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https://help.tallysolutions.com/docs/te9rel49/Payroll/Employees_ESI_Deduction_Pay_Head.htm

Creating Employees' ESI Deduction Pay Head

To create Employees' ESI Deduction Pay Head,

Go to Gateway of Tally > Payroll Info. > Pay Heads > Create

  1. Enter the name of the Pay Head in the Name field

  2. Select Employees' Statutory Deductions as the Pay Head Type from the List of Pay Head Types

  3. Select Employee State Insurance in the Statutory Pay Type field

  4. Select Current Liabilities from the List of Groups in the Under field

  5. 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

  6. 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 it in Name to appear in Payslip field

  7. In the Calculation Type field is pre-filled with As Computed Value and Calculation Period is pre-filled with Months by default

  8. Select Normal Rounding from the list of Rounding Methods and type 1 as the rounding Limit

  9. In the Compute field, select On Specified Formula from the Computation On list

  10. The Compute sub-screen appears, In the Pay Head column select Basic Pay from the List of Pay Heads and select Add Pay Head to add other Pay Heads that will be considered for ESI calculation one by one and select End of List to return to Pay Head Creation

  1. In the Effective Date field, enter the desired date from which the ESI Deduction will come into effect

  2. The Percentage is defaulted as Slab Type

  3. Enter the Percentage in the Value Basis field

  4. Similarly, enter the From Amount, Amount Upto, Slab Type and Value Basis details for the next slab

Note: The amount is not specified in the Pay Head creation for ESI as the same will be picked up from the Satutory Master file.

  1. Press Enter to accept.

Note: Any income of a regular nature will be subject to ESI calculation viz., Basic Pay, Dearness Allowance, House Rent Allowance, Conveyance, Overtime etc.

 

ESI Deduction Pay Head should be added in the Salary Details after Basic Pay, HRA, Conveyance and Overtime as the calculation for ESI is dependant on these Pay Heads.

 

Also, when more than one Pay Head is added in the formula for Calculation, you need to make sure that the independent Pay Heads appear first and the dependent Pay Heads later (e.g. HRA is dependant on Basic and hence, Basic should come first then HRA).

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