Gratuity wage types and obtains the Gratuity amount.
The Termination Workbench computes the Gratuity amount and stores the wage type for
Gratuity in the Additional Payments infotype (0015). This wage type stores information
on the amount (in the amount field BETRG) and the number of months of gratuity paid
(in the number field ANZHL).
You can also directly enter the Gratuity amount in the Additional Payments infotype
(0015).
During payroll processing, the Processing request for additional payments function (P0015)
reads the Additional Payments infotype (0015) and stores the wage type for Gratuity in the
internal table (IT).
Gratuity payments can be of two types:

As per the gratuity act

In this case, Gratuity contribution taxation payroll function (INGTX) checks the
internal table for the gratuity wage type that is associated with the tax code SAGA.
Gratuity recieved wage type (MPG0) is the model wage type for gratuity
payments as per the gratuity act.

As per company policy

When the gratuity paid by the company is higher than the limits set by the
Payment of Gratuity Act. In this case, Gratuity contribution taxation payroll
function (INGTX) checks for the gratuity wage type associated with the tax code
SNGA. Gratuity received wage type (MPG1) is the model wage type for the
gratuity paid as per company policy.
To identify the tax codes for gratuity and the gratuity wage types associated with
the two tax codes, the Gratuity contribution taxation payroll function (INGTX)
checks the table view Taxability of wage types (V_T7INT9). It also determines the
eligibility for gratuity through Pay Scale Grouping for Allowances from the table
view Reimbursement Allowances Perks - eligibility and calculation (V_T7INA9).

After identifying the wage type, associated with the tax code SNGA or SAGA, the
Gratuity contribution taxation payroll function (INGTX) checks for these wage
types in the internal table.
Ensure that you have configured
the eligibility wage types (MPG0 and MPG1)
as Gratuity, in the table view Reimbursement Allowances Perks - eligibility and
calculation (V_T7INA9). Gratuity is an option under the Reimbursement/
allowance/perk indicator field.

For more information, see Gratuity.

Tax limit
Gratuity contribution taxation payroll function (INGTX) checks for the maximum amount of
gratuity that can be exempt from tax. The maximum limit is as specified by the authorities.
You can view the tax limit for the tax code SAGA using the table view Taxability of wage
types (V_T7INT9).
If the employee, in any previous employment, received an exemption on the gratuity
amount, the Gratuity contribution taxation payroll function (INGTX) will reduce the
maximum limit on exemption by the amount already availed.
You can maintain the Gratuity
exemption, claimed in a previous employment
using the Previous Employment Tax Details infotype (0580). The Gratuity
Exemption wage type (/4V8) stores the previous exemption amount.

Number of months of salary for every completed year of service

Payment as per Gratuity Act
In this case, gratuity is computed as the product of:

No. of years of continuous service The termination workbench calculates the

number of years of service based on the employment Start Date and End Date. In
the Termination Workbench, you have the option of overwriting the value
computed by the Termination Workbench.
Multiplication Factor for gratuity, which is equal to (K1 * 12) / 1000
K1 is the 1000*Stat Gratuity contrb perc constant (GRYCO), stored in the table
view Payroll Constants (V_T511K). This factor is as defined by the Gratuity Act.
Latest Nominal Basis
Gratuity contribution taxation payroll function (INGTX) takes the last nominal
basis as the current nominal basis, and it makes use of the Last nominal basis rule
(INLN) to obtain this value.

Payment as per Company Policy

If the payment of gratuity is as per company policy, the system computes gratuity as the
product of:

No. of years of service

The system computes this in a manner similar to that for the Payment as per
Gratuity Act.

Multiplication Factor for gratuity, which is equal to K2, divided by ten.

K2 is the constant (GRYTX) in the table view Payroll Constants (V_T511K). The
value of this factor can be as per the company policy.

11 Average Monthly Salary

The system computes the Average Monthly Salary as the average of the basis
salary for a pre-defined number of months, preceding the period of termination or
retirement. The Current nominal basis wage type (/129) stores the monthly basis
salary for Gratuity.
The No. of months for avg. salary constant (GRAVS) of table view Payroll
Constants (V_T511K) stores the pre-defined number of months for computing the
Average Monthly Salary. The value is as specified by the authorities.
If basis salary data for the
required number of months is not available in
the SAP system, you can enter the same through the Additional Payments infotype
(0015). Ensure that you pass the wage type for average salary as the first
parameter (param 1), to the Gratuity contribution taxation payroll function (INGTX).
You can use the model wage type Avg sal pre-instln wage type (MLIN) to create the
wage type for average salary.

After selecting the minimum of the three exemption factors, Gratuity contribution
taxation payroll function (INGTX) generates the Gratuity Cont. Exemption wage type
(/4E8), in which it stores the current exemption on Gratuity.
Result
When you process the payroll for the employee in a period after termination/retirement,
the system will import the Gratuity exemption results, from the termination/retirement
period into the period under consideration.
The Processing the last results table payroll function (PLRT) makes use of the B/F
Termination related exemptions for Payroll after termination rule (INTT) to import the
results. The rule checks the Last Results Table (LRT) for the gratuity wage types and
imports them into the current period. The system does not make any changes in the
imported results.

Superannuation
Purpose
This component is used to process Superannuation for an employee.
Superannuation is a benefit provided to an employee on cessation of employee services.
To give this benefit to an employee, the employer contributes to a Superannuation trust
on a monthly or yearly basis. There is no similar contribution from employee.
This component does not form a part of the monthly pay slip and is not taxable.
Integration

Payroll Process
Superannuation contributions are computed by the system as a part of the regular payroll
process

Termination Workbench
The Termination Workbench computes the Superannuation payable to an employee at the
time of termination of employment. During a regular payroll run, the system computes the
Superannuation and stores the results in provisional wage types.

Features
The Superannuation component comprises:

Personal IDs infotype (0185) Superannuation for India subtype (01)

In the subtype, you maintain the Identification Number of the employee and the name of
the trust, in which you are contributing for Superannuation.

Superannuation report (HINCSAN0)

Using this report you can generate a Superannauation List. This list gives an employee
wise contribution towards a Superannuation trust, for a specified period.

See also:
Superannuation Configuration

Superannuation Configuration
Purpose
This process describes the configurations for Superannuation.
Prerequisites

You have configured the Pay Scale Grouping for Allowances for the employees. This
configuration is required for the system to identify employee eligibility towards
Superannuation.

You have configured the wage types that form the basis for Superannuation, in the table
view Processing Classes, Cumulations, and Evaluation Classes (V_512W_D). The
Superannuation Basis wage type (/117) stores the basis amount for superannuation.

Process Flow
1. 1. Define the trust(s) in which your company maintains the Superannuation amount.
You must define the name of the trust, and the Trust ID
To do so, go to the IMG under Payroll India Retirement Benefits Maintain
Superannuation Trust ID.
The Superannuation ID field of Personal IDs infotype (0185) Superannuation for India
subtype (01), displays options as per the Trust IDs that you have configured in this IMG
activity.

2. 2. Define the types of contribution for Superannuation, and the wage types
associated with the different types of contribution. Contributions to Superannuation
can be on a monthly or on an annual frequency.

For more information, refer to the IMG under Payroll India Retirement Benefits
Maintain Superannuation Contrib. Freq. and Related Wage Types.
In the IMG activity, you have the option of creating customer specific wage types for
Superannuation. You can do so by copying the following default wage types:

San Contrib -monthly (/3S1) - Stores the monthly superannuation contribution

San Contrib - annual (/3S2) Stores the annual superannuation contribution

San Prov - sum of split (/3S3) Stores the sum of splits in the superannuation
period
3. 3. Specify the percentage of the Superannuation basis that the system must use for
superannuation computations.

To specify the percentage, go to the IMG under Payroll India Retirement Benefits
Define Contribution Rates for Superannuation.

4. 4. Specify the criteria under which an employee becomes eligible for

Superannuation.
The processing of Superannuation depends on processing of Bonus also. If an employee
has received a bonus, you can specify whether the system must calculate superannuation
for the employee in the same payroll period.
Using the Superannuation processing feature (40SAN), you can configure the criteria
under which an employee becomes eligible for superannuation, in case of a bonus
payment. You can configure the feature using the IMG under Payroll India Retirement
Benefits Maintain Eligibility Details for Superannuation.

Configurations for Retrospective Calculation

If you have configured customer specific wage types in the table view SuperannuationWagetype Details (V_T7INS5), then you must:
...
1. Include the customer specific wage types to the To check whether Superannuation
contributions took place rule (INSN).
During a retrospective calculation, based on this rule, the system either imports or does not
import the superannuation wage types from the previous results.
To include the wage types to the rule, go to the IMG under Payroll India Retirement
Benefits Check for Superannuation Contributions.
2. Include customer specific wage types to the Passing wage types from ORT to IT for
Superannuation Retro rule (IN52).
You might have already contributed towards superannuation in the previous payroll run for
the period. In this case, you can set the rule such that the employer need not contribute
again, during the retrospective payroll run.
To include customer specific wage types to the rule, go to the IMG under Payroll India
Retirement Benefits Maintain Wagetypes to be passed during Retro Runs.

Print Program for Form 24

Use
This function enables you to print, for the selected employees, the following parts of
Form 24 and Form 24Q:
...
Details of Salary Paid and Tax Deducted thereon from the Employee
This part displays the income, deductions and tax details of the selected employees for the
financial year.
Annexure
The annexure displays the particulars of perquisites and amount of accretion to Employee's
Provident Fund Account for the financial year.
Form 27A (only for Form 24)
This is a coversheet for the e-filing of Form 24. This has to be submitted to the tax office in
a physical form.
An electronic copy of Form 24 has to be submitted by the employer to the tax office before May
31 for the preceding financial year, example, before May 31, 2004 for the financial year
2003 - 2004.
If you have implemented the SAP Payroll across a group of companies, and you have
employees who have worked in more than one of these companies within a financial year
or a quarter, you can list their details for the period of his/her employment in Form 24 or
Form 24Q of each of these companies. This happens only when you enable Multiple Form
16.
If an employee has been with a Group for discontinuous periods, in the same financial year
or a quarter, the employee will be listed in Form 24 or Form 24Q of the Group for each
continuous employment with the Group. For example, an employee has been with:

Group 1 of ABC between April 1, 2001 - July 31, 2001

Group 2 of ABC between August 1, 2001 - December 31, 2001
Group 1 of ABC between January 1, 2002 - March 31, 2002
In this case, the employee will be listed twice in the Form 24 of Group 1 and once in the
Form 24 of Group 2.

Integration
The report reads the:
1. PAN, TAN and the GIR of the employer through the Feature to return Employer ITax
related data (40ECC). To maintain this feature, go to the IMG under Payroll India Tax
Basic Settings Maintain Feature to Return Employer IncomeTax Related Data.
1. PAN/GIR Number of the employee from the Personal Ids infotype (0185) 0002 subtype.
1. Results Table for the income, deductions and tax details of the selected employees, for the
financial year.

Prerequisites
For Form 24, you must have the payroll results for all the periods in the financial year, for
which, the employees have been with your organization.
For Form 24Q, you must have the payroll results for all the periods in the quarter, for
which the employees have been with your organization.
Features
1. It is mandatory to enter the Company Code of the employee.
2. If you enter the Personnel Area, Personnel Subarea or Payroll Area, the report reads all
records that exist for that Personnel Area, Personnel Subarea or Payroll Area only.
1. For Form 24, you have to enter the financial year for which the report is valid. In the printed
report, the Date from which employed during the financial year field displays either the
financial year begin date or the date on which the employee joins the organization,
whichever is later. The Date upto which employed during the financial year field displays
either the financial year end date or the date on which the employee leaves the
organization, whichever is earlier.
2. For Form 24Q, you have to enter the financial year and the quarter in that financial year for
which the report is valid. In the printed report, the Date from which employed field displays
either the quarter begin date or the date on which the employee joins the organization,
whichever is later. The Date upto which employed field displays either the quarter end date
or the date on which the employee leaves the organization, whichever is earlier.
3. Specify whether you want to generate Form 24 or Form 24Q in the Quarter field. If you
want to generate Form 24Q, specify the quarter (1 - 4) for which you want to generate the
form. If you want to generate Form 24, leave this field blank.
4. In the Personnel No. of Person Resp. field, you must enter the Personnel Number of a
person from your organization. The report reads the master data records of this person for
the required details. This person has to sign on the form.
5. If the address of the employer has changed since the last time that the employer has filed
tax returns, select the Change in Addr. of Employerindicator.
6. If the address of the person responsible has changed since the last time that the employer
has filed tax returns, select the Change in Addr. of Person Resp. indicator.
7. Indicate whether the type of employer filing Form 24 or Form 24Q is a Government
organization or not.
8. Enter the Employer Branch/Division. The system prints this on Form 24 or Form 24Q, and
Form 27A.
9. Enter the Report Date and the Report Place. The information that you enter is printed on
the form.
10.When you run this report, data that is printed under Details of Salary Paid and Tax
Deducted thereon from the Employee section of Form 16 is exported to the TemSe file.
Print program for form 16 report (HINCF160) reads this data from the TemSe file. Every
time you run the Form 24Q report for the same selection, the system updates the existing
TemSe file.

1. Select the TemSe File (Test) indicator during the test run of the report. Print
Program for Form 16 report (HINCF160) does not read the TemSe file
records that are generated during a test run.
2. Do not select TemSe File (Test) indicator during the final run. If you run the
report again after the final run, you will get a warning message that the
TemSe file record of selected employee for the selected period will be

overwritten. You can decide to continue with the run or you can cancel the
run.
The naming convention of the
TemSe file that is exported is:
HR_INaabb_**********. Here, aa = last two digits of the year, bb = quarter (01 - 04)
and the 10 *s indicate the system generated sequence number for the TemSe
objects. You can see these objects through transaction SP11.
1. You can:

In case of Form 24 and Form 24Q for the last quarter, view the following lists in
the ALV format and download them as worksheets:
Deductee wise details of TDS
Salary and Income Tax Details
1. In case of Form 24Q for the first three quarters, view the Deductee wise
details of TDS in the ALV format and download it as worksheet
1. Download e-file for Form 24 and Form 24Q
2. Print Form 27A

1. You are provided with the following Business Add-Ins (BAdI):

HR_IN_ER_ADDRESS This BAdI can be used to determine the name and the
address of the employer, which is printed on Form 24 or Form 24Q, based on
parameters other than the standard.
You can access this BAdI in the IMG under Payroll India Other Reports
Form 16 and Form 24 BAdI: Determine Address of Employer Based on
Different Parameters.

HR_IN_F24Q_TXBL_INCM This BAdI can be used to calculate the monthly

Taxable Amount to be printed on Form 24Q.
You can access this BAdI in the IMG under Payroll India Other Reports
Form 16 and Form 24 BAdI: Calculate Taxable Income of the Employee for
Form 24Q Reporting.

Activities
...
From SAP Easy Access menu, choose Human Resources Payroll Asia/Pacific India
Subsequent Activities Annual Legal Reports Income Tax Form24.
The Print Program for Form 24 screen appears.
Enter the relevant selection criteria.
Enter the Company Code.
Enter the User Parameters.
Choose Program Execute.
The system lists down the Deductee wise details of TDS for each employee in the different
payroll periods. You can select the Salary and Income Tax Details option on the Application
tool bar to display the Salary and Income Tax Details of each employee for the last quarter
or for the financial year.
You can total the different sub components of salary or tax to enter the challan details. You
can download the lists mentioned above in the form of worksheets by selecting the
Spreadsheet option from the Application tool bar.

Choose Challan Details option. Enter the details of the tax paid You can use the details
displayed on the screen. The details that you enter are printed on Form 24 and Form 24Q.
Save the Challan Details.
To print a copy of Form 27A, choose Print Form 27A.
To download the electronic copy of Form 24 or Form 24Q, and the Annexure in the form of a
text file, choose Download e-File for Form 24. On the selection screen, if you have entered:

1. Annual (blank) as the Quarter, the system downloads Form 24

One of the quarters (1 - 4) as the Quarter, the system downloads Form 24Q