To create User Defined Earnings Pay Heads for which the Values will be entered at the time of processing the Payroll (e.g. Variable Pay),
Go to Gateway of Tally > Payroll Info. > Pay Heads > Create
Enter Pay Head name in the Name field
Select Earnings for Employees as the Pay Head Type from the list of Pay Head Type
Select the Income Type for the Pay Head
There are two Income Types: Fixed and Variable
Pay Heads categorised under the Income Type - Fixed, form a part of the employee’s Total Gross Salary. For example: Basic Pay
Pay Heads categorised under the Income Type - Variable, form a part of the employee’s Total Earnings only. For example: Overtime Wages
Select Indirect Expenses from the List of Groups in the Under field
By default, Affect Net Salary is set to Yes. Type No, if you do not want this component to be included in the Pay Slip
By default, the Pay Head component name entered in the Name field will appear in the Pay Slip, if you want to change the default pay head component name then type required name in Name to appear in Payslip field
By default, Use for Gratuity is set to No. Set this to Yes, if you want this Pay Head to be considered for Gratuity calculation
In the Income Tax Details screen,
Select Other Earnings/Allowances (Fully Taxable) as the Income Tax Component
In Tax Calculation Basis select On Actual Value for User Defined Pay Heads as the amount will be different in each month so the Tax should be rationalised accordingly and spread across the remaining period. If value of pay head is fixed in nature then select On Projected Value.
Set Deduct TDS across Period(s) to Yes to deduct Tax across the remaining period. If set to No, entire tax will be deducted in the same month.
In the Calculation Type field select As User Defined Value from the List of Calculation.
Press Enter to accept.
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