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

Exemptions
 Exemption on Leave Travel Allowance
 Exemption on Medical Reimbursements
 Exemption on Medical Insurance
 Exemption on Child Education Allowance
 Exemption on Child Hostel Allowance




Exemption on Other Allowances and Reimbursements
Exemption on Leave Encashment
Exemption on Voluntary Retirement Scheme
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:

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.

Company Leased Accommodation (CLA)
In a CLA, the company leases an accommodation and provides it as a housing
benefit to the employee. Employee eligibility towards CLA depends on the Pay
Scale Grouping for Allowances.
If an employee has a CLA benefit, the system will compute the perquisite
applicable on the CLA.

Company Owned Accommodation (COA)
In a COA, the company owns the accommodation and provides it as a housing
benefit to the employee. Employee eligibility towards COA depends on the Pay
Scale Grouping for Allowances.
If an employee has a COA benefit, the system will compute the perquisite
applicable on the COA.

Hotel Accommodation
In this case, the employer provides a hotel accommodation to the employee. If the
stay in the hotel exceeds a fixed period, as specified by the Government, a
perquisite is applicable on the cost of accommodation.
If you have specified a perkable hotel accommodation in the Housing (HRA /
CLA / COA)infotype (0581), the system will compute a perquisite.

You can specify the Accommodation Type for an employee, and maintain
the housing details using Housing (HRA / CLA / COA) infotype (0581).
 If your company has provided furniture and helper(s) as a part of the
accommodation, the system will compute the applicable perquisites.
 To create and process the different categories of accommodation, the SAP system
provides a standard set of Accommodation Types. For example:

Rented 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 not change the default configurations of the tables
listed above.
 User Exits
If you have created your own Accommodation Types, you must also specify the
computation rules for these Accommodation Types. You may also need to define your own
set of validations for the Housing (HRA / CLA / COA) infotype (0581). The Housing
functionality provides the following user exits:

EXIT_HINCALC0_005 User Exit in the Enhancement 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.

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).

Maintain the wage types for a Conveyance Type and a Pay Scale
Grouping for Allowance through the IMG under Payroll India 
Reimbursements, Allowances and Perks  Calculate Eligibility for RAPs
(V_T7INA9).

If you want these wage types to be defaulted in Basic Pay infotype
(0008), you must maintain these wage types in table view Conveyance
Allowance Eligibility (V_T7INC9), through the IMG under Payroll India 
Car and Conveyance  Assign Eligibility Criteria for Conveyance
Allowance.
If you have maintained the wage type in this table view, when you save the Car &
Conveyance infotype (0583) record for an employee, a dynamic action is triggered,
wherein the system takes you to the Basic Pay infotype (0008). The wage type that
you have maintained will get defaulted into the Basic Pay infotype (0008). If it is an
INVAL wage type, the amount is also defaulted, else you have to enter an amount
here and save the infotype.

Maintain the conveyance tax exemption limit of these wage types
for tax code SCNV through the IMG under Payroll India Tax  Tax
Liability on Reimbursements, Allowances and Perks Assign Tax Code
Limits to Wage Types (V_T7INT9).
You maintain payment wage types for all the Conveyance Types. But, only the
Conveyance Type for which you require Exemption under Section 10, you should
maintain the wage type entries in table view Taxability of Wage Types (V_T7INT9)
for taxcode SCNV.
 In case of a physically challenged employee under section 10(14)(xi), you must maintain
an entry for the employee in Challenge infotype (0004) for the Challenge Type Disabled
Sec10(14)xi (N1).
 Exemption on Conveyance Allowance is the lesser of:
...
...
Actual payment made to the employee for conveyance
Exemption limit

Amount maintained for tax code SCNV in table view Taxability of Wage
Types (V_T7INT9).
Amount maintained in Exemption limit for challenged constant (CHGEX) of
table view Payroll Constants (V_T511P) for a physically challenged
employee.

Perquisite
Perquisite on Car Schemes and driver(s) provided by the company is valid only till
financial year 2004 – 2005.
The system processes perquisites on Car Schemes that the employer provides to the
employee.
You must make the following configurations to maintain a Car Scheme and calculate
perquisite on it:
 You must maintain the car types through the IMG under Payroll India  Car and
Conveyance  Define Vehicle Details (V_T7INC1). The Cubic Centimeter or the Horse
Power of the car that you maintain here is used during the calculation of perquisite.
 The SAP System provides you with some default Conveyance Types. If required, you can
maintain conveyance types to suit your company requirements. To do this, go to the IMG
under Payroll India  Car and Conveyance  Define Conveyance Types (V_T7INCA).
Select Yes for the Car Detail Flag to define the conveyance type as a Car Scheme. In this
case, you can capture the details of the vehicle in the Car & Conveyance infotype (0583).
The system uses these details to calculate the perquisite value of the vehicle.
 For a Pay Scale Grouping for Allowance and a Car Scheme, you can maintain the eligibility
of an employee for

The number of cars
 The maximum amount of all the cars. This is based on the price of the
cars.
To maintain this, go to the IMG under Payroll India  Car and Conveyance  Define
Amounts and Numbers for Car Schemes (V_T7INC7). The options that you get for the Car
Scheme will be the ones for which you have selected Yes as the Car Detail Flag in table
view Codes for Conveyance Types (V_T7INCA).
 For a Pay Scale Grouping for Allowance and a Car Scheme, you must maintain the Car
Type and you can maintain the maximum age of the car, that an employee is eligible for.
To do this, go to the IMG under Payroll India  Car and Conveyance  Assign Type and
Age of Car for Car Schemes (V_T7INC3). The options that you get for the Car Type will be
the ones that you have maintained in table view Car Types Master (V_T7INC1).
The system provides you with the following Car Schemes:
 Company Owned Car Scheme (COCS)
In this case, the car is owned by the employer, and can be


Maintained by the employer
Maintained by the employee
The perquisite amount for COCS depends on the Cubic Centimeter of the car. These
perquisite values are stored in the table view Perk Valuation for Cars (V_T7INC5). This
perquisite value is valid only for the first car.
Ten percent of the total value of the second and third cars are taken as the perquisite
values. This percentage is stored in the Car perk calculation rate constant (CRPRK) of
table view Payroll Constants (V_T511K).
 Own Your Car Scheme(OYCS)
In this case, the vehicle is owned by the employee and is maintained by the employer. The
system provides for following types of OYCS:

Availing Own Your Car Scheme (OYCS)
In this case, the vehicle is a car.

Own Your Car Scheme Others (OYCS Others)
In this case, the vehicle is an automotive conveyance other than a car.
The perquisite value for Availing OYCS and OYCS Others is the actual expenditure
reduced by a particular amount. This particular amount depends on the Cubic Centimeter
of the vehicle and is stored in the table view Perk Valuation for Cars (V_T7INC5). Actual
expenditure can be the

Reimbursements made to the employee through Additional
Payments infotype (0015) or through Recur. Payments/Deds. infotype
(0014).
 Notional reimbursement of the expenditure through Additional Payments
infotype (0015) or through Recur. Payments/Deds. infotype (0014), in case
the employer incurs the maintenance expenditure directly, for which the
employee does not get a reimbursement.
Maintain the actual expenditure wage types for the tax codes,

SCNE in case of Availing Own Your Car Scheme (OYCS)
 SCNO in case Own Your Car Scheme Others (OYCS Others)
You can do this through the IMG under Payroll India Tax  Tax Liability on
Reimbursements, Allowances and Perks  Assign Tax Code Limits to Wage Types
(V_T7INT9).
Legally, the Car Schemes, COCS (Old) and OYCS (Old), are not valid after
September 30, 2002. In these cases, the perquisite value is calculated on the Horse
Power of the car.
For a Car Scheme, the system calculates the perquisite value for an employee only if the
indicator for perquisite calculation is selected in the Car & Conveyance infotype (0583).
If the company is providing the employee with a driver or drivers for a Car Scheme, there
is a perquisite value attached to a driver. This perquisite amount for a driver is stored in
the table view Payroll Constants (V_T511P)

Perk value of driverconstant (DRVP1)
Valid for the payroll period from October 1, 2001 onwards.
 Perk value of driver (old) constant (DRVPK)
Valid for payroll period until September 30, 2001.
See also:
Exemption and Perk Calculation for Car and 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:

Param 1 - Determines the TDS computation method. Param 1 can
have the following values:
...
BON1 – Tax at a standard company wide rate
BON2 – Tax before bonus payment and at the marginal rate of tax, for
individual employees. It is exclusive of surcharge.
BON3 – Tax before bonus payment and at the marginal rate of tax, for
individual employees. It is inclusive of surcharge.
BON4 – Tax after bonus payment and at the marginal rate of tax, for individual
employees. It is exclusive of surcharge.
BON5 – Tax after bonus payment and at the marginal rate of tax, for individual
employees. It is exclusive of surcharge.
 Param 2 - Determines the Tax Code for bonus. The standard SAP system
has the Tax Code for Bonus as SBON. You can maintain your own tax code
for Bonus through the table view Taxability of wage types (V_T7INT9).
For an off-cycle bonus, you also have the option of maintaining your own tax rates. To do
so, go to the IMG under Payroll India  Bonus User Exit: Determine Income Tax Rate
on Bonus Paid through Off Cycle.
For more information see, Off-Cycle Activities.
Income Tax
Purpose
This component computes tax on the income received by an employee for a financial
year.
Income of an employee may consist of all or any of the following components:
Regular Income - This is that part of the salary, which an employee receives every month and
is projected for the entire financial year. For example, Basic Pay, House Rent Allowance,
Conveyance Allowance.


Monthly regular income - Mon Reg Income wage type (/124). This wage type is
the cumulation of the values of all the wage types for which you have configured
the Cumulation Class as 24.
Annual regular income - Ann Reg Income wage type (/410)
The value of Ann Reg Income wage type (/410) is the sum of:
Value of Mon Reg Income wage type (/124) in the Cumulative Results Table
Value of Mon Reg Income wage type (/124) for the current period
Value of Mon Reg Income wage type (/124) for the current period, multiplied by
the value of Projection Factor wage type (/401)
 Value of the Projection Factor wage type (/401) is the number of
remaining periods that payroll has to be run in the current financial
year, for the employee.
 The projection of the remaining periods can be until the end of the
financial year or until the employee is terminated or the retirement
date of the employee, whichever is the earliest.
 System projects the annual regular income using either Actual Basis or
Nominal Basis. The system by default uses Actual Basis to project
annual regular income. You can access this from the IMG for Payroll
India: Tax  Maintain Annual Taxable Income.
We recommend that you use a single tax calculation method, either Actual
Basis or Nominal Basis throughout the financial year, to project the annual
regular income.
Irregular Income - This is that part of the salary, which an employee receives for a particular
period and is not projected for the entire financial year. For example, Leave Travel
Allowance, Bonus.


Monthly irregular income - Mon Irr Income wage type (/125). This wage type is
the cumulation of the values of all the wage types for which you have configured
the Cumulation Class as 25.
Annual irregular income - Ann Irr Income wage type (/411)
The value of Ann Irr Income wage type (/411) is the sum of:
...
Value of Mon Irr Income wage type (/125) in the Cumulative Results Table
Value of Mon Irr Income wage type (/125) for the current period
Perquisite - Example, Housing Perk, Loan Interest Advantage.

Annual Perk wage type (/127)

Annual Perk wage type (/413)
The value of Annual Perk wage type (/413) is equal to the value of Annual Perk
wage type (/127).
Previous Employment Salary



1.

Prev Gross salary wage type (/4V1)
Val of perk u/s 17(2) wage type (/4VJ)
Profts wrt sal u/s 17(3) wage type (/4VK)
These values are captured directly through the Previous Employment Tax Details
infotype (0580). In case you have configured Multiple Form 16, these values are
automatically captured in the system when an employee gets transferred from one
group of the company to another group in a financial year.
Income from Other 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

Aggregate Deduction - Aggrg Deduction wage type (/424)
The value of Aggrg Deduction wage type (/424) is the equal to the value of
Empmnt tax (Prof Tax) wage type (/422) - Professional Tax.
...
Empmnt tax (Prof Tax) wage type (/422) includes the value of Prev prof. tax paid
wage type (/4V3).

(/432)
Chapter VI Section 80 Deductions - Agg of Chapter VI wage type
 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:

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). HR-IN: Voluntary tax deduction rule (INVT) then uses the applicable
tax rates of education cess and surcharge to divide the value of Additional
Voluntary Tax wage type (/462) into the following wage types:
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:

In case of a retroactive run across financial years for an employee
who was terminated before Period 12 of the year for which the retrospective
payroll run is being executed, the Results Table (RT) does not exist For
Period 12 In Period 12. In this case, the values of the above four wage types
in the DT will be incorrect. The Modify DT with the latest available results in
the 'for year' for S89 operation (INDTL), however, corrects the values of
these wage types in DT. This operation is called by the Personnel calculation
rule IN91 (IN91) of the Retroactive accounting INDIA schema (INNR).
 In case of a retroactive run across financial years for an employee who
joined the organization in Period 12, and whose payroll was not run in Period
12, the Results Table (RT) does not exist For Period 12 In Period 12. In this
case, you must set the value of the Cross fin Yr retro from March constant
(CYFRM) of table view Payroll Constants (V_T511K) to 1. The default
value of this constant is 0. You can do this in the IMG under Payroll India 
Tax  Section 89(1) Relief  Configure Cross Financial Year Retro for
March.
Features
 In case of Rebates and Statutory Deductions, the previous year's original amounts are
taken into consideration while recalculating tax for that year. The extra amount is carried
forward to the current period and treated accordingly. For example, while calculating tax for
the previous year by including the arrears payments, the amount deducted as Professional
Tax remains unchanged. The additional amount that should have been deducted if the
arrears payments had been made in the previous year, is stored in the Professional Tax
Difference wage type (/622). This amount is treated as part of the current year's
Professional Tax amount for calculating current year's tax including arrears.
 In case of Exemptions, the arrears payments made in the current year for the previous year
is also taken into consideration while recalculating tax for that year. For example, while
calculating tax for the previous year including the arrears payments, the House Rent
Allowance (HRA) exemption is recalculated for the previous year.
 You can choose, at the implementation level, to provide Section 89(1) Relief to your
employees. In the Sec 89 Switch Implement. level constant (S89SW) of the table view
Payroll Constants (V_T511K),


Set the Value field to 1, if you want to provide Section 89(1) Relief to your
employees.
Set the Value field to 0 or leave the field blank, if you do not want to provide
Section 89(1) Relief to your employees.
To do this, go to the IMG under Payroll India  Tax  Section 89(1) Relief  Maintain
Sec89(1) Switch at Implementation Level.
 You can provide Section 89(1) relief to certain employees, even if you have chosen not to
provide the relief to your employees at the implementation level. To do this, in the Other
Statutory Deductions infotype (0588) 0004 subtype, select the indicator for Section 89(1)
eligibility at employee level
Third Party Deductions
Purpose
This component provides for the calculation of Section 80 deduction and Section 88
rebate when payments to external parties are made directly from the payroll of the
employee. For example, LIC Premium, Mediclaim. These deductions are in addition to
the declarations that an employee makes for the Section 80 and Section 88 contributions
through Section 80 Deductions infotype (0585) and Investment Details (Sec88) infotype
(0586), respectively. You do not require to maintain the details in these two infotypes for
the the Section 80 and Section 88 deductions processed through the payroll.
For Third Party Deductions, you can make an entry through Basic Pay infotype (0008),
Recur. Payments/Deds. infotype (0014), Additional Payments infotype (0015) and
Membership Fees infotype (0057).
If the Third Party Deductions are made through Membership Fees infotype (0057), along
with the past and the present payments, the projected payments will also be considered
while calculating tax. The amount the employee proposes to contribute in the future
months of the financial year is also taken into consideration, by the system, while
calculating the total Section 80 and Section 88 contributions.
If you make the Third Party Deductions through Basic Pay infotype (0008), Recur.
Payments/Deds. infotype (0014) or Additional Payments infotype (0015), the system will
only consider the past and present contributions while calculating tax and not the
projected contributions.
Integration

The different types of deductions through Membership Fees infotype (0057) have to be
maintained as subtypes of the infotype. To do this, go to the IMG under Payroll India 
Tax  Third Party Deductions  Define Membership/Deduction Types.

If you are making Third Party Deductions through the Membership Fees infotype (0057),
you must maintain the wage type for this infotype through the IMG for under Payroll India
 Tax  Third Party Deductions  Check entry permissibility for Membership Fees
Infotype (0057).
The Third Party Deductions payroll function (INTPD) reads the internal tables S80, S88,
P0057 and the wagetypes in the internal table, and updates the internal tables S80 and
S88.
Feature
If you are making Third Party Deductions and you want the system to calculate tax after
taking Section 80/Section 88 contributions into consideration, you must configure the
wage types for the different:

Divisions or the subsections through the IMG for Payroll India  Tax  Third Party
Deductions  Configure Wagetypes for Section 80.

Types of contributions through the IMG for Payroll India  Tax  Third Party Deductions
 Configure Wagetypes for Section 88.
See also:
Membership fees infotype (0057)
Income from Other Sources
Purpose
This component helps you to consider for taxation, the income that is incurred from sources other
than that from your employment, in the current financial year.
The SAP System divides the income from other sources into:

Income from House Property

Income from Other Sources
Implementation Considerations
If an employee chooses to declare income from sources other than that from current employment,
then that income also has to be taken into consideration for taxation during a regular payroll run.
Integration
The system reads the details from the Income from Other Sources infotype (0584).
The Income From Other Sources payroll function (P0584) reads the Income from Other Sources
infotype (0584) and generates the internal table IOS. Deduction under Section-24 payroll function
(INS24) and Details of Income from Other Sources payroll function (INIOS) read the Internal
Table and the internal table IOS for the Income from House Property subtype (0001) and Income
from Other Sources subtype (0002) data, respectively and generates the following wage types in
the Internal Table:
/3O1 - Annual Lettable Value
This is the amount that you have entered as the Final Lettable Value in the Income from
Other Sources infotype (0584) Income from House Property subtype (0001), for either
Partly Let Out House Property or Wholly Let Out House Property.
/3O2 - Business Profits
This is the amount that you have entered as the Business Profits in the Income from Other
Sources infotype (0584) Income from Other Sources subtype (0002).
/3O3 - Long Term Capital Gains (Normal Rate)
This is the amount that you have entered as the Long Term Capital Gains (Normal Rate) in
the Income from Other Sources infotype (0584) Income from Other Sources subtype
(0002).
/3O4 - Short Term Capital Gains
This is the amount that you have entered as the Short Term Capital Gainsin the Income
from Other Sources infotype (0584) Income from Other Sources subtype (0002).
/3O5 - Income from Dividends
This is the amount that you have entered as the Income from Dividends in the Income from
Other Sources infotype (0584) Income from Other Sources subtype (0002).
/3O6 - Income from Interests
This is the amount that you have entered as the Income from Interest in the Income from
Other Sources infotype (0584) Income from Other Sources subtype (0002).
/3O7 - Other Income
This is the amount that you have entered as the Other Income (Unspecified) in the Income
from Other Sources infotype (0584) Income from Other Sources subtype (0002).
/3O8 - Deductions u/s 23
/3O9 - Deduction u/s 24 (Interest)
This is the amount that you have entered as the Deduction of Interest under section 24 in
the Income from Other Sources infotype (0584) Income from House Property subtype
(0001).
/3OA - Deduction u/s 24 (House Repairs)
This is the amount that you have entered as the Deduction on Account of Repairs under
section 24 in the Income from Other Sources infotype (0584) Income from House Property
subtype (0001), for either Partly Let Out House Property or Wholly Let Out House Property.
/3OB - Deduction u/s 24 (Others)
This is the amount that you have entered as the Deduction on Account of Other Expenses
under section 24 in the Income from Other Sources infotype (0584) Income from House
Property subtype (0001), for either Partly Let Out House Property or Wholly Let Out House
Property.
/3OD - Long Term Capital Gains (Special Rate)
This is the amount that you have entered as the Long Term Capital Gains (Special Rate) in
the Income from Other Sources infotype (0584) Income from Other Sources subtype
(0002).
/3OS - Short Gains on Listed Sec
This is the amount that you have entered as the Short Term Capital Gains (Listed
Securities) in Additional Payments infotype (0015) for the wage type associated with the
tax code STCG.
/3OG – Gift Income
This is the amount that you have entered as the Gift Income in Additional Payments
infotype (0015) for the wage type associated with the tax code SGFT.
The sum of amounts in these wage types is added to the Any other Income wage type (/131). The
amount in this wage type is added to the amount in Income under Head Salaries wage type
(/426) to form the Gross Total Income wage type (/430). Section 80 Deductions are made from
Gross Total Income wage type (/430) to form the Gross Total Income wage type (/434). Before
calculating tax on total income, the system deducts the amounts in Long Term Capital Gains
Normal Rate wage type (/3O3), Long Term Capital Gains Special Rate wage type (/3OD), Short
Gains on Listed Sec wage type (/3OS) and Other Income wage type (/3O7) from the Gross Total
Income wage type (/434). The tax calculated on Long Term Capital Gains, Special and Normal
Rate, Short Term Capital Gains on Listed Securities and Other Income are added to the normal
tax to form the Tax on Total Income wage type (/436).
Features
The parameters for Income from Other Sources have been configured in the SAP System as
follows:
...
1. In case of Let out House Property (Wholly or Partly), the Deduction on Account of
Repairs under section 24 is limited to a percentage of the Final Lettable Value. This
percentage may vary across financial years. In the Repairs under Section 24 constant
(REP24), of the table view Payroll Constants (V_T511K), this percentage has been
maintained.
2. In the table view Payroll Constants (V_T511P), the maximum amount of interest for
which you can get tax exemption under section 24 has been maintained. This amount may
vary depending on the financial year during which the loan was taken. Following constants
have been maintained for the different interest exemption amounts:
...
a. LNS01 - Rs.30,000
b. LNS02 - Rs.75,000
c. LNS03 - Rs.100,000
d. LNS04 - Rs.150,000
e. LNSMX - There is no limit in this case. The entire amount that you
enter as the Deduction of Interest under section 24 in the Income from Other
Sources infotype (0584) Income from House Property subtype (0001), for Self
Occupied \ Deemed Self Occupied House Property, is tax exempt.
3. In the table view Payroll Constants (V_T511K), the rate of taxation for Long Term
Capital Gains have been maintained in the following constants:
...
a. LCNRT - Long Term capital Gains (Normal Rate)
b. LCSRT - Long Term capital Gains (Special Rate)
4.
In the ST Cap. Gain rate (Listed Sec) constant (SCGRT) of table view Payroll
Constants (V_T511K), the rate of taxation for Short Term Capital Gains on Listed
Securities has been maintained.
5. In the Other Income - rate constant (OTHRT) of the table view Payroll Constants
(V_T511K), the rate of taxation for Other Income (Unspecified) has been maintained.
You can maintain whether a Loan Type is valid for Section 24 exemption. To do this, go to the
IMG under Payroll India  Company Loans  Master Data  Maintain Deduction Details
Under Section 24.
For details on configuring the IMG activity, refer to the IMG documentation.
Tax on Arrears
Purpose
This component provides for the arrears generated during the retrospective regular
payroll run, to be taxed in the payroll run in which the arrears are paid.
The arrears, arising due to salary increments, long term settlements or revision of loss of
pay, are generally a high value figure. Spreading the tax on arrears over the remaining
payroll periods of the financial year results in high tax incidence on the employee in the
subsequent periods, with insufficient payments to match. In such a case, this functionality
provides for the arrears generated during the retrospective payroll run to be taxed in the
payroll run in which the arrears are paid.
Integration
During a retroactive payroll run, the arrears are stored in the Stat.net recalc.diff. wage
type (/551). The Calculate Arrears for Taxation rule (INAR) reads, in the original period
the Stat.net recalc.diff. wage type (/551) for each of the payroll periods and stores the
total arrears in the temporary variable table. Determine TDS rate and Calculate Tax on
Arrears rule (INTD) calculates the tax on arrears, stored in temporary variable table, at
the rate brought forward by the Determine TDS % for arrears operation (INTDS) and
stores this tax in the Income Tax wage type (/460).
Features

If the total arrears generated in the regular run exceeds a particular amount, then the
arrears is taxed by the Determine TDS rate and calculate Tax on Arrears rule (INTD). You
must maintain this particular arrears amount in the Arrear amount limit constant (ARLMT)
of table view Payroll Constants (V_T511P).

You must maintain the Determine TDS rate and Calculate Tax on Arrears rule (INTD) for
the parameter of the Determine TDS % for arrears operation (INTDS). You must configure
the Determine TDS % for arrears operation (INTDS) to determine the tax rate, based on
any of the following parameters:
...
a. BON1 - Standard tax rate at company level configured in Arrear
Payment - TDS % constant (ARTDS) of table view Payroll Constants (V_T511K).
b. BON2 - Marginal tax rate (excluding surcharge) before arrears, of an
employee.
c. BON3 - Marginal tax rate (including surcharge) before arrears, of an
employee.
d. BON4 - Marginal tax rate (excluding surcharge) after arrears, of an
employee.
e. BON5 - Marginal tax rate (including surcharge) after arrears, of an
employee.
i. You can maintain the Arrear Payment - TDS % constant
(ARTDS) and Arrear amount limit constant (ARLMT) in the IMG under Payroll
India  Tax  Tax on Arrears  Maintain Tax Limit and Tax Rate for
Arrears Payment.
ii. You can maintain the Determine TDS % for arrears
operation (INTDS) in the Determine TDS rate and Calculate Tax on Arrears
rule (INTD) in the IMG under Payroll India  Tax  Tax on Arrears 
Maintain Schema for Tax on Arrears.

Employees, who have a low salary and have no tax liability, tax on arrears will not be
calculated even when the parameter for the Determine TDS % for arrears operation
(INTDS) is maintained as BON1.
Exemptions
Purpose
This component comprises of:

Exemption on Medical Reimbursements and Medical Insurance Premiums

Exemption on Leave Travel Allowance

Exemption on Child Education Allowance and Child Hostel Allowance

Exemption on Other Allowances and Reimbursements

Exemptions on Leave Encashment

Exemption on Voluntary Retirement Scheme

Exemptions on Housing

Exemptions on Conveyance
Exemption on Leave Travel Allowance (LTA)
Purpose
This component calculates the tax exemptions applicable to Leave Travel Allowance
(LTA).
Your organisation can give LTA to the employees in the following ways:
...
By specifying an annual (normally, but not necessarily) amount for LTA and making payments
against claims submitted by the employee.
By giving the employee a certain amount as LTA on a monthly or a periodic basis.
For more information on LTA reimbursements, see the Claims section.
Integration
Whenever an employee submits the travel tickets for LTA exemption as proof, you must create
an Exemptions infotype (0582), LTA subtype record for the employee. You must create one
record for every trip for which the employee is claiming an exemption.
You can make the payments for LTA through the Basic Pay infotype (0008), Recur.
Payments/Deds. infotype (0014), Additional Payments infotype (0015) or Additional 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 Medical Reimbursements, see the Claims section.
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,
/4E1, /4E2
that is, the components are
projected for the financial year
to arrive at the annual
exemption.
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
annual exemption.
/4E1, /4E2
' '
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.
Leave Encashment Amount
Exemption limit
3.
4.
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:

Basis for Employee contribution
 Basis for Employer Contribution
 Trust ID of the PF and Pension Fund trusts, in which your company
maintains employee PF
 VPF amount
 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

Use the Employees' Provident Fund - Reports (HINCEPF0)
generate the following monthly PF forms:
 Form 5 - You can generate this for employee(s) who qualify for
the PF, Pension Fund and EDLI membership for the first time.
 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.
 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.
 Use the PF Report (HINCEPF1) to generate the following annual
PF forms:
 Form 3A - Use this report to obtain a statement on the PF
contributions made towards Un-exempted establishments. This is an
annual report.
 Form 6A - This report provides consolidated contribution
statement for the financial year.
Pension Fund

The PF reports( for exempted trust ) Report (HINCEPN0) to
generates the following monthly Pension Fund forms:
 Form 4 - This report provides details of employee(s) joining the
Pension Fund trust during the current payroll period.
 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.
 Form 6 - Use this report to obtain information on the contribution
made by the employer, in the current payroll period.

Use the Pension Reports (HINCEPN1) to generate the following
annual Pension Fund forms:
 Form 7 (PS) - Use this report to obtain information on the
employee(s) who qualified for membership to the Employee Pension
Fund.
 Form 7 (FPF) - Use this report to obtain information on the
employee(s) who qualified for membership to the Family Pension
Fund.
 Form 8 (PS) - This report provides consolidated information on the
contribution made by employees towards the Pension Fund.
 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

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.
 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.
 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) multiplied by (Number of ESI days) divided by (Number of
Calendar days).
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).

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 30th 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:

 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

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
 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.

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.

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).
 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:

 
 
 
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
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.
1.
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).
3.
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:

Termination/retirement period is the same as the Gratuity payment
period
 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:

Gratuity payment period is before the Termination/retirement
period.
 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.

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
Print Program for Form 16
Use
This function enables you to print for a financial year, for an employee, the following
sections of Form No. 16 and Form No. 16AA:
...
Details of Salary Paid and Any Other Income and Tax Deducted
This section displays the income, deductions and tax details of the employee for the
financial year.
Details of Tax Deducted and Deposited into Central Government Account
This section displays the:
 Tax Deducted at Source (TDS)
 Surcharge
 Education Cess
 Total Tax Deposited
 Cheque/DD No. (if any)
 BSR Code of Bank Branch
 Date on Which Tax Deposited
 Transfer Voucher/Challan Identification Number
The two sections mentioned above form the main part of Form 16. The following two
reports are also printed along with Form 16:
Annexure to Form No. 16
This report displays, the amounts for the different components of:




Emoluments Paid
Perks
Income from Other Sources declared by the employee and processed in the
payroll runs
Exemptions u/s 10
Form No. 12BA
This report is a statement showing particulars of:
 Perquisites
 Other fringe benefits or amenities
 Profits in lieu of salary
A copy of the Form 16 is given to the employee by the employer at the end of the
financial year or on termination of the employee.
Form No. 16AA contains a Header and a Footer.
Form No. 16AA is printed for employees for whom both of the following conditions
are fulfilled:
1. Have an annual income less than INR 150,000
2. Do not have any income from other sources to be processed by
the SAP payroll
1. Multiple Form 16
If you have implemented the SAP Payroll across a group of companies, you can issue
separate Form 16 to an employee for the period of his or her employment in each of these
companies.
If you are already live with the SAP Payroll, you can enable Multiple Form 16 from the
beginning of the financial year, example, from April 1, 2002.
Once you have enabled Multiple Form 16, you should not revert it.
If an employee has been with the same group for discontinuous periods in the same
financial year, the employee will get a separate Form 16 for each continuous employment
with a 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 get three separate Form 16, two from Group 1 and one from
Group 2.
Integration
The report reads the:
1. PAN/GIR Number of the employee from the Personal Ids infotype (0185) 0002 subtype.
2. PAN Number, TAN and the GIR of the employer through the Feature to return Employer
ITax related data (40ECC). To configure this feature, go to the IMG under Payroll India 
Tax  Basic Settings  Maintain Feature to Return Employer IncomeTax Related Data.
3. TDS Circle address from the table view Personnel Subarea grouping for Tax (V_T7INT5).
Prerequisites
1. You must have the payroll results for all the periods in the financial year, for which, the
employee has been with your organization.
1. You must have defined the Tax Groupings, and assigned a TDS Circleand Payee Key to a
Tax Grouping. To do this, go to the IMG under Payroll India  Tax Basic Settings
Define Personnel Area and Subarea Groupings for Tax.
1. You must have assigned an employee to a Tax Grouping according to his/her Personnel
Area and Personnel Subarea. To do this, go to the IMG under Payroll India  Tax  Basic
Settings  Assign Tax Groupings for Personnel Areas and Subareas.
2. You must have maintained the Employee Address constant (ADDSS) of table view Payroll
Constants (V_T511K). To do this, go to the IMG under Payroll India -> Other Reports ->
Form 16 -> Maintain the Addresss to be Printed on Form No. 16AA.
1. To enable Multiple Form 16, you must have implemented the following in all the systems
and all the clients:
...
In the Implementation Guide for Customizing (IMG), go to General Settings  Field
Display Characteristics  Global Field Display Characteristics  Preallocate global
field values.
Select Payroll  India in the Application Component Hierarchy.
Create the Global Field for the PIN_MUF16 data element.
Set the value of this Global Field to the begin date of the financial year, from which
you want to enable Multiple Form 16.
For example, you want to enable Multiple Form 16 in your organization from April 1, 2002.
In this case, you must set the Global Field Value to 20020401. Once you have activated
this Global Field value, you must not revert it.
1. To capture the tax on non-monetary perquisites, if the employer pays this tax on behalf of
the employee, you must have implemented the Business Add-In (BAdI),
HR_IN_TAX_EMPLOYER. This tax amount is printed on Form 16 under point 16b (Tax
paid by the employer on non-monetary perquisites u/s 192(1A) on perquisites u/s 17 (2)).
To implement this BAdI, go to the IMGunder Payroll India  Other Reports  Form 16 and
Form 24  BAdI: Tax on Non Monetary Perk Paid by Employer for Form 16 Reporting.
2. To determine the name and address of the employer, which is printed on Form 16, based
on parameters other than the standard, you must have implemented the Business Add-In
(BAdI), HR_IN_ER_ADDRESS. To implement this BAdI, go to the IMG under Payroll India
 Other Reports  Form 16 and Form 24  BAdI: Determine Address of Employer Based
on Different Parameters.
3. You must have executed the Print program for form 24 report (HINCF240). The system
reads the TemSe file that is generated by the Form 24Q report to print the data in the
Details of Tax Deducted and Deposited into Central Government Account section of Form
16.
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
records for all employees that exist for that Personnel Area, Personnel Subarea or Payroll
Area only.
3. You have to enter the financial year for which the report is valid. In the printed report, the
From date displays either the financial year begin date or the date on which the employee
joins the organization, whichever is later. The To date displays either the financial year end
date or the date on which the employee leaves the organization, whichever is earlier.
4. In the Person Responsible field, you must enter the name of a person from your
organization. The name of this person will appear at the bottom of the form. This person
has to sign against his or her name on the form.
5. If you want Original Document to be printed on the report, select the Original Document
indicator.
6. If you do not want to print the form in the layout given by SAP, select Customer Layout and
enter the name of the layout created by you. You can create your own layout through
transaction SE71.
7. The TemSe files, which are generated by the Print program for form24 report (HINCF240),
may not exist for a quarter. You can execute either of the following so that the details are
printed in the Details of Tax Deducted and Deposited into Central Government Account
section of Form 16:
1. Generate Form 24Q again for the the relevant quarter. In this case, you can
leave the File Path field blank. You must not have selected the TemSe File
(Test)option on the selection screen of Print program for form24 report
(HINCF240) while generating Form 24Q. The Form 16 report does not read
the TemSe files that are generated as test runs.
2. Upload the worksheet with the tax data for the relevant quarter. In this case,
in the File Path field, enter the path where the file is stored in your local
machine. The data in this worksheet is given preference over the data in the
TemSe file.
8. If you want the system to print the standard Form No. 16 instead of Form No. 16AA for the
employee, select the Execute the Standard Form indicator.
9. You can enter the text to be printed at the footer of the report in the Free text for footer
field.
Activities
...
From SAP Easy Access menu, choose Human Resources  Payroll  Asia/Pacific  India
 Subsequent Activities  Annual  Legal Reports  Income Tax  Form16.
The Print program for Form 16 screen appears.
Enter the relevant selection criteria.
Enter the Company Code.
Enter the Date of Payment and the Bank where tax is deposited details for the 12 regular
payroll runs, if required. For details see Tax Deducted and Deposited into Central
Government Account.
Enter the User Parameters.
Enter the Output Format.
Enter the Footer Text.
Choose Program  Execute.
Form 217 (2A) of the Company’s Act (HINC2170)
Use
This function displays and prints the salary details of employees whose salary exceeds a
specified statutory amount. This is a statutory report, submitted as an annexure to the
Director's Report.
This report is printed in accordance with the Company's Act.
Integration
This report reads the values of the following constants from the table view Payroll
Constants (V_T511P):

Annual Salary for sec 217 (2A) constant (SC217) - During the reporting period, if the salary
of an employee (who was employed for the complete duration of the reporting period)
exceeds the amount maintained in this constant, the entire salary details of the employee is
printed in Form 217 (2A).

Monthly limit for Form 217 (2A) constant (FM217) - If the salary of an employee (who was
employed for any part of duration in the reporting period) exceeds the amount maintained
in this constant, for one or more months during the reporting period, the salary details of
the employee for that period is printed in Form 217 (2A).
You can configure these constants through the IMG under Payroll India  Other Reports
 Form 217 (2A)  Maintain Minimum Salary of Employees for 217 (2A) Printing.
This report also reads the Business Add-In, HR_IN_PERCENT_SHARES, for the
percentage of shares held by the employees. You can configure this Add-In in the IMG
under Payroll India  Other Reports  Form 217 (2A)  Add-In: Percentage Share
Held by Employee.
Prerequisites


You must have maintained records for the employee in the Organizational Assignment
infotype (0001), Personal Data infotype (0002), Contract Elements infotype (0016),
Education infotype (0022) Subtype N5 and Other/Previous Employers infotype (0023).






 You must configure subtype N5 for the Education infotype (0022).
 The system reads the latest record of the Other/Previous Employers
infotype (0023), in case multiple records exist.

You should have maintained the following fields of the above mentioned infotypes for
the corresponding information to be printed on Form 217 (2A):
Header on Form
217 (2A)
infotype
Field
Nature of
Employment
Contract Elements infotype
(0016)
Contract type (CTTYP)
Qualification
Education infotype (0022)
Subtype N5
Education/training (AYSBI)
Previous
Employment Job
Other/Previous Employers
infotype (0023)
Job (TAETE)
Previous
Employment
Employer
Other/Previous Employers
infotype (0023)
Employer (ARBGB)

You must have maintained Evaluation Class 11 of the wage types used in Form 217
(2A) reporting, of which:
Specification 1 should be set for all the wage types that are defined as salary
components in Form 217 (2A).

Specification 2 should be set for all the wage types that are defined as
perquisites in Form 217 (2A).

The total remuneration that is printed on the form is the sum of the values of all
wage types with Evaluation Class 11 Specification 1 or 2.
Features



Full time employees - All employees who are in the payroll throughout the
reporting period.

Part time employees - All employees who are in the payroll only for a part of
the reporting period.






You can select the following types of employees:

The reporting period can be:



A financial year ((for example, April - March), or
A calendar year (January - December), or
A 15 month period
If the reporting period is not a financial year, the perquisite values are prorated on
the basis of the actual number of days.
For example, the reporting period is January 2002 to December 2002. In this case,
the total perquisite value for the reporting period will be the sum of:
  Perquisite for January 2002 to March 2002, which is the prorated
value of the perquisite of the financial year, April 2001 to March 2002
(the system reads the perquisite values from the payroll results of
March 2002), and
  Perquisite for April 2002 to December 2002, which is the prorated
value of the perquisite of the financial year, April 2002 to March 2003
(the system reads the perquisite values from the payroll results of
December 2002 or the last payroll result, whichever is earlier).
Activities
...
1. From SAP Easy Access menu, choose Human Resources  Payroll  Asia/Pacific 
India  Subsequent Activities  Annual  Legal Reports  Other Reports  Form 217
(2A) .
The Form 217 (2A) report screen appears.
2.
3.
4.
5.
Enter the employee selection criteria
Enter the Company Code
Enter the period for which you want to generate the report
Select Customer layout to print the report in any layout that you may have created
6. Choose Program  Execute
The report generates the salary details of all the eligible full time and part time employees
Loans Infotype (0045) - India
Definition
The following options have been added as the Conditions of the Loans infotype (0045)
for India:
Tranche/Loan Disbursement Plan
 Penal Interest Simulation
Use
 Tranche/Loan Disbursement Plan - You can select this option to display the Proposed
Disbursement Plan (as per configuration) of the loan grouping for the employee.
When you select this option, the system reads and displays data from the table views
Loans Disbursement Schedule (V_T7INJ5) and Loan Tranche Disbursement: Text for
Event Codes (V_T7INJ6).
 Penal Interest Simulation - You can select this option to simulate the Penal Interest Amount
for the current period, if you have entered a Special Repayment Amount under the
Payments.
When you select this option, the system calls the Batch Program for Penal Interest (Loans)
report (HINILON0) in the simulation mode, to calculate the Penal Interest Amount for the
current period for the employee.


You must have entered and saved the Special Repayment Amount under
the Payments of Loans infotype (0045), before selecting the Penal Interest
Simulation option.
You must have maintained the percentage to be multiplied by the Special
Repayment Amount to arrive at the Penal Interest Amount.
Integration
The system conducts the following eligibility checks when you create this infotype:
...
...
Whether the Pay Scale Grouping for Allowances that the employee belongs to is eligible for
the loan type that you are assigning to the employee.
Whether the age of the employee is less than or equal to the maximum age for that loan
grouping.
Whether the experience of an employee exceeds the minimum experience for that loan
grouping.
Whether the maximum number of loans of the selected loan type that an employee can avail
at a time is less than or equal to the number for that loan grouping.
Whether the maximum number of loans of the selected loan type that an employee can avail
for the entire period of his or her service in your organization is less than or equal to the
number for that loan grouping.
Whether the total outstanding amount in case of the selected loan type availed by the
employee, is less than or equal to the amount for that loan grouping.
Whether the maximum number of loans of all types that an employee can avail at a time is
less than or equal to the number maintained as a, Max. no. loans allowed at a time
constant (LMNL1) of table view Payroll Constants (V_T511K).
Refer to point 3 under
Loans Configuration for India.
Whether the maximum number of loans of all types that an employee can avail for the entire
period of his service in your organization is less than or equal to the number maintained as
a Max. no. loans allowed constant (LMNL2) of table view Payroll Constants (V_T511K).
Refer to point 4 under
Loans Configuration for India.
Whether the total outstanding amount in case of all types of loans availed by the employee, is
less than or equal to the amount maintained as a, Max. amt for loans outstanding constant
(LMVAL) of table view Payroll Constants (V_T511P).
Refer to point 5 under
Loans Configuration for India.
Whether the number of months between two loans of the selected loan type is less than the
time interval between two loans for that loan grouping.
Whether the approved loan amount is less than or equal to the minimum of:
Percentage of the Salary – Salary is the sum of all salary components (wage types)
that you have configured for a Loan Grouping through Determining Salary
Components for Loan eligibility feature (40LSL). All these wage types should also
be maintained in Basic Pay infotype (0008) record that corresponds to the
beginning date of the loans record. Percentage is the value that you have
configured in the table view Individual loan eligibility checks and limits (V_T7INJ3).
Percentage of the Asset Value – To capture the Asset Value, you must configure the
GET_ASSET_VALUE Method of the HR_IN_LOANS_VALIDATE Business Add-In
(Add-In). Percentage is the value that you have configured in the table view
Individual loan eligibility checks and limits (V_T7INJ3).
Fixed Amount – This is the value that you have configured in the table view Individual
loan eligibility checks and limits (V_T7INJ3).
If you do not configure the Asset Value through the GET_ASSET_VALUE Method
of the HR_IN_LOANS_VALIDATE Business Add-In (Add-In), the system takes the
Asset Value to be zero. As such, the loan approval amount becomes zero. In such a
case, you can maintain the GET_LOAN_APPROVED Method of the
HR_IN_LOANS_VALIDATE Business Add-In (Add-In) to override the loan approval
amount computed above.
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

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
 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.

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.

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).
 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
Loans Configuration for India
Purpose
This process allows you to configure the SAP system for the Company Loans
functionality in India.
This configuration is over and above the configurations provided under Loans.
Process Flow
You must make the following configurations for Company Loans in India:
...
1. Maintain the Loans Grouping in the IMG for Payroll India  Company Loans 
Master Data  Maintain Loans Grouping (40LGR feature).
2. Define the different salary components (wage types) that define the salary for a loan
grouping in the IMG for Payroll India  Company Loans  Master Data  Maintain Salary
Components (40LSL feature).
3. Maintain the maximum number of loans allowed at a time for an employee in the IMG
for Payroll India  Company Loans  Master Data  Maintain Maximum Number of
Loans Allowed (LMNL1 constant of V_T511K).
4. Maintain the maximum number of loans that an employee can avail in his or her entire
period of employment in your employee in the IMG for Payroll India  Company Loans 
Master Data  Maintain Maximum Number of Loans Allowed (LMNL2 constant of
V_T511K).
5. Maintain the maximum amount of outstanding loans, of all types, for an employee at
any given point of time in the IMG for Payroll India  Company Loans  Master Data 
Maintain Maximum amount for loans outstanding (LMVAL constant of V_T511P).
6. Maintain characteristics for a Loan Grouping, such as Employees' Eligibility for a loan,
Limit on number of loans taken, in the IMG for Payroll India  Company Loans  Master
Data  Maintain Loans Eligibility Checks and Limits (V_T7INJ3).
7. Maintain the disbursement schedule of the loans for a Loan Grouping in the IMG for
Payroll India  Company Loans  Master Data  Maintain Loans Disbursement
Schedule (V_T7INJ5).
8. Maintain the text for the event codes for a Loan Grouping in the IMG for Payroll India
 Company Loans  Master Data  Maintain the Description for the Event Codes
Tranche (V_T7INJ6)
9. Maintain the percentage, at company level, to be multiplied by the Special Repayment
Amount, stored in the Loans infotype (0045), to arrive at the Penal Interest Amount. To do
this, go to the IMG for Payroll India  Company Loans  Master Data  Maintain Penal
Amount Percentage for Special Repayment (LONPI constant of V_T511K).
10. Specify whether a Loan Type is eligible for Section 24 Deduction in the IMG for
Payroll India  Company Loans  Master Data  Maintain Deduction Details Under
Section 24 (V_T7INJ1).
11. Configure the Business Add-In (Add-In), HR_IN_LOANS_VALIDATE, to:
...
a. Capture the Asset Value (Method - GET_ASSET_VALUE) – A
percentage of this Asset Value is then used to determine one of the three
parameters for loan approval amount limit. If you do not maintain this value, the
system takes the Asset Value to be zero.
b. Maintain the loan approval amount for your employees (Method GET_LOAN_APPROVED). The system computes the loan approval amount as the
minimum of:
i. Percentage of the Salary
ii. Percentage of the Asset Value
iii. Fixed Amount
Ifyou want to override the loan approval amount computed by the system, you
can do so by using this Add-In.
c.
Maintain for an employee or a group of employees, the:
  Maximum number of loans allowed at a time
  Maximum number of loans allowed for the entire period of employment
  Total value of the outstanding loans allowed
(Method - GET_LOAN_MAX_VALUES).
The values for all the three mentioned eligibility criteria are maintained in Steps
3, 4 and 5, above. But, if you want to change any of the three eligibility criteria
for an employee or a group of employees, you can do so by configuring this AddIn.
To configure this Add-In, go to the IMG under Payroll India  Company Loans  Master
Data  Add-In: Loans Eligibility.
12. Configure the Business Add-In (Add-In), HR_IN_PENAL_INTEREST, to calculate the
penal interest amount due to foreclosure of a loan. The SAP system provides you with a
method to calculate this amount. (See the Batch Program for Penal Interest (Loans) report
(HINILON0) for more details.) But you can override this method by using the Add-In.
To configure this Add-In, go to the IMG under Payroll India  Company Loans  Master
Data  Add-In: Penal Interest Amount.
13. Configure the Taxation of interest rate advantage rule (INJ2) for the taxation of the
value of Int.rate adv./curr.month wage type (/LMB) in the IMG under Payroll India 
Company Loans  Calculation  Interest Rate Advantage Taxation.
Loans Summary Report (HINCLON1)
Use
This function is used to display the loans status of the employees.
Integration
The system reads the Loans infotype (0045) records of the employees.
Prerequisites
The Loans infotype (0045) record must exist for the employee.
Features
You can enter the following details in the entry screen of the report:
Employee selection criteria - You can select a single or a range of employees
 Loan Type
 Evaluation Period
The system displays the following details when you run the report:
 Employee Number
 Employee Name
 Loan Type
 Sequence Number
 Principal Latest Month - Principal amount paid by the employee in the last month
 Principal for the Period - Total principal amount paid by the employee in the entire period
selected
 Interest Latest Month - Interest paid by the employee in the last month
 Interest for the Period - Interest paid by the employee in the entire period selected
 Interest Subsidy Latest Month - The amount of interest subsidy that the employee has
received in the last month by the employer
 Interest Subsidy for the Period - The amount of interest subsidy that the employee has
received by the employer in the entire period selected
 Maturity Date - Date on which the employee will pay or has paid the last installment
 Pre Closure - Pre-closure amounts paid by the employee. This is the sum of the values of
the following wage types in the Results Table (if they exist):



Complete repaymentwage type (/LEX)
Special payroll repayment wage type (/LEP)
Sp.repayment, external wage type (/LEE)
Activities
...
From SAP Easy Access menu, choose Human Resources  Payroll  Asia/Pacific  India
 Utilities  Loans  Loans Summary Report.
The Loans Summary Report screen appears.
Enter the relevant selection criteria.
In the Loan Details section,
Enter a single or a range of Loan Types.
Enter the period for which you want the loan status in the Evaluation Period field.
Choose Program  Execute.
The HR-IN: Loan Report output screen appears with the loans details of the selected
employees
Subsequent Activities
Purpose
The component comprises the activities that you must carry out after payroll (gross - net payroll).
Wage and Salary Payments in India
Purpose
This component enables you to pay wages and salaries to employees, while taking into
consideration country and bank-specific requirements and specifications. Moreover, you can
make certain employee-specific payments to third parties (dependent on the country version),
whereby the employee is not the payment recipient. The system offers different variants of wage
and salary payments, which are used in various combinations by the individual country versions.
You can find technical information on wage and salary payments and notes on the necessary
Customizing settings in the following sections:



Payment-Related Information in the Master Data
Payment-Related Information in the Payroll Result
Preliminary Program DME
You can find information on the posting of payment transactions in the documentation for Posting
to Accounting, under
Integration with the Posting of Payment Transactions.
Scope of Function
You can find information on wage and salary payments in the following sections
Payment-Related Information in the Master Data
Certain information from the master data for your employees reappears in the
Payroll results. The Wage and Salary Payments evaluates this Information in the Payroll
Results, but also accesses certain infotypes directly.
Below is a list of the international infotypes that contain payment-related
information.





Organizational Assignment (Infotype 0001)
Personal Data (Infotype 0002)
Addresses (Infotype 0006)
Bank Details (Infotype 0009)
External Bank Transfers (Infotype 0011)
In addition to the infotypes mentioned above, there are other international wage
types (e.g. for capital formation) that contain payment-related information. These
infotypes will not be discussed here. For more information on international
infotypes, see the SAP Library under Human Resources  Payroll  <Country>.
For more information on how the system evaluates the payment-related
information in the master data and the payroll results, see Preliminary Program DME
Payment-Related Information in the Payroll
Results
The following tables in the payroll results contain payment-related information
that the system evaluates during the wage and salary payments process.


Payment Information (BT)
Work Center/Basic Pay (WPBP)
Payment Information table (BT)
Every entry in the Payment Information table (BT) in an employee's payroll results
corresponds to a payment that was created in a payroll period for this employee.
However, the employee is not necessarily the payment recipient of all
payments. A difference must be made, for entries in the Payment Information table
(BT), between payments to the employee and employee-specific payments to
third parties.
The origin and treatment of employee-specific payments to third parties is
country-specific. If, for example, salary elements for an employee are garnished
or are retained for capital formation, an entry is created in the Payment Information
table (BT) in the employee's payroll results, for payment of the retained amount
to a third party (e.g. the creditor or the capital formation institute). The origin of
this entry depends on the county version used, and the settings in Customizing.
However, employee-specific payments to third parties do not necessarily create
an entry in the Payment Information table (BT) for the employee. The reason for
this is that in certain country versions these payments are made independent of
the Wage and Salary Payments component.
Entries in the Payment Information Table (BT) for Payments to the Employee



The Payment Method field is always filled.
The Bank Number and Bank Account fields are filled, if the payment method requires
bank details.
The Recipient, Postal Code and Location fields are filled, if you have manually
overwritten the corresonding fields in the
Bank Details infotype (0009). If you have not
manually overwritten these fields in the Bank Details infotype (0009), the values from the
Personal Data (0002) and
Addresses (0006) infotypes are displayed there. In this
case, the Recipient, Postal Code and Location fields are not filled in the Payment
Information table (BT).
Entries in the Payment Information Table (BT) for Employee-Specific Payments to Third
Parties


The entry in the Payment Information table (BT) for an employee-specific payment to a
third party either contains detailed information from the infotype that forms the basis of
the payment (Payment Method, Bank Details, Name and Addresses), or a recipient key in
the Recipient field. This recipient key refers to Customizing for Personnel Management,
where you must store the detailed information mentioned.
The Purpose field in the Payment Information table (BT) is filled, if a purpose was entered
in the infotype that forms the basis of the payment.
Note that not all the fields in the Payment Information table (BT) are discussed
here. For more information on how the system determines the information on the
payment recipient, see Preliminary Program DME, in the "Scope of Function"
section.
Work Center/Basic Pay Table (WPBP)
Certain organizational elements from the Organizational Assignment infotype (0001)
are stored in the Work Center/Basic Pay table (WPBP) during payroll. These
organizational elements are used in the wage and salary payments process
(dependent on Customizing) to determine the house bank and the house bank
account.
Furthermore, the system uses the Work Center/Basic Pay table (WPBP) to determine
the paying company code. Specification of the paying company code is optional
in Customizing. If you have not specified a paying company code in Customizing,
the system uses the company code that is stored in the Work Center/Basic Pay table
(WPBP) in the employee's payroll results. If the Work Center/Basic Pay (WPBP)
table for the employee contains several partial periods as the result of a WPBP
Split, in the payroll period to be processed, the system uses the company code in
the last partial period, in which the employee was active, to determine the paying
company code.
Preliminary Program DME
Use
To start the preliminary program DME, from the SAP Easy Access menu choose Human
Resources  Payroll  Payroll  Bank Transfer  Pre. DME Program.
You use the preliminary program DME to evaluate the payroll results to create payment
data. The creation of payment data is the first step in the wage and salary payments
process.
You can also use the preliminary program DME if you want to make several partial
payments on different dates within a payroll period ( Qualified Advance Payment).
The preliminary program DME can evaluate payments using different payment methods
in a payment run. The payment medium programs, which further process the data created
by the preliminary program DME, select the relevant data records using the payment
method.
The preliminary program DME processes both information from the master data and
information from the payroll results for an employee.
Integration
The payment data created by the preliminary program DME is processed by the countryspecific payment medium programs in Accounting to create payment mediums (for
example, DME files for the bank, checks). You must start these subsequent programs
after the preliminary program DME has evaluated the payroll results for the employee
and has created the payment data.
Prerequisites
You have exited payroll for the payroll periods for which you want to make wage and
salary payments. (Exception: You make a Qualified Advance Payment before exiting
payroll.)
You have checked or made the following settings in agreement with Accounting.

Setting up the payment methods (in Customizing for Personnel Management under
Personnel Administration  Personal Data  Bank Details  Define Payment Method)

Setting up the house banks and house bank accounts (in Customizing for Payroll
under Data Medium Exchange  Preliminary Programs for Data Medium Exchange  Set
Up House Banks)

Defining the Sending Banks (using the Sender Account Number for Data Medium
Exchange feature (DTAKT) in Customizing for Payroll under Data Medium Exchange 
Preliminary Programs for Data Medium Exchange  Define Sending Banks)

Defining the paying company code if you do not want to use the company code stored
in the Organizational Assignment (0001) infotype (using the Sender Account Number for
Data Medium Exchange feature (DTAKT) in Customizing for Payroll under Data Medium
Exchange  Preliminary Programs for Data Medium Exchange  Define Sending Banks).

Assigning the text key for the payment transaction to transfer wage types (in
Customizing for Payroll under Data Medium Exchange  Preliminary Programs for Data
Medium Exchange  Check Text Keys for Payment Transactions)
This assignment is not necessary in all country versions.
Features
For every current original result for employees processed in a payment run, the
preliminary program DME reads the Payment Information table (BT) in the payroll
results.
In the process, the system performs the following steps for every entry in this table:

The system determines the information on the payment recipient


from the Payee Keys table (T521B), if the entry in the Payment Information table (BT)
contains a recipient key

from the Personal Data (0002) and Addresses (0006) infotypes, if the entry in the
Payment Information table (BT) does not contain a recipient key and does not contain
any recipient data

The system evaluates the Sender Account Number for Data Medium Exchange feature
(DTAKT) to determine the following information:

The paying company code

The house bank

The house bank account

The system reads the Purpose field in the Payment Information table (BT):




from the entry in the Payment Information table (BT)
If the Purpose field is filled, the contents of the field are transferred to the payment data.
If the Purpose field is not filled, the following text is used: "Wage/Salary", <Personnel
Number>, <Payroll Period> or "Pension", <Personnel Number>, <Payroll Period>.
The system determines the payment currency:

If the Currency field in the Payment Information table (BT) contains a currency, this
currency is used for the payment.

If the Currency field in the Payment Information table (BT) does not contain a currency,
the currency from the Currency field in the Payroll Status Information table (VERSC) is
used for the payment.
The system reads the bank codes of the house bank and the recipient bank from the Bank
Master Record table (BNKA).

The system checks the payment data for consistency. If a payment with inconsistent data
exists for an employee, the system does not perform a payment for this employee.

For every entry in the Payment Information table (BT) the system creates an entry in the
payment data.
Selection
The selection screen for the preliminary program DME is country-specific. The following
describes only the most important international parameters.
Set Flag for Transfers
We recommend that you mark this indicator. It causes the system to mark every
processed entry in the Payment Information table (BT) with date and time, to indicate to
payment runs carried out later that they are "processed". This prevents entries in the
Payment Information table (BT) being accidentally processed more than once. If the
payroll run is repeated after you have executed the preliminary program DME, the system
does not overwrite the entries marked with date and time but performs a difference
calculation. That is why you must mark the Set Flag for Transfers indicator if you want
to perform a qualified advance payment.
Wage Type
You can use these input fields to restrict a payment run to certain wage types, for
example, to pay the wage types created for External bank Transfers (Infotype 0011)
separately from the employee's salary.
Test
If you mark this indicator, the system only displays the payments to be made as the result
of a payment run. It does not create any payment data and does not change any data in the
payroll results.
Output
The preliminary program DME creates a payment run that contains payment data. You
can clearly identify every payment run using a combination of the Program Run Date and
Identification Feature. The Identification Feature originates from the six-digit system
time, when you started the preliminary program DME. The system replaces the last digit
of the six-digit system time in the Identification Feature with a P.
You started the preliminary program DME at 09.25.12 on 04.14.2000. You can
clearly identify the payment run created using a combination of the Program Run
Date (04.14.2000) and Identification Feature (09251P).
The payment data contained in a payment run is saved in the following tables:

Control Records for the Payment Program (REGUV)

Settlement Data from Payment Program (REGUH)

Processed Items from Payment Program (REGUP)
The data in these tables is further processed by the payment medium programs in
Accounting. For more information, see Payments (FI-BL).
Recent Developments and Legal Changes:
Topic
Description
Note
Number
Housing
Perquisites
Changes to housing perquisite
valuation for Company Owned
accommodation as per the deeming
provisions in Finance Bill 2007. The
consulting note provides the
guidelines to activate this
computation.
Monthly
GTI and
Tax
components
wage types
Monthly GTI and Tax component
wage types have been enhanced to
take into account Income Tax in
regular run for Arrears and Irregular
payments, Re-hiring of Employee in
the same PERNR and the Secondary
and Higher Education Cess.
Budget
2007
Legal changes introduced in the
Finance Bill 2007 covering Secondary
and Higher Education Cess and
1047524
Income Tax Slab changes for senior
citizen and women.
Form 16
Inclusion of Acknowledgment
Number of Form 24Q in Form 16.
1075933
1076737
1021797
1066580
1045878
Irregular income such as Bonus and
LTA are currently taxed in the regular
run by considering them as part of
total income, and the tax is spread
Income Tax
across the year. The payroll
on Irregular
1024284
computation now supports
Payments
computation of Income Tax on these
components during the regular run
instance without spreading the income
across the year.
Rehiring of an employee on the same
employee name (PERNR) is now
Rehiring of
supported in India Payroll. The
employee in
Income tax computations take into
981544
same
account the employee's previous stint
PERNR
in the organization during the financial
year.
Labour Welfare Fund (LWF)
contribution in certain Indian States,
for example Maharashtra, is based on
salary of the employee. The India
Labor
Payroll solution for LWF is modified
Welfare
to set up salary slab based contribution 973398
Fund (LWF) rates. This is done through the
introduction of a new generic
functionality namely Universal
Contributions (Payroll Function :
INUCD).