Creating Gratuity Pay Head for India
Creating Gratuity Pay Head for UAE
To create the Pay Head for Gratuity computation,
Go to Gateway of Tally > Payroll Info. > Pay Head > Create
Enter the Name of the Pay Head
Select Gratuity from the List of Pay Head Types
Enter the Slab Rate details for Gratuity Calculation in the sub-screen as shown:
Select Provisions as Group from the List of Groups in the field Under
Set Set Alter Income Details to Yes
In the Income Tax Details screen,
Income Tax Component is defaulted to Gratuity while creating the Gratuity Pay Head
Tax Calculation Basis is defaulted to On Actual Value as Gratuity is paid only while leaving the organisation or retiring
Deduct TDS Across Period(s) is defaulted to No as the tax has to be deducted in the same month when Gratuity is paid
Select the Rounding Method from the list if applicable
Accept to save the Pay Head
Note: To use the Earning Pay Head for Gratuity calculation, set Use for Gratuity? field to Yes in the ledger creation screen (for Pay Heads such as Basic Salary, DA, and so on, created under Indirect Expenses).
An employment contract in the United Arab Emirates (UAE) may either be for a limited or unlimited period.
According to the Federal Law of the UAE, an employee, to be entitled to receive gratuity should have completed one year of continuous service irrespective of the contract type i.e., limited or unlimited.
Tally.ERP 9 now supports calculation of gratuity as per the prescribed rules and regulations of UAE.
To compute gratuity depending on the employment contract type, it is essential that two gratuity pay heads - one for limited contract and another for unlimited contract employee is created in a UAE Payroll enabled company.
Note: Since an individual can be employed under either of the two contracts (limited & unlimited, only one pay head out of the two should be defined in the Salary Details of an employee.
To create a gratuity pay head for a limited contract,
Go to Gateway of Tally > Payroll Info. > Pay Head > Create
Enter the Name of the Pay Head
Select Gratuity from the List of Pay Head Types
Enter the Slab Rate details for Gratuity Calculation in the sub-screen as shown:
Select Provisions/Current Liabilities as Group from the List of Groups in the field Under
Select the Rounding Method from the list, if applicable
Accept to save the Pay Head
To create a gratuity pay head for an unlimited contract,
Go to Gateway of Tally > Payroll Info. > Pay Head > Create
Enter the Name of the Pay Head
Select Gratuity from the List of Pay Head Types
Enter the Slab Rate details for Gratuity Calculation in the sub-screen as shown:
Select Provisions/Current Liabilities as Group from the List of Groups in the field Under
Select the Rounding Method from the list, if applicable
Accept to save the Pay Head
Note: Ensure that the Employer Unique ID is entered in the F11: Statutory & Taxation features screen
On including the gratuity pay head in the salary details for an employee, the computation of gratuity can be viewed in the Gratuity Summary report.
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