Issue in income tax computation

Dear All,
I have some issue in income tax calculation India Payroll for few employees.
Listed the problems below
1. Exemption Under Section 10 is not considered during Income tax calculation
2. Medi-claim is not deducted from gross salary

Hi Lakshman,
Exemption under sec 10 should be considered in the tax calculation. In the Tax calculation all the amount u/s 10 will be stored in wage type /130 and it will subtracted from the Gross salary (/416).
If this is not happening then please check the configuration of the wage type which you are using.
Normally Medical exemption will be processed before the arrival of gross salary.
Hope this will help you.
Thanks & Regards
Saroj Hial

Similar Messages

Income tax computations

Dear Gurus,
Last month (June) we have deducted the Income tax through MVT1 wagetype for all the employees .As the master data has been changed for the previous month , so when i executed this month payroll with standard INTAX, system is triggering the retro. In case of retro system is genrating only /460 not /4MT
When i posting the results, system is showing that posting balance is not cleared for the month of june.

Hi Jeet,
Please provide the format to the abaper who can create the same in smart form and then assign this to a communication type.
Regards.
Vikas.

Income tax - wrong computation in /460

Dear Seniors,
While processing the march-2015 payroll, I found wrong income tax computation for few employees in form 16. system is working fine for rest employees, as per my understanding it may be due to master data issue. I have checked the thing again and again but not able to resolve.
I am looking forward for your expert advice.
Regards,
Ritu

Hi Venkatesh,
Thanks for your prompt reply.
Please find the details are as below...
* /101 Total gross                                                   112,227.00
* /110 Net payment                                                        10.00-
* /115 COA/CLA Bas01                                                  60,627.00
* /117 Superannuat                                                    36,418.00
* /121 Nom. ExGrat                         100000.00                  36,418.00
* /124 Mon Reg Inc01                                                  60,627.00
* /129 Voluntary R01                                                  36,418.00
* /130 Exemption U                                                    21,064.64
* /138 Form 217 2(                                                   112,227.00
* /3F1 Ee PF contr0101                                                 4,370.00
* /3F3 Er PF contr0101                                                 3,120.00
* /3F4 Er Pension 0101                                                 1,250.00
* /3F5 Ee Mon PF c                                                     4,370.00
* /3F6 Ee Ann PF c                                                    21,122.00
* /3F8 EDLI adm ch0101                                                     0.75
* /3F9 PF adm chrg0101                                                    65.55
* /3FA PF basis fo0101                                                36,418.00
* /3FB PF Basis fo0101                                                36,418.00
* /3FC Pension Bas0101                                                15,000.00
* /3FD Mon perk (e                                                        61.00
* /3FE Interest ac                                                       291.00
* /3FG Ann perk (e                                                       148.00
* /3FJ VPF basis f0101                                                36,418.00
* /3FL PF Basis fo0101                                                15,000.00
* /3I1 Deduction u                                                    34,854.00
* /3I2 Gross amoun                                                    24,630.00
* /3P1 Prof Tax - 01010101          I                                    200.00
* /3P2 Professiona01010101                                            60,627.00
* /3P3 Prof Tax -                                                        200.00
* /3R2 Non-metro H                                                    18,209.00
* /3R4 Non-metro H                                                    36,418.00
* /422 Empmnt tax                                                      1,000.00
* /4E4 HRA Annual                                                     21,064.64
3 /090 /128-LEAVE 01                        1,213.93
3 /091 /128-LEAVE 01                        2,101.04
3 /092 /128-LEAVE 01                        1,820.90
3 /111 EPF Basis 01                                                  36,418.00
3 /112 ESI Basis 01                                                  60,627.00
3 /113 ESI Basis N01                       100000.00                  60,627.00
3 /114 HRA Basis 01                                                  36,418.00
3 /116 Gratuity Ba01                                                  36,418.00
3 /118 PTax Basis 01                                                  60,627.00
3 /119 PTax Basis 01                       100000.00                 112,227.00
3 /120 Nom. ExGrat                         100000.00                  36,418.00
3 /125 Mon Irr Inc01                                                  51,600.00
3 /128 Leave Encas01                                                  36,418.00
3 /134 Annual Non-01                                                  51,600.00
3 /136 1DSD Basis 01                                                  36,418.00
3 /137 1DSD Basis 01                                                  36,418.00
3 /139 VPF Basis 01                                                  36,418.00
3 /180 /124-BONUS 01                                                  36,418.00
3 /807 Partial per01                       100000.00                      24.00
3 /808 Partial per01                       100000.00                      31.00
3 1004 M230-HRA   01                                                  18,209.00
3 1016 M200-SPECIA01                                                   6,000.00
3 6009 B301-EX-GRA01                                                  51,600.00
* /410 Ann Reg Inc                                                   293,030.50
* /411 Ann Irr Inc                                                    51,600.00
* /416 Gross Salar                                                   344,630.50
* /418 Balance                                                       323,565.86
* /424 Aggrg Deduc                                                     1,000.00
* /426 Incm under                                                    322,565.86
* /430 Gross Tot I                                                   322,565.86
* /432 Agg of Chap                                                    34,854.00
* /434 Total Incom                                                   287,710.00
* /4MI Monthly Tax                                                   169,663.00
* /403 Marginal ta                             10.00
* /437 Tax credit                                                      2,000.00
* /436 Tax on tota                                                     3,771.00
* /446 Tax payable                                                     1,771.00
* /404 Mrgnl tax r                             10.30
* /450 Tax payable                                                     1,824.00
* /449 Education C                                                        35.00
* /447 Sec and Hig                                                        18.00
* /458 Net tax pay                                                     1,824.00
* /460 Income Tax                                                      1,824.00
* /4MS Monthly Sur
* /4ME Monthly Edu                          1,941.75                      35.01
* /4MH Monthly Hig                            970.87                      17.50
* /4MT Monthly Tax                         97,087.38                   1,771.49
Ritu

Income Tax Calculations 2008

Hi Friends,
I have a Issue in Income Tax calculation,
for the month of September, the form 16 for a particular employee is a follows
Form 16 summary
Gross Salary                   783,399.00
Exemption U/S 10                 5,600.00
Balance                        777,799.00
Empmnt tax (Prof Tax)            1,125.00
Aggrg Deduction                  1,125.00
Incm under Hd Salary           776,674.00
Gross Tot Income               725,513.00
Agg of Chapter VI              106,008.00
Total Income                   619,510.00
Tax on total Income             90,853.00
Tax payable and surcharg        93,579.00
Tax deducted so far             24,100.00
Income Tax                       9,926.00
Now i have added a wage Type called Special pay -Rs.100000 in IT 15, eventhough this amount is reflecting in monthly gross salary and RT table, this amount is not considered for Income tax . I.e with or without Wage type Special pay, The gross salary considred for Income Tax is 783399(without any change). Why it is so.
Rgds,
Sekar.

Hi Sekar,
Make sure that you have assigned the right processing and cumulation classes to your wage type in table V_512W_D
Make sure that in table V_512W_D cumulation class 1 is ticked for this wagetype.
Warm Regards,
Kapil Kaushal

Income Tax/Annual Perk Computation for rehired employee is incorrect

Hi All,
           One of our employees retired on 30.9.11 was rehired on 30.11.2011 with the same employee number. After rehiring we had delimited IT 581 up to 30.9.11 and further a new entry was maintained from 1.12.2011. In the salary slip for Dec 11, in the Income tax yearly computation six months Rent has been deducted from the Annual gross, which is not required.
           Kindly suggest how this issue can be rectified.
Sunil

Hi All,
    I raised an OSS for the issue. SAP support has provided me with a solution. The steps are as follows:
     1. When rehiring period split for payroll accounting indicator in view V_T530_All is to be set for the action type and action reason which you use.
      2. Run the payroll for this person by doing force retro from 01.04.2011. With the force retro, /460(Income Tax for the month) will not change but the projection and all the other things will be changed.The pay slip will not change as pay slip checks the specified month data. But Form 16 will show the correct values (the total amount will be displayed in the Form 16).
      3. The following SAP Notes will have to applied for generating Form 16 correctly:
          1607827
          1614257
          1615579
          1679799
Regards
Sunil

Issue for Form 16 and tax Computation on Salary to Employees

Dear All
Can Anybody suggest a way out for the following -
We have to issue form 16 as per Indian income tax laws to employees. is there any method for computation of tax on salary or any development is required for the same. As per the Indian income Tax law a computation sheet is to be issued to an emmployee wherein his actaul salary earned ( say for two months) plus his estimated salary for remaining 10 months is to be given and employee in turn returns back the form duly signed in. how this computation sheet works in SAP ?
Pl guide.
Regards
Rakesh Choudhary

Hi Rakesh,
this computation happens inside INTAX payroll function for India Payroll. ya its true that there is no standard SAP report to do this. But u can all the annual computation wage type in the RT (/4** wage types).
If u want a seperate report to this then u can go for some Z development. But u dnt need to write the whole computation logic inside that. Instead of this u can use /4** wage types for the same.
Regards,
Praveen
Edited by: Praveen Kr Tiwari on Apr 11, 2009 3:30 PM

Income tax issue for mid month joinees

Issue 2:
For New (mid month) joinee at the first month gross salary is calculated based on the earned salary amount *12 months (or no. of remaining months for financial yr end), but in my client income tax deducted based on the actual salary (not earned salary) from the first month onwards.
For example :
Employee X,
Joined date 15.08.2011,
Actual salary = 1,00,000 INR. Earned salary for 15 days = 50,000 INR.
While Start Payroll for the period 5th (August) 2011. The WT /416 Gross salary = 4,00,000 (50000*8). Based on this gross salary income tax calculated, But I want to calculated the gross at first month (august 2011) based on follows,
Gross salary : August month earned salary = 50,000 + Actual salary per month =1,00,000*7 =7,00,000.
Gross salary = 7,50,000 INR.
Please give me some solution
Thanks and regards
Mohan .V

Hi Param Dayal,
New issues rise Now....
For New (mid month) joinee at the first month Exemption U/S 10 is calculated based on the Conveyance Allowance amount *12 months (or no. of remaining months for financial yr end), but in my client income tax Exemption U/S 10 based on the actual salary (not earned salary) from the first month onwards.
For example :
Employee X,
Joined date 15.08.2011,
Conveyance Allowance = 800 INR. Earned Conveyance Allowance for 15 days = 400 INR.
While Start Payroll for the period 5th (August) 2011. The WT /130 Exemption U/S 10 = 3,200 (400*8). Based on this Conveyance Allowance The Exemption U/S 10 calculated, But I want to calculated the Exemption U/S 10 at first month (august 2011) based on follows,
August month earned Conveyance Allowance = 400 INR + Actual Conveyance Allowance per month =800*7 =5,600.
Exemption U/S 10 = 6,000 INR.
Please give me some solution
Thanks and regards
Mohan .V
Edited by: mohantamilan on Sep 26, 2011 2:52 PM

Issue on Projected Income Tax (Payroll India)

Hi Experts
We have upgraded the system with SP_HR Component patch level 64 and configured SAP Note 1568264.
We have an issues on Projected Income Tax.
Scenario :
Monthly sal : 25000/- and paid the same to employee in Apr, May 11.
In the month of June employee has LOP for 2 days and paid 22000/- against June 11.
Now system is calculating projected IT based on 22000/- for the remaining months i.e., 22000*10= 2,20,000/-.
Showing projected income tax as 2,20,000+50000 = 2,70,000/- (should be 3,00,000/-)
Please suggest the possible ways to resolve this.
Appreciate your help.
Thanks
Venkat Babu Kurada

Hi Experts,
New issues rise Now....
For New (mid month) joinee at the first month Exemption U/S 10 is calculated based on the Conveyance Allowance amount *12 months (or no. of remaining months for financial yr end), but in my client income tax Exemption U/S 10 based on the actual salary (not earned salary) from the first month onwards.
For example :
Employee X,
Joined date 15.08.2011,
Conveyance Allowance = 800 INR. Earned Conveyance Allowance for 15 days = 400 INR.
While Start Payroll for the period 5th (August) 2011. The WT /130 Exemption U/S 10 = 3,200 (400*8). Based on this Conveyance Allowance The Exemption U/S 10 calculated, But I want to calculated the Exemption U/S 10 at first month (august 2011) based on follows,
August month earned Conveyance Allowance = 400 INR + Actual Conveyance Allowance per month =800*7 =5,600.
Exemption U/S 10 = 6,000 INR.
Please give me some solution
Thanks and regards
Mohan .V

Income Tax Calculations - Issue

Client is saying that as per their existing SAP system, the Income tax calculation is made on Gross salary. And they are saying that if any additional taxable payout is made in a month to an employee, then the total tax on this additional payout should be paid by the employee in the same month. So basically his total tax would be the (general regular monthly tax + total tax on the additional payment), which as per them the system is not calculating correctly since October 2010.

Hi,
Thanks for your reply Jurgen & Remi. I am pretty new to Payroll & this is India Payroll.
Now, the issue is how should I proceed ahead.
1. The client says that the wage types are already configured in the system in such way that on certain wage types, the tax which is calculated is paid in the same month. Can u pls inform that which processing class & cumulation class do I need to check in Table 512w_d for this wage type.
2. As I need to see this whole functioning in Schema, pls guide as to where I should check this whole tax calculation in Schema.
3. The function I have heard which is used is India for Income tax is INTAX.
Looking forward to your reply.
Thanks a lot!!!
Edited by: SAP ST on Nov 25, 2010 7:24 PM

/616 WT & Income tax issue

Dear all,
I face a serious problem: some PFs have income tax = 0 (their salary is taxable) while others are double.
I checked PC_PAYRESULT and saw that error come from WT /616:
At period 01.2011, in section 89, some wage types are calculated wrong
In-Year for Payroll --- --- --- --- For-Year for Payroll --- --- --- - Wage type- --- --- -- Amount
2011--- --- --- --- --- --- --- --- --- - 2010- --- --- -- -
--- --- --- - /6I2- --- --- --- ---    29,377.00-
2011--- --- --- --- --- --- --- --- --- -   2010- --- --- --- --- --- --- --- - /616- --- --- --- --- 365,713.00-
2011--- --- --- --- --- --- --- --- --- -   2010- --- --- --- --- --- --- --- - /650- --- --- --- ---   5,973.00-
I don't know why they come with a huge amount like this , but it causes wrong taxes and many problems for payroll in year 2011.
I checked many topics, but still can't resolve.
Add. gross salary in RT Table.
/616 Add gross salary Issue
Please help.
1. Why were these WT calculated with a huge Rs?
2. How can I fix this (Payroll already has ran for 5 months ago)

Hi,
the error is in which system.(PRD/QLY)
according to the first thread you have gone through check the control record dates and change it to 2010 xx period and try once.
if it is not giving any error then you can easily capture the solution why is it calculating so .
change the control record dates to 2010 and try..
or check the IT-0008 records are there any salary changes in past(salary Increased)
we have model wage types
M89G--/616
M89I--/6I2
M89T--/650 copy using this model wage types and balance the amount by giving in IT-0015 (deduction amount) and try...
hope this helps you
let us know the result...
Regards,
mohammed

Income tax issue without PAN no.

Hi Expert
If an employee having annual compensation INR 1.5 L than he/she will not be come under tax and in this case there is no need maintain the PAN no. in IT 185.
My question is that according to SAP if an employee dont have PAN no. because of non availability of taxable income than 20% flat tax would be applicale for him/her or not?
If yes pls guide me how to map that kind of scenario in sap.
I am maintaining following notes.
1568264
1558465
1572614
1575366
Pls treat this on high priority
regards
sachin

Hi Sachin,
Please go through the below circular:
4.8 Section 206AA.
4.8.1 Finance Act (No. 2) 2009, w.e.f. 01/04/2010 has inserted sec. 206AA in the Income-tax Act which makes furnishing of PAN by the employee compulsory in case of payments liable to TDS. If employee (deductee) fails to furnish his/her PAN to the deductor, the deductor shall make TDS at a higher of the following rates
i. at the rate specified in the relevant provision of this Act; or
ii. at the rate or rates in force; or
iii. at the rate of twenty per cent.
4.8.2 The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS . This section applies to any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVII-B of Income Tax Act. As chapter XVII-B covers all Payments including Salaries, Salaries are also covered by Section 206AA. In case of salaries there can be following situations
a) Where the income of the employee computed for TDS u/s 192 is below taxable limit.
b) Where the income of the employee computed for TDS u/s 192 is above taxable limit.
In first situation, as the tax is not liable to be deducted no tax will be deducted. In the second case, if PAN is not furnished by the employee, the deductor will calculate the average rate of income-tax based on rates in force as provided in sec 192. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax is to deducted at the average rate. Education cess@ 2% and Secondary and Higher Education Cess @ 1 % is not to be deducted, in case the TDS is deducted at 20% u/s 206AA of the Income-tax Act.
Regards
Raviiii

Income tax issue-URGENT

Dear Guru,
I have run the payroll of April 08 with old income tax slab Now,
Before running the May 08 payroll if I apply the new income tax slab and all budget changes 2008-2009 then, will the system calculate the taxes according to the new budget changes?
Will the income tax be calculated from the month of April 08 or May onwards ?
Please Advised
Regards
MHPO

Dear Santosh thanks,
But what about the old slab April 08 income tax deduction amount is adjused to may 08 to mar 09??
1 I have run the payroll of april 08 with old income tax
2 Then we update new budget changes may 08 month
3 Then we run the may08 payroll
my question is, the income tax be calculated from the month of April 08 or May onwards ?
if the system is calculated income tax from april 08 so what about the old slab April 08 income tax deduction amount is adjused to may 08 to mar 09??
very serious issue
Please Advised
MHPO

Tax computation in case of varibale income

Hi Experts,
I have a tax scenario wherein client computes taxable income of employee at the start of the year Now when they pay salary arrears (salary increment) to employees in novemeber/december they want that tax should not be calculated on the cumulative amount of salary for that month but tax liability of employee should be spread across the remaining periods of the year and tax should be accordingly calculated.
As i understand in sap tax get's deducted on the amount for a particular month (Variable + fixed). If the amount for a particular month is high for any reason then tax get's deducted accordingly for that month, the tax liablity does not get spread,
Ex:
Employee fixed monthly payment
basic - 27580
hra - 5516 (rent exemption - non metro)
Employee variable monthly payment
conve - 2713 (conve reimbursement - totally taxable)
savings
Agg of Chapter VI - 10000
conv exemption - 2713 (monthly)
Income Tax coming - 653
Now if in October he get's salary arrear of 100000 will system deduct tax as 30% for that month and change Income tax for that month (653/-) to any other amont (30% tax ded for that month) or will the system spread the tax to other month's and calculated tax accordingly.
Thanks so much for all the help extended.
Regards,
Jyoti

Well Jyoti, you are actually getting confused with the tax concepts for India -
Let me explain it in brief -
Whatever income employee will get in whole year, it will be keep on adding up and accordingly tax will be calculated as per the slab. Here we divide the income into 2 part that is regular income and irregular income.
Since the taxation for India is annual, regular part needs to be projected for the rest of year to get the estimated annual income. It is based on the formula -
Year till date value of regular income (CRT value of /124) + current month value + current month value X projection factor(/401) - this is calculated and stored as wage type /410 in system. As you know /124 generate based on cumulation class 24 and processing class 20.
Irregular income based on formula -
Year till date value of regular income (CRT value of /125) + current month value - this is calculated and stored as wage type /411 in system. As you know /125 generate based on cumulation class 25 and processing class 20.
After that we get all the exemption etc and finally generate the taxable income on which slabs are applied and deducted accordingly. This taxation will spread uniformly throughout the year subjected to the active status of employee. - This is just to make you understand that how regular and irregular income plays an role. I am also not explaining the rest part as i feel that is not the part of problem here.
There are 2 type of processing possible for taxation of arrears in India provided by SAP-
1. You just add in simply into /125 wage type as it is a irrgular income. Accordingly it will be cumulated into /411 and will be considered for taxation. Here as you are not treating the arrears differently, taxation will spread uniformly here.
2. Now If you want that taxation on arrears/ bonus happens on the same period of the whole amount, then you will be required to configure INBTD for the particular payment (Check the documentation for the details).
Hence if you are not configuring INBTD then tax will spread uniformly for rest of the year.
Let me take some of your example to make it more clear -
Annual Gross - 397152
Income under head salary - 356075
Total income - 256080
Tax on total income - 7608
Monthly tax - 653
Employee monthly salary April , May, june, july - 35269 (tax 653)
Salary Arrears /Leave encashment Aug - 2 lac
So for the month of Aug what will be his taxable amount , will it be 235269 * 30% or will the tax amount for Aug be spread over to coming months (sep, oct, nov, dec, jan, feb, mar)
Here till july it is correct. But after getting arrears, calculation will happen like this -
Total income in month of aug - 256080 + 200000 = 456080 (Note i am not considering exemption etc so may be the amount vary lil bit).
Tax on total income= slab rate applied on 456080.
tax deducted till date = 2612
tax remaining = tax on 456080 -2612
tax for aug month = tax remaining / 8.
Prerequisite is you need to tick cumulation class 25 here and also need to set processing class 20 accordingly.
Now suppose you are configured the INBTD for this 2 lac payment then calculation will hapen in following way -
Tax calculated on 200000 = say 30% slab applied then 66666. This processig will happen in INBTD.
But astill this amount will be cumulated into /125 and accordingly into /411.
Total income in month of aug - 256080 + 200000 = 456080
Tax on total income= slab rate applied on 456080.
Remaining tax = Tax on total income (calculated in previous step) u2013 66666 u2013 2612
August part of this remaining tax = Remaining tax (calculated in previous step) / 8.
Total tax for august = August part of this remaining tax (calculated in previous step) + 66666.66
This is subjected to the total tax liability. IN your case tax liability may not reach at 66666. Then tax will be adjusted accordingly.
Since you are not using INBTD, it will not have any impact on your calculation. Hence the remaining tax including all the income will be uniformly for the rest of the periods
I know the answer become bit lengthy but hopefully will clear all your doubts
Edited by: Praveen Tiwari on Jul 7, 2011 12:26 PM

Income tax rule 2014-15:issue in Loan Interest Limit in infotype 584 for tcode-pa30

Currently when we are using existed limit which is 1,50000 for income from other sources. it is displaying in pay slip.in any other income colum as Deds S24
(104692.00 -)
pa30-infotype-584 –limit-150000
As per new tax rules for year 2014-15,we have implemented Changes for Interest on Loan limit.
View-V_T511P.
After making entries in this view for current income tax rules:limit exceed 200000. LNS05 we created this new entry.
And changes also made here.
Pa30-infotype-584-limit exceed-200000.
After doing this entry.it is not showing in payslip.in any other income colum.its blank now.
please suggest.

Sandhya Kodepudi replied (in response to Priya Gupta) 10 minutes ago
Hi Priya ,
Section 24 deduction works perfectly for me . Its clearly stated in the budget note released to get your system upgraded to N-1 patch level.
We are currently working on SAP 604 sp76(upgraded from 64-76) , and EA-HR patches updated to 55..
Please ask your basis consultant to check the levels and upgrade accordingly .
The manual changes given in the budget note are working correctly.
regards
sandhya

Income Tax issue

Dear Experts
I need to know whether it is possible to have an estimation of the income tax which will be deducted during the entire year
what are the controls for it?
How do i do it?
Your help will be really appreciated
Thnks in advance
Regards
Jayeeta

Hi ,
Here you required some hardwork in like first you have to tell which value is to pick from RT and which from CRT.
By name and few checks you will get everything.
Now Projection you had to manual (In report context addition , multiplication and substraction on the base of values from RT )
Hope you get or let me give 1 ex basic 1000 you have to calculate in report for 12 month then 1000 * 12 this is manual process.
High end logic is needed.
Still if you have any doubt then reply.
Manoj Shakya

Issue in income tax computation

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