Payroll – FAQ

The integrated Payroll solution available with Tally.ERP 9 simplifies the complex payroll processes and practices and handles them in the most simplified manner.

The salient features of payroll are listed below:

1. Create and maintain the Employee database viz- Name, Address, Contact Details, Personal Details like Blood Group etc., Family Details, Bank Account Details, Statutory Details like PAN, PF Account nos, ESI Account nos. etc.,  EXPAT Details like Passport VISA and Work permit details.

2. Employee group or department wise categorization.

3. Attendance, overtime, leave or production details can be recorded.

4. Multiple salary structures can be created for different group of employees. For example, department wise salary structures and salary processing.

5. Support Salary revision and arrear calculation both as prospective and retrospective change.

6. Tally.ERP 9 Payroll facilitates tracking of loans and advance paid to employees and allows defining multiple criteria for recovery of such advances. The loan / advances can be recovered in complete or a number of installments from Employee’s salary.

7. Complete support to implement Provident Fund and Employee Insurance schemes along with Professional Tax Calculation.

8. Supports Gratuity as per the specified criteria.

9. Above all, the Payroll feature is completely integrated with Accounts.

Benefits of using Tally.ERP 9 Payroll

1. Time spent on processing salaries, manual and paper work can be cut down to a great extent.

2. Accurate and timely salary processing.

3. Tracking and reviewing of employee’s absence and salary calculation as per the attendance is much easier.

4. Generate the Payment Advice to instruct the Bank for Salary payment.

5. Payslips can be printed, exported to Excel or Emailed to the respective email accounts of the employees.

6. All Payroll related reports can be generated with a click of a Button.

Payroll Reports in Tally.ERP 9

Statements of Payroll

· Payslip : The Payslip option in Tally.ERP 9 facilitates the users to View the Payslip, Configure Content and Appearance based on the requirement and then Print, Export or Email the Payslip.

· Pay Sheet : The default report contains all earnings and deduction details for a given month or period with a number of options to reconfigure the appearance of rows and columns. Format of the pay sheet report may be configured to serve as a Salary/Wage register as required by the organization. The selection of data can be filtered based on a given category or group of employees.

· Payroll Statement : Payroll Statement report allows generating the report for a specific Pay Head/Ledger.

· Payment Advice :The Payment Advice report is used to generate Payment Advice / Bank Transfer letters to transfer Salary Amount from a specific bank account to the respective bank accounts of the employees based on the Salary Payment voucher.

· Payroll Register : Payroll register is a month-wise transaction summary report displaying Payroll vouchers, similar to Display Statistics in the accounting module. Though the register primarily displays Payroll vouchers, new columns for any other voucher type can also be added.

· Employee Profile : The Employee Profile report provides the Employee related details such as Personal details, Payment details, Statutory details, Expat and contract details etc.

· Employee Pay Head Break-up : This report is similar to a Payroll Statement for a selected Pay Head, with a difference that, in this report, opening balance, credit / debit transaction and closing balance for the selected period would displayed as columns.

· Pay Head Employee Break-up : This report displays a group wise summary of the transactions and Closing balance for the selected Employee. Drill down to specific ledger of the group, to the month wise summary and up to voucher, is available in this report.

· Attendance Sheet : The Attendance Sheet report is similar to Pay Sheet report, and displays a pre-formatted report with columns, related to your Attendance/Production data.

· Attendance Register : This report is similar to Payroll Register and displays the summary report of the Attendance vouchers. The configuration and button functionality are the same as in other Payroll Register report.

· Expat Reports :The Expat reports provide comprehensive information about foreign nationals who are employed (regular or contract employees) on short/long work assignments. It displays separate reports on Passport/ Visa/ Contract Expiry dates along with the date of joining with respective Passport/ Visa numbers etc. both at an individual employee level as well as at the group level.

Statutory Reports

Provident Fund Reports

The Provident Fund reports are sub divided into the Monthly and Annual based on the period as listed below:

Monthly

· PF Combined Challan contains the details of the PF amount that needs to be deposited in the Bank during the given month.

· PF Form 5 provides the details of the employees newly joining the Provident Fund scheme during the given month.

· PF Form 10 provides the details of the employees exiting from the Provident Fund scheme during the given month.

· PF Form 12A provides the details of the PF Payments made to the respective PF Accounts of the Employees during the given month.

· PF Monthly Statement is an MIS report which provides the details of the Amounts contributed by the Employees and Employer towards the PF Accounts during the given month/period.

Annual

· PF Form 3A is an Employee wise Annual report for the Amounts deducted/contributed by the Employee and the Employer towards the EPF, VPF and EPS Accounts.

· PF Form 3A in dbf format for e-filing

· PF Form 6A is the detailed Annual Statement of contribution towards the different PF Accounts for the given currency period.

Employee State Insurance Reports

The Employee State Insurance reports are sub divided into the Monthly and Half yearly on the period as listed below:

Monthly

· ESI Challan contains the details of the ESI amount that needs to be deposited in the Bank during the given month.

· ESI Form 3 is a Return of Declaration form to be submitted during each month with the details of the Employees falling in the purview of ESI during the given month. Form 3 can be generated separately for Male and Female employees.

· ESI Monthly Statement is an MIS report which provides the details of the Amounts contributed by Employees’ and Employer towards the ESI Account during the given month.

Annual

· ESI Form 5 is a Return of Contribution form to be submitted half yearly with details of employee wise ESI contribution made on a monthly basis.

· ESI Form 6 is Register of Employees falling under the purview of ESI with detailed monthly information on the worked days, wages received and Employees’ contribution towards the ESI.

Professional Tax Reports

· Professional Tax (PT) Computation Report is monthly which provides the details of the PT amount that the employer is liable to pay to the professional Tax department during the given month.

· Professional Tax (PT) Monthly Statement is MIS report showing the PT employee wise PT contribution details for the given month.

Gratuity Reports

· The Gratuity summary report provides comprehensive information on the gratuity eligible salary and the total gratuity amount to be given to the employees for a given Period or Till Date.

Assume the following details for the salary calculation for an employee:

Attendance:

● Present days = 28

● Sick Leave = 1, Absent = 1

● Total working days in a month = as per calendar days

● Basic Pay needs to be calculated for 28 (present)+0.5(Sick) days

● HRA, Special Allowance and other allowance except Basic all are considered as only 28(present) days

To process Payroll as per the above scenarios

Create Attendance Types as:

● Present - Attendance/leave with pay

● Sick Day - Attendance/leave with pay

Create the Pay Heads as:

1. Basic on Present Days

2. Basic On Sick Days (Half value Payable Per Sick Day)

3. Basic Pay Payable (1+2)

Step 1: Attendance Type creation

Present

Sick Leave

Step 2: Pay Heads creation

Basic on Present Days

Create Pay Head Basic on Present Days under New Group “Basic Cal” and Attendance/Leave with Pay as Present.

Note: After creating this Pay Head you need to enter monthly fixed value in this head in Salary details. This is used for calculating Basic Pay and entering the monthly Fixed Value.

Basic on Sick Days

For calculating half day Salary on the days when Sick Leave is taken, create the Basic on Sick Days Pay Head as follow:

1. Create Pay Head “Basic on Sick Day” under the same Group “Basic Cal” for calculating Half Day Basic with Calculation Type as Computed Value.

2. In Computation Info – select Specified Formula and specify the formula as Basic on Present Days/Present Days X Sick Days

3. In Slab Type select Percentage

4. In the Value basis field select 50%

Create Basic Pay Payable (1+2) Pay Head

The above two Pay Heads are required only for calculation purpose only but all the above Pay Heads should be selected into Salary Details for each Employee.

To create the payable Basic Pay in addition to Basic on Present Days and Basic on Sick Days, create “Basic Pay” Pay head under Direct/Indirect Expenses as Computed Value with specified formula as Basic on Present Days + Basic on Sick Days.

Step 3: Create/Alter Salary Details

Create/Alter Salary Details for each employee as shown:

Step 4: Create Payroll Voucher Class

The Pay Head Basic Cal is just created for calculation purpose and hence need not be shown as part of salary calcualtion. Hence this Pay Head should be excluded using the Voucher Class.

Gateway of Tally > Payroll Info > Voucher Types > Alter > Payroll > Enter Name of Class > Press Enter .

Under Exclude select Basic Cal the Pay Heads created under this group will be excluded in process.

Select Salary Payable ledger under ledger Name.

Step 5: Recording the Attendance

Both Present Days and Sick Days needs to be recorded using the Attendance Vouchers as a regular process.

Step 6: Processing Payroll

Go to Gateway of Tally > Payroll Vouchers > select Payroll Voucher Class to process the Salary.

Press Alt+A for Auto fill then fill the information press Enter.

After processing payroll you will get Basic Pay for Present Days and Half Day salary for Sick Days other allowances will be calculated for Present days only.

You can print Pay Slip(s) with the Company's Logo.

● Enable company logo

● Print pay slips with company logo

Enable Company Logo feature

1. Go to Gateway of Tally > F11: Features > F1: Accounting Features .

2. Set the option Enable Company Logo to Yes .

3. The Company Logo screen is displayed asking for the location of the logo. In Location of Logo field, specify the path and press Enter to accept.

Print Pay Slip

Go to Display > Payroll Reports > Statements of Payroll > Pay Slip > choose Single/Multi Pay Slip (as required). The Pay Slip is displayed.

1. Click P: Print button or press Alt+P to view Printing Pay Slip screen.

2. In Printing Pay Slip screen, to configure the pay slip, press Backspac e.

3. Set the option Print Company Logo to Yes .

4. Specify the logo path in the Location of Logo field. Tally.ERP 9 by default captures the logo path specified while enabling the Company Logo Feature under Accounting Features .

5. Press Enter to accept.

6. You can preview the pay slip which is to be printed, by pressing Alt+ I or by clicking on the I : With Preview button.

The Print Preview of Payslip with Company Logo appears as shown:

Follow the steps given below to handle the distribution and recovery of Salary Advances given to the Employees:

1. Create a Pay Head for Salary Advance e.g. Advance to Employees.

2. Make the Salary Advance payment to required employees using Payment Vouchers.

3. Create/Alter Employees Salary Details to include the Salary Adavance Pay Head at the end.

4. Process Payroll at the end of the month.

5. View Pay Slip.

6. View the report for remaining amount to be recovered from the Employee.

Detailed steps

1. Create a Pay Head ‘Advance to Employees’

Create the Salary Advances Pay Head Advance to Employees as shown below:

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

While creating the Pay Head, you may select the 'Calculation Type' as per the requirement for recollecting the Loan Amount. As an example, consider ‘As User defined field’

Note: The Calculation Type can be Flat Rate if a fixed EMI amount needs to be deducted from the Employee's salary.

2. Salary Advance Payment to Employee

Pass an advance Payment entry to give the Salary Advance to the Employee/Employees.

Go to Gateway of Tally > Accounting Vouchers > press F5 for Payment Voucher

Enter the other details as shown:

3. Create/Alter 'Salary Details'

Before passing the Payroll Voucher for the recovery of Loan, you will have to add the Pay Head for Salary Advance and specify the amount to be deducted from the Employee’s Salary.

Note: Salary Details can be Created/Altered from Employee/Employee Group Master.

4. Create (pass) Payroll Voucher

Go to Gateway of Tally > Payroll Vouchers > press Ctrl+F4 for Payroll Voucher

Click on A: Payroll Auto Fill or press Alt + A keys to view Payroll Auto fill screen. In Process for field select User Defined as the process  type.

Pass the Payroll Voucher, with the option provided for the deductions made from the employee’s salary.

5. View the Payslip

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Slip > Single Pay Slip

6. View the report for remaining amount to be recovered from the Employee

To view a report of the Advances given to each Employee, go to Display > Payroll Reports > Statement of Payroll > Employee Pay Head Breakup > Advance to Employee, F12 > Expand all the levels in a detailed format.

Overtime allowance can be calculated based on per hour of basic pay.

To calculate the Overtime Allowance based on the Per Hour Basic Pay (or Basic Pay and DA) received

1. Create/alter basic pay head.

2. Create/alter overtime hours as a Production Type .

3. Create/alter OT allowance pay head.

4. Define salary details.

5. Record attendance and overtime details.

6. Pass payroll voucher.

Create/Alter Basic Pay Head

For the sake of illustration, we have taken a calculation period of 30 days in each month.

Similarly, create DA Pay Head if required.

Create/Alter Over Time Hours as a Production Type

Create the attendance/production type as shown below:

Create/Alter OT Allowance pay Head

Create the OT Allowance pay head as shown below:

Note: If DA is not applicable, then the OT Allowance formula will have only basic pay component for the computation of OT.

The above pay head should not affect the net salary and hence the option is set to No .

Basic salary divided by total present days will give per day salary. Assuming that there are 8 hrs in a day,

8 Hours = 100%

1 Hour = 12.50%

Note: In this case study, 8 hours is considered as working hours. In other cases, the following table can be used to compute the Per Hour OT amount.

Define Salary Details

Provide salary details as shown below:

Record Attendance and Overtime details

Create the attendance voucher as shown below:

Record payroll voucher as shown below:

You can use the following solution to handle and update the Balances for Loans and Advances from the previous year.

1. Create Ledger - Loans & Advances

2. Alter Loans & Advances Ledger

3. Modify the Loans & Advances Pay Head

4. Create/Alter Salary Details for Employees

5. View Trial Balance report

6. Create a Journal Voucher for adjustment entry

7. Check Reports

1. Create Ledger - Loans & Advances

● Go to Gateway of Tally > Accounts Info > Ledger > Create .

● Set the option Cost Centres are applicable to Yes and do not allot an Opening Balance to the ledger.

2. Alter Loans & Advances Ledger

Alter the above Ledger, since the option ‘Use for Payroll’ appears only in ‘Alteration’ mode.

● Go to Gateway of Tally > Accounts Info > Ledger > Loans & Advances > Alter .

3. Modify the Loans & Advances Pay Head

● Go to Payroll Info > Pay Heads > Alter > Loans & Advances .

● The options Affect Net Salary will be set to No while the Calculation Type will be set to As User Defined Value , by default.

Modify the default options mentioned above as shown:

● Set the option Affect Net Salary to Yes .

● Name to appear in Payslip – Mention a name, say Loans & Advances.

● Set the Calculation Type as required. Let us take a ‘Flat Rate’ for example.

4. Create/Alter Salary details for Employees

In the process of creating Salary Structure/Details by mentioning the Pay Heads, i.e., Basic Pay, Conveyance, ESI, etc, also mention the pay head ‘Loans & Advances’  and specify the amount that needs to be deducted from the employees salary on a monthly basis, manually.

5. View Trial Balance report

The Trial Balance will display the closing balance of Rs.25,000/- for ‘Loans & Advances Adjustment’ account (Ledger) which was used for mainting employee loan account before implementing Payroll in Tally. This must be transferred to the Loans & Advances ledger (Pay Head) by allocating the amount to the respective employees.

6. Create a Journal Voucher for adjustment entry

Now allocate the amount taken by Mr. Ajay by passing an Adjustment entry through a Journal (F7) (Transferring the Opening balance to ‘Loans & Advances’ Pay head – Mr. Ajay from ‘Loans & Advances Adjustment’ ledger.)

The Trial balance will now show a debit balance of Rs.25,000/- in the Loans & Advances account (Pay Head)

Now when you go to Display > Payroll Reports > Statements of Payroll > Employee Pay Head Breakup > Loans & Advances, it will display the debit balance of Rs.25,000/- for that particular employee.

Payroll Voucher for Mr. Ajay: You will see the opening balance of Loans & Advances of Mr. Ajay reduced to Rs. 24,000/- from Rs.25,000/-, as a monthly deduction of Rs.1,000/- was mentioned in the Salary details of Mr. Ajay

7. Check Reports

Now when you check the Payslip for the month of ‘April’, it will show you the amount deducted from Mr. Ajay’s Salary.

The ‘Employee Pay Head Breakup’ will show you the report as shown below.

Consider a scenario where an employee is repaying a loan by paying the Employer in cash. The receipt entry for the same in the Employer’s book will be as follows:

Now go to Display > Payroll Reports > Statements of Payroll > Pay Head Employee Breakup, to see the balance amount due from Mr. Ajay:

You can check the difference through the following report:

Press ‘ALT+A’ (Alter Column) and mention the period as 01-04-2007 to 30-04-2007. Select the name as Mr. Ajay and the group as ‘Loans & Advances (Asset)’

This will display the details of Loans & Advances of Mr. Ajay for the month of April

Press Alt+C (New Column) and mention the period  01-05-2007 to 31-05-2007 and Accept the same.

You will see the deductions made in the month of April and May in two different columns, i.e., Rs.1,000/- deducted from the salary in the month of April and Rs.11,000/- (1,000+ 10,000) in the month of May.

Employee Details can be exported into excel using ODBC feature. To export the data:

1. Enable ODBC server capability in Tally.ERP 9.

2. Open excel and perform the query for Tally database.

3. Format the Excel sheet as per requirement.

Enable ODBC Server Capability in Tally.ERP 9

1. Go to Gateway of Tally > F12: Configuration > Advance Configuration .

2. Under Client/Server Configuration , set Enable ODBC Server to Yes .

3. In the Port field specify the required ODBC port (e.g. 9000).

Note: ODBC port number can be any number above 9000.

4. Skip all other field and save the details to restart Tally.ERP 9.

Once Tally.ERP 9 restarts, the Configuration section will be changed as shown below:

Open Excel and perform the query for Tally database

1. Open a new Excel Sheet.

2. Click Data .

3. Click Import External Data .

4. Click New Database Query .

5. In the Choose Data Source screen, select the required database (e.g. TallyODBC_9000*).

6. In the Query Wizard - Chose Columns

o Under Available tables and columns , select Employees .

o Press > button to move the details in the Columns in your q uery field.

Note: You can decide to choose only available field to be exported to excel.

7. Click Next .

8. Click Next in the Query Wizard Filter data screen.

9. Select the required Sort by (e.g. Name) from the list in the Query Wizard - Sort Method screen.

10. Click Next .

11. In the Query Wizard Finish screen, select the option Return Data to Microsoft Excel .

12. Click Finish .

13. In the Import Data screen select the row and column from where the data import should start.

14. Click OK . The imported data in excel sheet will appear as shown below:

Format the Excel to organize data as per your requirement.

Tally.ERP 9 generates the following Statutory forms with regard to the Provident Fund, Employee State Insurance, Professional Tax, Gratuity and Income Tax.

Provident Fund

● Monthly

o PF Combined Challan No. 1, 2, 10, 21 and 22

o Form 5

o Form 10

o Form 12A

o Monthly Statement

● Annual

o Form 3A

o Form 6A

● E-Return

o Form 5 (Monthly)

o Form 10 (Monthly)

o Form 3A (Annual)

Employee State Insurance

● Monthly

o Challan form for Deposit in A/C No. 1

o Monthly Statement

o Form 3

o E-Return

● Half Yearly

o Form 5

o Form 6

o Monthly

Professional Tax

● PT Statement

Gratuity

● Gratuity Summary

Income Tax

● Quarterly

o Form 24Q

o Annexure I to 24Q

o Annexure II to 24Q

● Annual

o Form 16

o Form 12BA

o ITR-1

● E-Return

o E-24Q

o Print Form 27A

In some states Professional Tax (PT) is computed and paid once in specific period ( for example , PT is paid every six months in Tamil Nadu).

To configure PT Computation and payment based on any periodicity

1. Create/alter PT pay head with Calculation Period as Period .

2. PT deduction using professional tax process from payroll voucher.

3. Process professional tax payment using payment voucher.

Detailed steps

Create/Alter PT Pay Head with Calculation Period as Period

1. Go to Gateway of Tally > Payroll Info. > Pay heads > Create .

2. Create PT Pay Head with Calculation Period as Period as shown below:

Note: If the PT deduction is made only once in six months then Slab Range (i.e. From Amount & Amount Upto) should be selected based on six months earnings as shown above.

All other pay heads can be created as per the process explained in the Help file.

Note: By selecting Period as Calculation Period , a separate process will be available in the payroll Auto Fill , namely, Professional Tax .

To process PT Deduction using Professional Tax from Payroll Voucher

1. Go to Gateway of Tally > Payroll Vouchers > press Ctrl+F4 for payroll vouchers.

● In Payroll Auto fill select Professional Tax as shown:

● Enter other details in the Auto Fill screen as shown below:

● Press Enter to prefill the Professional Tax details in the payroll voucher.

2. Save the payroll voucher.

To process PT Payment using Payment Voucher

1. Go to Gateway of Tally > Accounting Vouchers > F5: Payment .

2. Press Alt+A for Payroll Auto Fill .

3. In the Payroll Auto Fill screen, select the details as shown:

The completed professional tax payment voucher appears as shown below:

Note: The professional tax can also be deducted every month and paid to the government only once in six months.

You can calculate the Tax Deducted at Source on the interest paid, towards the Unsecured Loans .

Let us consider the following example: On 1-4-2011, ABC Company, took a unsecured loan of Rs. 5,00,000 from Kiran @ 10% of Interest. Interest is payable monthly after deducting TDS.

● Prerequisites

● Create Ledgers

● Record the Receipt Voucher (receipt of loan amount)

● Create Voucher Class for Credit Note

● Record the Credit Note to account the Interest Payable on Unsecured Loan

● Record a Journal Voucher to Deduct Tax at Source (using Helper)

Prerequisites

In F11: Features > Accounting Features , set the following options to Yes

● Maintain bill-wise details

● For non-trading Accounts also

● Activate interest calculation

● Use advanced parameters

Create Ledgers

Ledger for Unsecured Loan

1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create

2. In F12: Configuration , set the option Allow Advanced entries in TDS Masters to Yes . ( In release 5.x Provide advance information in masters ).

3. Enter the ledger name

4. Group the ledger under Unsecured Loans .

5. Set Maintain balances bill-by-bill to Yes .

6. Set Activate interest calculation to Yes .

7. In Interest Parameters screen set the parameters as shown:

8. Set the option Is TDS Deductable to Yes .

9. Set Treat as TDS Expenses and in Deductee to No .

10. Set Use Advanced TDS entries to to Yes .

11. In Advanced TDS Entries screen

● Set the option Alter Ignore Income Tax Exemption Limit to Yes

● Select Interest Other Than Interest on Securities as the TDS Nature of Payment .

12. Enter Mailing Details and Tax Information . The completed Unsecured Loan ledger is displayed as shown.

Expenses Ledger

To account the expense of interest on unsecured loan create the ledger as shown.

TDS Ledger

To account the Tax deducted from the interest payable on the unsecured loan, create the ledger as shown.

Record the Receipt Voucher (receipt of loan amount)

1. In Debit field select the unsecured ledger - Loan Taken from Kiran and enter the loan received in Amount field.

2. In Bill- wise Details screen enter the bill details. Accept the default details displayed in the Interest Parameter screen.

3. In Credit field select Bank/Cash ledger depending on the nature of receipt of loan. The completed Receipt voucher is displayed as shown.

Create Voucher Class for Credit Note

1. From Gateway of Tally > Accounts Info. > Voucher Types > Alter .

2. Select Credit Note .

3. Tab down to Name of Class field and enter the class name as Interest Accounting . Press enter to view Voucher Type Class screen.

4. In Voucher Type Class screen, set the option Use Class for Interest Accounting to Yes .

Record the Credit Note to account the Interest Payable on Unsecured Loan

In F11: Features > Accounting Features , set Use Debit/Credit Notes to Yes .

1. Go to Gateway of Tally > Accounting Vouchers > Ctrl +F8 .

2. In Change Voucher Type screen, select the class Interest Accounting in Class field.

3. In Credit field select unsecured loan ledger - Loan Taken From Kiran and press enter to view Interest Details .

4. In Interest Details screen, in Name field select the Interest Bill - Loan - 001 from the list and save the interest details screen.

Note: Tally.ERP 9 will automatically calculate the interest at the Rate defined and Calculate From method selected.

5. In Bill-wise Details screen,

● Select New Ref in Type of Ref field

● Enter bill name as - C/N-001 in Name field.

● Interest amount will appear by default in Amount field.

6. In Interest Parameter screen, specify Zero in Rate field and press enter to confirm.

Note: In Interest Parameter screen, in Rate field Zero is entered as we are not going to calculate the interest on current amounted accounted as Interest payable.

7. In Debit field, select the expenses ledger - Interest Payable, to account the expenses paid in the form of interest. Press enter to view TDS Details screen.

8. Accept the default tax bill name and other details in TDS Details screen

Note: In Credit Note while accounting Interest Payable , there is no provision to deduct the TDS.

The completed Credit Note is displayed as shown below.

Record a Journal Voucher to Deduct Tax at Source (using Helper)

1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .

2. Press Alt +S (or click on S : TDS Deduction ) to view TDS Deductions screen.

● Enter the date until which the TDS transactions to be considered for deduction in Till Date field.

● Select the party for whom the tax to be deducted in Party field.

● Select the nature of payment against which tax to be deducted in Nature of Payment field

3. Accept the TDS Deduction details. Tally.ERP 9 will auto fill the TDS ledger, Tax bill references and the amount deducted.

4. In the Bill-wise Details screen

● Select Agst Ref in the Type of Ref field.

● Select C/N-001 as the bill name in Name field.

● Amount appears by default.

The completed Journal voucher is displayed as shown below.

Salary structure can be created based on gross salary.

Example

To create salary structure

1. Create gross salary pay head

2. Create other pay heads

3. Define salary details

4. Create voucher class

5. Process payroll

Create Gross Salary Pay Head

To create gross salary pay head

1. Create a pay head named Gross Salary under Pay Head Type - Earnings of Employees .

2. Select Calculation Group in the Under field.

Note: The Calculation Group is created so that the same can be excluded using a voucher class during the salary processing

3. The option Affect Net Salary should be set to No .

Create Other Pay Heads

Create all the pay heads as computed value with computation method as On Specified Formula .

Pay Head Creation screen for basic pay appears as shown below:

Define Salary Details

To define salary details

1. Go to Gateway of Tally > Payroll Info. > Salary Details > Define .

2. Specify employee wise salary structure in salary details including gross salary pay head as per the order shown below as all the pay heads depends on the gross salary pay head:

Create Voucher Class

The voucher class should be created to exclude the gross salary pay value while processing the payroll voucher.

To create voucher class

1. Go to Payroll Info. > Voucher Types > Alter > Payroll > Enter Name of Class under Class ( for example , Pay Process).

2. Exclude the calculation group by selecting the same under Exclude these Groups (this group is used only for gross salary pay head).

Process Payroll

To process the salary using the voucher class

1. Go to Payroll Voucher > Press Ctrl + F4 > Select Pay Process as Voucher Class .

2. Press Alt + A for Payroll Auto Fill .

The salary will be processed as per the requirement. Similarly other pay components can also be processed.

How can we create Attendance based Pay Heads having Attendance Type which is computed on multiple Attendance/Production types (e.g. Basic is calculated on both Present days and Leave days(e.g. CL, SL, PL etc.))?

To create the Pay Head (Basic) which computes the values based on the multiple Attendance/Production Types (e.g. Present and Leave), follow the steps given below:

1. Create Attendance Type Group (e.g. Pay Days) with Attendance/Leave with Pay option

2. Create Present attendance Type under Pay Days Group

3. Create different Leaves (Casual Leave, Sick Leave and Paid Leave) as Attendance Type under Pay Days Group

4. Create the Attendance based Pay head e.g. Basic Pay with Attendance Type as Pay Days

5. Add the Pay Head to Salary Details

6. Process Attendance for Present and Leave

7. Process payroll and check the Pay Slip

1. Create Attendance Type Group (e.g. Pay Days) with Attendance/Leave with Pay option

Go to Gateway of Tally > Payroll Info. > Attendance/Production Types

· Click on Create

· Specify Pay Day s in Name field

· Select Primary in the field Under

· Select Attendance/ Leave with Pay in the Attendance Type field

The completed Attendance Type Creation screen appears as shown:

2. Create Present attendance Type under Pay Days Group

Go to Gateway of Tally > Payroll Info > Attendance/Production Types

· Click on Create

· Specify Present in Name field

· Select Pay Days in the field Under

· the Attendance Type field is prefilled with Attendance/ Leave with Pay

The completed Attendance Type creation screen appears as shown:

3. Create different Leaves as Attendance Type under Pay Days Group

Similarly, create the Casual Leave also with the Attendance Type as Attendance/Leave with Pay. The completed Attendance Type creation for Casual Leave is as shown:

Similarly, create Sick Leave is as shown:

Similarly, create Paid Leave as shown:

4. Create the Attendance based Pay Head e.g. Basic Pay with Attendance Type as Pay Days

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

In the Pay Head Creation screen,

· Specify Basic as the Name of the Pay Head

· Select Earnings for Employees as the Pay Head Type

· Select Indirect Expenses in the field Under

· Set Affect Net Salary to Yes and specify the required Name

· Set Use for Gratuity to Yes if the Pay Head has to be considered for Gratuity computation

· In the Calculation Type field select Attendance

· In the Attendance/Leave with Pay field select Pay Days

· Calculation Period should be set to Months

· Per day calculation basis should be User Defined with Month of 30 Days

· select the required Rounding off Method and save the Pay Head

The completed Pay Head appears as shown:

5. Add Pay Head to Salary Details

Go to Gateway of Tally > Payroll Info. > Salary Details > Define

Enter the required details as shown:

Note: Salary Details can be defined in Employee/Employee Group masters. Click here to know how.

6. Process Attendance to record Present and Leave details

The attendance for Present and Leave can be captured using two separate Attendance Vouchers or single Vouchers without using the Auto Fill (manual process).

The completed Attendance Voucher passed manually (without Auto Fill ) will appear as shown:

Note: The total number of working days comes to 30 days (24+1+2+3).

7. Process Payroll

Payroll can be process in a normal manner as shown below:

The details for different Leaves (CL, SL and PL) along with the Present days can be seen in the Attendance Sheet as shown:

As per Section 192, TDS on salary is calculated for Payroll. For details on income tax, click here .

Tally.ERP 9 calculates PF admin charges and EDLI admin charges based on the rules specified by the PF department. In order not to complicate the transactions by displaying all the formulas being used to calculate these values, the masters used to account for these values are designed to simplify setting up the formulation for calculating the charges.

Once the masters are created by choosing the right options, Tally.ERP 9 calculates the values in the transactions when these masters are selected.

Both PF admin charges and EDLI admin charges are calculated based on PF Gross, which is a combination of pay heads used for the calculation of employee contribution to provident fund (A/C No 1) and EPS calculation (A/C No 10). The different components of salary (pay heads) participating in PF calculation are Basic Pay, Dearness Allowance (if any), and Retention Allowance (if any). In Tally.ERP 9, when pay heads are being created for PF and EDLI admin charges, system by default takes the computation formula as calculate On PF Gross .

Currently, the PF admin charges and EDLI admin charges are calculated at 1.10% and 0.01% of PF gross respectively with minimum of Rs. 500 for PF admin charges and Rs. 200 for EDLI admin charges.

When the PF admin charge is below Rs. 500 for the employees, the balance amount i.e. Rs. 500 minus the calculated admin charges for all employees is divided by the number of employees and the amount is equally added to the PF admin charge against each employee as shown in the illustration below:

For example :

Based on the above salary structure, the PF Admin charges @1.10% for both employees is Rs. 242 and Rs. 198 (total - 440). The difference from the minimum PF Admin charges payable is Rs. 60 [500-(242+198)]. Now dividing 60 by 2 employees and adding the resultant Rs. 30 (60/2) to each employee will give us Rs. 272 (242+30) for employee A and Rs. 228 (198+30) for employee B. Similar calculation goes for EDLI admin charge also.

Also, note that these charges are paid by employer, there is no impact on employee's salary.

You can follow the steps given below, for the disbursement of salary based on the bank mode of payment.

1. Ensure bank details are fed in employee master:

2. Go to Payroll Voucher > Using Payroll Auto Fill (Alt+A) > select all employees or group of employees from the list:

3. Select Payroll Ledger as Salary Payable or Bank ledger according to the scenario:

4. Now payroll voucher has been generated with bifurcation of Salary for each employees:

5. To make payment, pass payment voucher against the payroll entry using Payroll Auto Fill (Alt+A). Here ensure Payment voucher in Single Entry Mode

6. Once after accepting the configuration, salary will be calculated for each employees:

7. In bank allocation screen, it shows employee wise mode of payment:

You can account the employee's total eligible leave in the year beginning. In the intervals you can check the remaining leave (deducting the availed leave) of the employees.

1. Create the Attendance Type .

2. Record the Attendance Voucher to account the total eligible leave.

Note: To capture employee's eligible leave, in Attendance Voucher enter the number with negative symbol.

3. Record the Attendance Voucher to account the leave taken. During the year if employees take/avail leave, record Attendance Voucher by specifying the number of days leave taken.

In the above attendance voucher, you can observe that the current balance is (-22). Ajay is eligible for 24 days of leave in a year and in the month of April he has availed 2 days leave. After deducting the availed leave the remaining leave is displayed as the current balance.

4. Verify the remaining leave. You can check the remaining leave (with negative symbol) in Attendance Sheet . In this report, the leave taken accounted in positive number will be adjusted against eligible (in negative symbol) and the balance will be displayed.

I want to calculate the PF for an employee whose Basic salary is greater than Rs.6500 and PF slab is specified, based on Attendance, i.e. if the employee is absent for a few days, the PF should get calculated based on pro-rated slab amount based on attendance.

For example:

Employee 1’s Basic Salary Rs.10,000

He is absent for 2 days.

Employee PF @ 12% is calculated on the slab of Rs.6500. When the employee is absent for 2 days even the slab should be pro-rated.

Therefore PF should be [(6500/30)*28] = 6067*12% = 728

Solution

1. Create a group called Calculation Group under Indirect Expenses .

2. Create a Basic Salary pay head as shown below below:

3. Create a PF Gross pay head under the Calculation Group , as shown below:

The PF Gross Pay Head is created to give a slab amount for PF Calculation. This way the PF Calculation does not depend on the Basic Salary.

Note: PF Gross is created under Calculation Group, so it can be excluded during Payroll Process and not affect Net Salary.

4. Create Employee PF @ 12% on Specified Formula as “PF Gross” as shown:

5. Similarly create Employer’s PF @8.33% taking PF Gross as the Specified Formula.

6. Create Employer’s Pf @ 3.67% taking Employee PF @ 12% - Employer’s PF @ 8.33% as the Specified Formula.

7. Define the Salary Details for the employees as follows.

For Employee 1: Basic Salary is 10000 and PF is calculated on 6500.

For Employee 2: Basic Salary is 7000 and PF is calculated on 6500.

Note: Salary Details can also be defined from Employee/Employee Group master.

8. Create a Voucher Class – Salary Class and exclude the Calculation Group from the voucher Class

9. Record an Attendance voucher for 2 days absent for both the employees.

Process the Salary using the Voucher Class - Salary Class, by following the steps given:

1. Go to Gateway of Tally > Payroll Vouchers > press Ctrl+F4 and select Salary Class .

2. Press Alt+A to auto-fill salary details.

3. Select Salary under the Process for field.

4. Select All Items in the Employee/Group field.

5. Accept the screen.

The PF will be calculated on the Pro-rated Slab amount (PF Gross) based on attendance as shown above.

Let's assume that the Loan of Rs. 10,000 was given to an Employee in the month of February 2009. Total of Rs. 4000 was recovered as two instalments of Rs. 2000 each from the salaries of Feb and Mar 2009. Balance Loan while splitting the Company at the end of Mar 2009 was Rs. 6000.

● Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Employee Pay Head Breakup

● Select the required Pay Head (Pay Head created for Loans & Advances) and press Enter.

The Employee Pay Head Breakup will display the Closing Balance of the Loan pending for recovery as shown:

Once the Company is splitted the same report will appear as shown:

The Pay Head created under the Loans and Advances will have the details of the pending Loan Amount that needs to be recovered as shown:

The above clearly shows that the total pending Loan Amount that needs to be recovered is carried forward to the new company after splitting but the information of Employees for whom the Loan is pending is not carried forward.

To allocate the pending Loan amount as the Opening Balance to the respective Employee

1. Create a Ledger under Loans & Advances (Assets) option from Accounts Info..

2. Transfer the Opening Balance from Default Salary Advance Pay Head to the Ledger created above.

3. Pass a Journal to transfer the Loan amount back to the Salary Advance Pay head and select the required Employee to allocate the Loan Amount Opening Balance.

4. Check the Employee Breakup of Pay Head report for balance Loan Amount .

Detailed:

1. Create a Ledger under Loans & Advances

● Go to Gateway of Tally > Accounts Info. > Ledger > Create

Specify the details as required:

2. Transfer the Opening Balance from Pay Head to Ledger

● Delete the same Opening Balance from the Pay Head (manually) and save the Pay Head as shown:

● Add the Opening Balance Amount to the Ledger created in the previous step as shown:

3. Pass a Journal entry to transfer the Loan Amount back to the Pay Head and allocate to the respective Employee

Note : Before passing the Journal Voucher, ensure that the Maintain Cost Centres is enabled and the option Cost Centres are applicable is enabled for the Pay Head. This option can be enabled for the Pay Head from the Accounts Info. Menu as shown:

To pass the Journal entry

Go to Gateway of Tally > Accounting Vouchers > F7: Journal Vouchers.

Select the Pay Head and Ledger as shown:

4. Check the Employee Pay Head Breakup Report

● Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Employee Pay Head Breakup.

● Select the required Pay Head (Pay Head created for Loans & Advances) and press Enter.

In order to keep track of the arrears paid to the employees:

● Create a separate Payable Ledger called Arrears under Current Liabilities Group

● Create/Alter the Payroll Voucher Type to create a new Voucher Class called Arrears using the above Payable Ledger

● Process Payroll using the Voucher Class - Arrears

● Check the reports - Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Head Employee Breakup > Employee

● Pass the Payment Voucher using Auto Fill to pay the Arrears

Step 1: Create a Pay Head as Arrears under Current  Liabilities

1. Gateway of Tally > Payroll Info > Pay Head > Create

2. Enter the details as shown:

Step 2: Create/Alter Payroll Voucher Type to create a new Voucher Class

1. Gateway of Tally > Payroll Info > Voucher Type > Payroll > Alter .

2. Mention the Name of Class .

3. Press Enter . The Voucher Class creation screen will be displayed.

4. Select End of List under Exclude these Groups & Include these Groups , and select Arrears under Ledger Name .

5. Accept the screen by pressing Enter or Ctrl+A . The completed Payroll Voucher Class for Arrears is as shown:

Step 3: Process Payroll Voucher

1. Let us assume that the Payroll has been processed for the month of April. Now, as the salary is revised from the month of April (For eg, Basic has increased from Rs. 10,000/- to 12,000/) , you need to pass the Payroll voucher again for the month of April selecting the Voucher Class to track the Arrears.

2. Press Ctrl+F4 to select the Arrears from the Voucher Class List

3. Press Alt+A for Auto fill.

Step 4: Track the arrears by viewing the Report

1. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Head Employee Breakup > Select the required Employee

2. Drill down further to view the Ledger Monthly Summary Report.

Step 5: Process the Arrears payment using Payment Vouchers.

Check the reports after Payments.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Head Employee Breakup > Employee .

Drill down further to view the Ledger Monthly Summary Report.

How can we configure the Conveyance in Payroll to be calculated at 5% of the Basic Salary, provided the basic salary does not exceed Rs. 20,000/-, if the Basic salary exceeds Rs.20,000/-, then the conveyance should be fixed at Rs.1,000/-?

To calculate the Conveyance Pay Head as required

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

2. Create the Conveyance Pay Head with the options configured as shown below:

3. Go to Gateway of Tally > Payroll Info > Salary Details > Create .

4. Specify the Conveyance Pay Head in the Salary details for the employee as shown below:

Salary Details for Mr. Vishal

Salary Details for Mr. Akshay

Go to Gateway of Tally > Payroll Vouchers > Click on A: Payroll Auto Fill > Specify the details as shown:

Since the Basic Salary specified for Mr. Akshay is above Rs. 20,000/-, the conveyance works out to Rs. 1000/- (fixed amount).

However, for Vishal, conveyance works out to Rs. 500/- which is 5% of his basic salary of Rs. 10,000/- (see the picture below).

Note: Salary Details can be Created/Altered from Employee/Employee Group Master.

To calculate the Bonus amount based on each months salary and accumulate this amount to be payable at the year end, follow the steps given below:

· Create a Group (Bonus Pay) under Indirect Expenses, which can be used to exclude using Voucher Class to calculate the Bonus Amoun t separately for each month

· Create a Payable Ledger (Bonus Payable) under Current Liabilities , for passing the Bonus amount till its paid to the Employees.

· Create the Bonus Pay Head with Group as Bonus Pay and calculation based on Specified Formula ( e.g.14% of Basic+DA)

· Create/Alter Payroll Voucher using Voucher Class to eliminate the Bonus Pay Group and pass the values to Bonus Payable Ledger and another Voucher Class to pass regular salary without Bonus Group and pass to Salary Payable Ledger.

· Create/Alter Salary Details for all Employees to include the Bonus Pay Head

· Process Payroll using the Voucher Class for Bonus calculation and excluding this from regular Salary

Detailed steps

1. Create a Group (e.g.Bonus Pay) under Indirect Expenses

Go to Gateway of Tally > Accounts Info. > Group

2. Create Bonus Payable Pay Head under Current Liabilities

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

3. Create Bonus Pay Head

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

Note : Percentage may be changed as per your requirement.

4. Creating Voucher Class for Salary Payable to exclude Bonus pay Group

Go to Gateway of Tally > Payroll Info. > Voucher Types > Alter > Payroll

· Select Bonus Pay under Exclude these Groups then select Salary Payable ledger under Ledger to use: - then press enter

· Similarly, create another Voucher Class called Bonus

· Select Bonus Pay under Include these Groups then select Bonus Payable ledger under Ledger to use -> press enter then Accept it.

5. Define Salary Details to include Bonus Pay Head

Note : Salary Details can be Defined from Employee/Employee Group master. Click here to know how.

6. Process Payroll

To process the Payroll Voucher you need to select Voucher Class that we created earlier.

Go to Gateway of Tally > Payroll Vouchers > press Ctrl+F4

· Select the Voucher Type from the list.

Note: you will have to select Payroll for calculating the salaries for each month and select Bonus in the month along with the Payroll when you want to pay the Bonus.

Payroll Process

Salary processed excluding Bonus Pay Head by Payroll Class in Payroll Voucher.

Now the Salary for the Month of April is processed and the amount is passed to Salary Payable Ledger.

Similarly, you can process the other components such as Employer PF Contibution and Employer ESI Contribution also.

The Salary payment, PF Payment and ESI Payment can be carried out as described in the Help File (Tally Reference Manual).

Bonus process

The Bonus should be processed for all the months and paid at the end of a specific period. Example if you want to pay the Bonus at the end of the year (March)

· Press Alt+A to start Auto Fill and enter the details as shown below:

The complete Payroll Voucher for Bonus computation is as shown:

The Bonus amount will be calculated and passed on to Bonus Payable Ledger.

Tally.ERP 9 allows you to process payroll even from middle of the month e.g. 26th to 25th of each month. To process the payroll in the middle of the month, you need to:

1. Create the attendance based pay heads on User defined Calendar Type

2. You need to pass two Attendance Vouchers one for calendar days and another for actual attendance

Once the above is followed the Salary will be processed correctly from the middle of the month.

Example:

ABC Company started operations from 1-4-2010 and wants to process the Payroll on 25th of each month. The payroll is processed on 25.4.2010 for April 2010 and 25.5.2010 for May 2010 and so on.For illustration, lets assume that Mr. Rakesh is the Employee who has joined the company on 1.4.2010. There is only one Pay Component Basic Pay.

Create/Alter - User Defined Calendar Type

1. Go to Gateway of Tally > Payroll Info. > Attendance/Production Types

2. Select Create to create new calendar type

3. Select User Defined Calendar Type in the Attendance Type field and enter the details as shown:

4. Press Enter to accept and save.

Create/Alter - Basic Pay Head

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

2. Select Create to create new Pay Head. Specify the details as shown:

3. Press Enter to accept and save.

Similarly, create the Employee and Salary Details for the Employee.

Create Attendance Vouchers for recording the number of working days

1. Go to Gateway of Tally > Payroll Voucher > Press Ctl+F5 for Attendance Voucher

2. Press Alt+A for Attendance Auto Fill

3. In the Attendance Auto Fill screen,

● Specify Voucher Date as 25.04.2010 and select the require category and Employee Groups

● Select My Calendar (user defined calendar type created earlier) as Attendance/Production Type

● You can specify 30 in the Default Value to Fill which will be prefilled for all Employees

Completed Attendance Voucher for number of working days appears as shown:

Similarly, pass the attendance Voucher for the number of days the Employee is present on 25.4.2010. Since there are only 25 days, you will have to specify the days the Employee is present out of 25 days.

Note: The present days is captured as the Basic Pay Head is created on Present days.

Create Attendance Voucher to record the actual days present

Similarly, pass the attendance Voucher for the number of days the Employee is present on 25.4.2010. Since there are only 25 days, you will have to specify the days the Employee is present out of 25 days.

Note: The present days is captured as the Basic Pay Head is created on Present days.

Process Payroll

1. Go to Gateway of Tally > Payroll Voucher > Press Ctl+F4 for Payroll Voucher

2. Select the required details in the Payroll Auto fill as shown:

The completed Payroll Voucher appears as shown:

3. Press Enter to accept and save.

In the month of May, you will have to consider the number of working days as 30 (ie. 5 days of April and 25 days of May).

To process the Payroll successfully, you will have to pass three attendance Vouchers, one Attendance Voucher for April from 25th to 30th April 2010 and two for the month of May on 25.5.2010.

Attendance Voucher for April 2010 for pay period from 26th to 30th April 2010

The above Voucher has to be passed to compute the salary for the last 5 days of April 2010. The total salary will be divided by the user defined days and multiplied by 5 or actual attendance.

Attendance Voucher for 1st to 25th May 2010 for user defined Calendar Type

The above Voucher is passed to record the user defined days from 1.05.2010 to 25.05.2010.

Actual Attendance from 26th April to 25th May 2010

The above Voucher records the actual number of days the Employee was present in the office from 26.04.2010 to 25.05.2010.

Process Payroll for period 26th April to 25th May 2010

Note: In the Payroll Auto Fill, you will have to select Payroll period as 26.04.2010 to 25.05.2010.

Similarly, you can pass the attendance and payroll Vouchers for all the months.

Follow the above process for salary computation for remaining months also.

The PF admin charges will not come automatically while making the PF payment. Following are the pre-requisite for the PF admin expenses to be computed and display the PF Payment Voucher and PF Challan.

1. The PF admin Pay Heads should have been created:

o PF Admin Charges @1.10%

o EDLI Contribution @0.5%

o EDLI Admin Charges @0.01%

2. PF Admin Expenses Ledger should have been created under Indirect Expenses

3. PF Admin Charges Liability should have been created using a Journal Voucher and Employer Other Charges Auto Fill process

4. After the above three are completed, pass the PF Payment Voucher using the Auto Fill feature to automatically bring the values.

The PF Challan when printed after the above will display the PF Admin charges along with EDLI charges in the PF Challan. For more information on create the above process refer to Help file (Tally.ERP 9 Reference Manual).

Payment Advice will display details only when

● The payroll payment voucher is processed by selecting a bank ledger.

● Payment voucher date should be with in the period mentioned in payment voucher period - From and To fields in Printing Payment Advice screen.

Note: Before generating Bank Payment Advice , ensure in Employee Masters , the payment details line Bank Name , Account Number , etc. are specified.

Pay Head will not appear in the Salary Pay Slip of Employee unless and until it is configured in the Employee’s Salary Details screen.

Let us understand this better with the help of an example:

1. Create a new Pay Head Loan to Employee under the head Loans and Advances.

2. Create a new Employee and configure the Salary Details as shown below:

Note : Salary Details Creation/Alteration screen can be accessed from Employee/Employee Group Master screen.

3. Now record a Payment Voucher manually, without using the Auto fill option as shown below:

4. Record a Payroll Voucher manually, without using the Auto fill option after providing the necessary details. The Payroll Voucher Creation screen appears as shown below:

5. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Slip > Single Pay Slip > Select the Employee from the drop down list.

The Employee Pay Slip screen appears as shown below:

We can see that the Pay Head Loan to Employee is not displayed in the Pay Slip even though both Payment and Payroll Vouchers have been recorded, only due to the fact that it has not been configured in the Salary Details screen of the Employee.

Hence for the New Pay Head to be displayed in the Pay Slip, it needs to be configured in the Employee Salary Details first as shown below:

6. Record the Payment and Payroll transactions with the respective ledgers. Now, the Pay Slip will display the Pay Head Loan to Employee.

Tally.ERP 9 supports the deduction of specific Pay Heads which are user defined in nature and the respective employees salary is updated with these deductions while processing the Payroll. For example, deductions like electricity, home loan, insurance, etc.

1. Create a new Group Recoveries (for example), Loans can be Grouped under Loans and Advances(Assets)

2. Create/Alter the Pay Heads which are required to be recorded before processing the actual payroll for the month

3. Create Voucher Classes for Recoveries

4. Process the Payroll Voucher using the Voucher Class Recoveries

5. Process the regular Payroll Voucher for other Pay components

Detailed steps to record deductions

1. Create a new Group Recoveries (for example)

o Go to Gateway of Tally > Accounts Info. > Groups > Create .

o Specify the details as shown.

o Press Enter to accept and save.

2. Create/Alter the Pay Heads

Alter all the required Pay Heads or create new Pay Heads (for which the amount needs to be recorded first) for recoveries and Group them under Recoveries Group. These Pay Heads should be created with Calculation Type as As User Defined Value .

o Electricity Deduction

o Sample Insurance Deduction

o Employee Loan Deduction has to be grouped under Loans and Advances (Asset) Group as shown.

3. Create Voucher Classes for Recoveries

o Go to Gateway of Tally > Payroll Info. > Voucher Types > Alter > Payroll

o Specify select the other Parameters as shown.

o Press Enter twice the save the new Voucher Class Created.

Note: Ensure that the new Pay Heads are also specified in the Salary Details for the required Employees.

4. Process the Payroll Voucher using the Voucher Class Recoveries.

o Go to Gateway of Tally > Payroll Vouchers

o Press Ctrl+F4 for Payroll Vouchers

Note: You need to press Ctrl + F4 if you are already in the Payroll Voucher Creation screen.

o Select the required Voucher Type which is created to record the User Defined Pay Values which needs to be deducted from Salaries.

o Press Alt+A for Payroll Auto Fill and specify the required parameters as shown.

o Press Enter to save the voucher.

5. Process the regular Payroll Voucher for other Pay components.

o Press Ctrl+F4 again and select Not Applicable as the voucher type and press Enter .

o Press Alt+A for Payroll Auto Fill and specify the required parameters.

o Specify the value for earning components which are created with Computation Method as User Defined .

o Press Enter to save the Payroll voucher.

Other Payroll Vouchers will be passed as per the usual process.

Computing of House Rent Allowance is made by creating separate payhead. Following steps should be completed to compute the HRA exemption successfully:

● House Rent Allowance Pay Head should be configured for Income Tax

● Basic and Dearness Allowance (DA) Pay Heads should be configured for Income Tax

● Declaration of Rent paid and proof submitted by Employee should be correctly specified for the period along with the Type of City (Metro or Non- Metro)

Configure HRA Pay Head

1. Go to Gateway of Tally > Payroll Info. > Income Tax Details > Pay Head Configuration .

2. Select HRA Pay Head and press Enter to display Income Tax Configuration screen.

3. Name of Pay Head/Ledger is defaulted with Ledger Name

4. Master Type is prefilled with Pay Head or Ledger

5. Income Tax Component should be selected as House Rent Allowance

6. Select the Tax Calculation Basis and Deduct TDS across Period(s) as shown below:

7. Press Enter to save.

Similar to HRA Pay Head the Basic and DA Pay Heads also should be configured for the Income Tax. This can be done from Pay Head Configuration screen or from the Tax Configuration screen

Configure Basic and DA for Income Tax

1. Go to Gateway of Tally > Payroll Info. > Income Tax Details > Pay Head Configuration .

2. Select the required Pay Heads and select the relevant Income Tax Components . The completed Income Tax Configuration screens for Basic / DA appears as shown:

Once the HRA, Basic and DA Pay Heads are correctly configured, you will have to enter the Rent Declaration/proof details provided by the Employees.

Declare rent paid and proof submitted

1. Go to Gateway of Tally > Payroll Info. > Income Tax Details > Declarations .

2. Select House Rent Allowance in the Income Declarations screen.

3. Select the required Employee for whom Rent details needs to be entered from the list and press Enter (Select All Items to specify the Rent Details for all the Employees in single screen). The Rent Declaration screen appears.

● Specify the date in the Effective From field.

● Specify the amount declared as rent in the Rent Declared Amount field. If the Employee has submitted the rent proofs also, then the amount can be entered in the Rent Proof Amount field (rent declared and actual rent paid can be different).

● Select Metro or Non-Metro based on the type of city.

● If the place of residence is changed or if the rent has changed in between the year, the same needs to be specified in the 2nd line. The completed House Rent Declaration screen appears as shown:

Note: Monthly rent needs to be entered and same amount will be taken up for the remaining month if the rent paid is not changed in between the year.

Once the above three steps are completed, the HRA exemption can be computed successfully. The Income Tax Computation screen displays the HRA values as after the successful configuration.

1. Go to Gateway of Tally > Display > Payroll Reports > Statutory Reports > Income Tax > Computation .

2. Select the employee. The Income Tax Computation report appears as shown below:

Note: The Allowances which are not configured will be seen in red colour when F3: Show All button is pressed.

Only One Employee Category can be processed in a Single Auto Fill in the Payroll Voucher.

By default the Pay Slip displays the Net Amount for all the Pay components.

1. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Slip > Single Pay Slip .

2. Select the required Employee from the List of Employees . The default Pay Slip for the selected Employee appears as shown below:

To change the default display, set the Configuration options as per the requirement.

● Press F12 (F12: Configure).

● Set the option Show Gross Salary to Yes .

● Press Ctrl + A. The Pay Slip with Gross values appears as shown below:

Note: Once the Gross Values appears in the Pay Slip display, the same will also be available while printing the Pay Slip.

Enable Payroll feature, to process PF in Tally.ERP 9.

● Enable Payroll and Payroll Statutory Feature in Tally.ERP 9 .

● Create Payroll Masters .

● Define Salary Details .

● Process PF in Payroll Vouchers .

● PF Payment and generate  PF Challan .

Enable Payroll and Payroll Statutory Feature in Tally.ERP 9

1. Go to Gateway of Tally > F11: Company Features > F1: Accounting Features .

2. Set Maintain Payroll to Yes in the Accounting Features screen, as shown below:

Enable Payroll Statutory features in Tally.ERP 9

1. Go to Gateway of Tally > F11: Company Features > F3: Statutory & Taxation .

2. Set Enable Payroll Statutory and Set/Alter Payroll Statutory Details to Yes , as shown below:

3. Press Enter . The Payroll Statutory Details screen appears.

4. Specify the details regarding Provident Fund, Employee State Insurance and Income Tax in the Payroll Statutory Details screen as shown below:

5. Press Enter to accept the Payroll Statutory Details screen.

6. Accept the Statutory & Taxation screen.

Create Payroll Masters

The following pay heads have to be created for PF processing.

Employee’s PF Deduction

1. Go to Gateway of Tally > Payroll Info. > Pay Heads > Create . Employee’s PF Deduction @ 12% is grouped under the Pay Head Type Employees’ Statutory Deductions and the Statutory Pay Head Type PF Account (A/c No. 1).

In this example, Employee PF Deduction @ 12% is computed on Specified formula- Basic Pay + Dearness Allowance.

The Employee PF Deduction @ 12% is created as shown below:

2. Press Enter to accept.

Employer EPS @ 8.33%

1. Go to Gateway of Tally > Payroll Info. > Pay Heads > Create . Employer EPS @ 8.33% is grouped under the Pay Head Type Employer’s Statutory Contributions and the Statutory Pay Head Type EPS Account (A/c No. 10).

2. Specify the Computation Details as Specified Formula on Basic Pay and Dearness Allowance. The Pay Head creation screen appears as shown below:

3. Press Enter to accept.

Employer EPF @ 3.67%

1. Go to Gateway of Tally > Payroll Info. > Pay Heads > Create . Employer EPF @ 3.67% is grouped under the Pay Head Type Employer’s Statutory Contributions and the Statutory Pay Head Type PF Account (A/c No. 1).

2. Specify the Computation Details as Specified Formula on Employee PF Deduction @ 12% - Employer EPS @ 8.33%. The Pay Head creation screen appears as shown below:

3. Press Enter to accept.

PF Admin Charges @ 1.10%

1. Go to Gateway of Tally > Payroll Info. > Pay Heads > Create . PF Admin Charges @ 1.10% is grouped under the Pay Head Type Employer’s Other Charges and the Statutory Pay Head Type Admin Charges (A/c No. 2).

The Pay Head creation screen appears as shown below:

2. Press Enter to accept.

EDLI Contribution @ 0.5%

1. Go to Gateway of Tally > Payroll Info. > Pay Heads > Create . EDLI Contribution @ 0.5% is grouped under the Pay Head Type Employer’s Other Charges and the Statutory Pay Head Type EDLI Contribution (A/c No. 21).

The Pay Head creation screen appears as shown below:

2. Press Enter to accept.

EDLI Admin Charges @ 0.01%

1. Go to Gateway of Tally > Payroll Info. > Pay Heads > Create . EDLI Admin Charges @ 0.01% is grouped under the Pay Head Type Employer’s Other Charges and the Statutory Pay Head Type EDLI Admin Charges (A/c No. 22).

The Pay Head creation screen appears as shown below:

2. Press Enter to accept.

PF Payable

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

2. Select the Pay Head Type as Not Applicable under the head Current Liabilities .

3. Press Enter to accept.

PF Admin Expenses Ledger

1. Go to Gateway of Tally > Accounts Info > Ledgers > Create .

2. Select the Group Indirect Expenses as shown below:

3. Press Enter to accept.

Define Salary Details

Once the PF Pay Heads are created, the Salary Details of the Employees should be created or altered to constitute the Employer Contribution Pay Heads.

1. Go to Gateway of Tally > Payroll Info. > Salary Details > Define .

2. Select the Employee for whom the salary details are provided.

3. Select the PF Pay Heads Employee PF Deduction @ 12%, Employer EPS@ 8.33% and Employer EPF @ 3.67% in the Salary Details screen.

4. Press Enter to accept the screen.

Note : Salary Details can be defined in Employee/Employee Group master also.

Process PF in Payroll Vouchers

In Tally.ERP 9, Employer’s PF Contributions and Employee’s PF Deductions can be processed using Payroll Vouchers.

Process Salary with Employee’s Deductions

1. Go to Gateway of Tally > Payroll Vouchers > press Ctrl+F4: Payroll .

2. Specify the date on which Payroll is to be processed. Let us take an example of the month April. So the Payroll Voucher Date is taken as 30-04-2011.

3. Press Alt+A to display a Payroll Auto fill sub-screen as shown below:

4. Select Salary in the field Process for and specify the period for which the payroll is processed.

5. Select the Employee or group for whom salary is processed and the Payroll Ledger as Salary Payable.

6. Press Enter . The Employee’s PF deduction @ 12% is captured as shown below:

7. Press Enter to accept the screen.

Process Employer’s PF Contributions

1. Go to Gateway of Tally > Payroll Vouchers > Press Ctrl+F4: Payroll .

2. Specify the date as 30-04-2011.

3. Press Alt+A to display a Payroll Auto fill sub-screen.

4. Select PF Contribution in the field Process for and specify the period for which the PF is processed.

5. Select the Employee or group and the Payroll Ledger as PF Payable.

6. Press Enter . The Employer’s PF Contribution is captured as shown below:

7. Press Enter to accept.

Process PF Admin Expenses

1. Go to Gateway of Tally > Accounting Vouchers > Press F7: Journal .

2. Specify the date as 30-04-2011.

3. Press Alt+A to display Other Charges Auto fill sub-screen.

4. Specify the period as 1-04-2011 to 30-04-2011.

5. Select the Employee or group and the Expense Ledger as PF Admin Expenses.

6. Select the Pay Head as stated below:

o Admin Charges (A/c No. 2): PF Admin Charges @ 1.10%

o EDLI Contribution (A/c No. 21): EDLI Contribution @ 0.5%

o EDLI Admin Charges (A/c No. 22): EDLI Admin Charges @ 0.01%

7. Press Enter . The Employer’s Other Charges gets captured as shown below:

8. Press Enter to accept.

PF Payment and generate PF Challan

1. Go to Gateway of Tally > Accounting Vouchers > Press F5: Payment .

2. Press Alt+A to display the Payment Auto Fill sub-screen.

3. Select PF Challan from the Process List.

4. Specify the period as 1-4-2011 to 30-4-2011 and the Voucher date as 30-04-2011.

5. Select the Employee for whom such contribution is made, the Bank through which payment is made and the Payroll Ledger as PF Payable to display the Payment voucher as shown below.

6. Set Provide Details to Yes and specify the Payment Details in the Payment Details sub-screen.

7. Press No in the Accept screen and Press Alt+P to print to print the PF Challan.

Whether the computed value for the ESI will be different with and without the option Exclude for ESI Eligibility checked for some of the Pay Heads?

Solution

Yes, the ESI computation will be different when the option Exclude for ESI Eligibility is checked for a Pay Head. Prior to Release 1.6, the Pay Heads considered for ESI amount computation and ESI Eligibility were same. Now, you have additional Pay Heads for ESI amount computation while the same is not considered for the ESI Eligibility computation.

To understand the above let's assume that Mr. Ramesh was getting paid as per the following components:

● Basic: Rs. 12,000

● Sales Allowance: Rs. 2,500

● Over time allowance: Rs. 100 per hour

● Overtime for May 2010: 10 Hours = Rs. 100*10 = Rs 1,000

The ESI Pay Heads will be created as shown:

Employee ESI deduction:

Employer ESI Contribution:

Earlier to Release 1.6, there was no option to Exclude any Pay Head (e.g. Overtime) from ESI Eligibility. Hence, if the Overtime is included in the Specified Formula while creating the ESI Pay Heads, then the total Pay Value for Ramesh will be Rs. 15,000 (12000 + 2500 + 1000). Hence there will be no ESI Deduction or Contribution for Mr. Ramesh for the month of May.

In case if Overtime is not included in the Specified Formula as shown in the screenshots above, the the ESI will be computed and the values for deduction and contribution will be as shown:

● Employee ESI Deduction@ 1.75% = Rs. 253.75

● Employer ESI Contribution@ 4.75% = Rs. 688.75

Note: The above values are calculated without considering the earnings for the Overtime Pay Heads.

But as per the ESI rule, once an Employee falls under ESI, then the Amount is computed on all the earning components whether they are regular in nature or not. Hence, Overtime should also be considered for Computation purpose.

Tally.ERP 9 Release 1.6 onwards provides the flexibility to exclude a Pay Head from the Eligibility criteria while considering it for the ESI Computation by using it in Specified Formula as shown in the above screenshots.

The Overtime Pay Head should be altered (created) with the option Exclude for ESI Eligibility set to Yes.

1. Go to Gateway of Tally > Payroll Info. > Pay Heads > Alter .

2. Select the Overtime Pay Head from the list.

3. Press Enter .

4. Press F12: Configure in the Pay Head Creation or Alteration screen.

5. Set the option Allow Pay Head for ESI Eligibility to Yes , as shown below:

6. Press Enter .

7. Set Exclude for ESI Eligibility to Yes as shown:

8. Press Ctrl+A to save the Pay Head.

Process Payroll for the month of May for Mr. Ramesh

Salary Process:

1. Go to Gateway of Tally > Payroll Vouchers .

2. Press Ctrl+F4 .

3. Press Alt+A for Payroll Auto Fill.

4. Select the required details.

5. Press Enter. The completed Payroll Voucher appears as shown below:

The Payroll Voucher clearly shows that the ESI is computed though the total earnings is 15,500 as Overtime is considered for the eligibility and hence eligibility amount is 14,500 only. But while computing the value for ESI Rs. 15,500 has been considered i.e. including Overtime amount.

Employer ESI Contribution Process:

Even the ESI amount is computed on the total value i.e. Rs. 15,500 as shown in the above screenshot.

The above illustration clearly shows that the Overtime Pay Head has been included while computing the Deduction or Contribution values for ESI but is ignored while checking Eligibility Amount i.e. Rs. 15,000.

At present it is not possible to import attendance details from MS Excel to Tally.ERP 9. This feature will be available in future releases of Tally.ERP 9.

Follow the steps given below for entering the details of the Interest paid on House Loan:

1. Go to Gateway of Tally > Payroll Info. > Income Tax Details > Tax Configurations .

2. Bring the cursor under Other Income Declared by Employee and press Enter .

3. Select the required employee and press Enter .

4. Under Particulars select Income From House Property .

5. Specify the date from when the Interest on House Loan is applicable in Effective From Date .

6. Specify the Amount and select End of List .

7. Press Enter to save.

Update the tax configuration screen

1. Go to Gateway of Tally > Payroll Info. > Income Tax Details > Tax Configurations .

2. Bring the cursor under Other Income Declared by Employee and press Enter .

3. Select the required Employee and press Enter .

4. Under Particulars select Income From House Property .

5. Specify the date from when the Interest on House Loan is applicable in Effective From Date .

6. Specify the Amount and select End of List .

7. Press Enter to save.

Once the above is configured correctly, the Interest on Housing Loan will be automatically considered for Income Tax Computati on.

Note: We have to ensure to enter the values as Negative (-) if its the Interest paid on the House/Home Loan.

You cannot track the details of the pending leaves from Payroll package. But you can manage the details of the leaves taken Employees by creating different Leaves types.

Tracking of Leaves and option to enter the Leave Opening balance will be provided in the future releases of Tally.ERP 9.

You can visit your website http://www.tallysolutions.com/ for the detailed product roadmap.

Yes, the Payroll module in Tally is completely integrated with Accounts. As a result the user need not pass separate accounting entries to record the details of the Expenses towards employees salaries.

Employee cheques can be printed from payroll vouchers when the bank ledger is credited in the payroll voucher.

1. Record a payroll voucher with details as show below:

2. Set the option Enable cheque printing? to Yes in F11: Features > F1: Accounts Features , as shown below:

3. Go to the bank ledger and enable the option Set cheque printing configuration? .

The Cheque Format Selection screen appears as shown below:

4. Press Enter to view the Cheque Dimensions screen and enter the details of the company signatory as shown below:

5. Record a payment voucher for the salary payment.

6. Press ALT+A . The Payment Auto Fill screen appears as shown below:

7. Press Ctrl+A to accept. The salary payment details will be auto-filled to the payment voucher, as shown below:

8. In the Bank Allocations screen, provide the following information:

● Favouring Name : Enter the name of the employee.

● Transaction Type : Cheque.

● Amount : Enter the employees salary amount.

● Instrument No. : Enter the cheque number.

● Instrument Date : Enter the cheque date.

● Cross Instrument Using : By default, A/c Payee will appear in this field.

9. Press Ctrl+A to accept. The completed payment voucher appears as shown below:

On saving the payment voucher, the Cheque Printing screen of first employee is displayed as shown below:

10. Press Enter to view the print preview of the first employee's cheque. The cheque appears as show below:

11. Press Esc ( Escape ) to view the Cheque Printing screen of the second employee, as shown below:

12. Press Enter to preview the second employee's cheque. The cheque appears as shown below:

The details of Salary Paid and Balance Salary can be viewed from Employee Head Count report.

1. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Employee Head Count > F12: Configure .

2. Set the option Show Salary Paid & Balance Amount to Yes .

The Employee Head Count report displays the details of Salary Paid and Balance Salary as shown:

3. To view Employee wise Salary/Wage payment details, scroll and move the cursor to Earnings field and press Enter.

4. The Employee wise Salary/Wages Payment Summary for the particular month will appear as shown below:

While creating the House Rent Allowance Pay Head, if you define the Calculation Type as Flat Rate, the House Rent Allowance will get calculated even if the Employee has been absent for an entire Pay Period. In such cases, to ensure the HRA does not get added to the salary, you can do use any of the following methods.

Method 1: Define Salary Details of the Employee

1. Go to Gateway of Tally > Payroll Info. > Salary Details > Define .

2. Select the Group/Employee for whom HRA has to be altered, i.e., made nil.

3. In the Salary Details Alteration screen that appears, tab down to the HRA field defined in the Salary Details with Effective Date being from 1-May-2011, and make the amount zero, as shown below:

4. Press Enter to accept and save the details.

Note: Salary Details can also be altered from Employee master/Employee Group Master.

Now go to Payroll Vouchers > Press Ctrl+F4 for the Payroll Voucher, and process Employee A’s salary for the month of May, 2011.

The Payroll Voucher appears with HRA as nil:

Note: For the month of May, HRA has been altered and set to NIL. If the same Salary Details are retained to process salary for the subsequent months, HRA will not be calculated. Hence, ensure that the Salary Details are altered appropriately with the applicable Effective Date to include HRA, if the same has to be paid to the employee.

Method 2: Alter Calculation Type for HRA Pay Head

1. From Gateway of Tally , go to Payroll Info. > Pay Heads > Alter .

2. Choose the HRA Pay Head from the List of Pay Heads.

3. In the Pay Head Alteration screen, tab down to the Calculation Type field, and change the Calculation Type to On Attendance from Flat Rat e.

4. Press Enter to accept and save the alteration.

5. Go to Payroll Vouchers > Press Ctrl+F5 for the Attendance Voucher.

6. Record Employee A’s attendance as absent for the entire month (usually, 26 days):

7. Press Enter to accept.

8. Now press Ctrl+F4 for Payroll Voucher.

9. Process Employee A’s salary for the month of May, 2011.

The HRA appears on the Payroll Voucher, again, as shown below:

No. Only those salary or wages payment vouchers recorded by enabling Payroll features will be displayed/considered in Salary / Wages Payments report for auditing.

In the Pay Slip for each month you want to display the values of Basic, HRA and other pay components unchanged (flat rate) and the Loss of Pay during each month due to absenteeism should be displayed separately as a Deduction component in the Pay Slip.

Follow the steps given to calculate salaries as per the above criteria:

1. Create/Alter Attendance Type to record Total days in a month and Absent days

2. Create/Alter required Pay head including Pay Head to calculate Salary Deduction for Absent days

o Create Earnings Pay Heads

o Create Total Earnings Pay Head

o Create Deduction Pay Head

o Create Voucher Class to eliminate the Calculation Group from regular Salary Calculation

3. Create Alter Salary Details for the employees

4. Record Attendance (Number of days Absent and Total number of days in the month)

a. Record total number of working days

b. Record total Attendance (days absent)

5. Process Payroll Voucher

6. Generate Pay Slip

Detailed steps:

Step 1: Create/Alter Attendance Type to record Total days in a month and Absent days

Go to Gateway of Tally > Payroll Info. > Attendance Type > Create

· Enter the name as Total Days

· In the Attendance Type field select Attendance / Leave with pay

The completed Attendance Type for Total days is shown:

Similarly create the Absent days with Leave without pay as Attendance Type .

Step 2: Create/Alter required Pay head including Pay Head to calculate Salary Deduction for Absent days

a. Create Earnings Pay Heads

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

· Create Basic Pay Head with the Calculation Type as Flat Rate

· Select other parameters as shown below:

Similarly create other Earnings Pay Head like DA, HRA, Conveyance etc.

b. Create Total Earnings Pay Head

The total earnings Pay Head should be created for calculation purpose under a dummy group (Calculation Group) which should be eliminated using a Voucher Class during the Salary processing.

The completed Pay Head for Total Earnings is as shown:

c. Create Deduction Pay Head

The Deduction Pay Head is created to record the Loss of Pay due to the absenteeism.

d. Create Voucher Class to eliminate the Calculation Group from regular Salary Calculation

Go to Gateway of Tally > Payroll Info. > Voucher Class > Payroll

In the Payroll Voucher Alteration screen specify the required Voucher Class Name

Exclude the Calculation Group as shown:

Step 3: Define Salary Details for the employees

The created Pay Heads should be included in the Employee Salary details as shown:

Note: Salary Details can be Defined from Employee/Employee Group Master.

Step 4: Record Attendance (Number of days Absent and Total number of days in the month)

a. Record total number of working days

Go to Gateway of Tally > Payroll Vouchers > press Ctrl+F5 for Attendance Vouchers

· Press Alt+A for Attendance Auto Fill

o Select the required Employee/ Group

o Under Attendance/ Production Type select Total Days

o Enter the Voucher Date

· Enter the details and save the Voucher

b. Record total Attendance (days absent)

Similarly to the above, record the days each employee was absent using the Attendance Auto Fill.

Step 5: Process Payroll Voucher

Go to Gateway of Tally > Payroll Vouchers > press Ctrl+F4 for Payroll Vouchers

· Select the required Voucher Type (Eliminate)

· Press Alt+A for payroll Auto Fill

o Select the required period

o Select the required employees or Group

The Completed Payroll Voucher appears as shown:

Step 6: Generate Pay Slip

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Slip

The salary slip for the employee will appear as shown:

In Bank Reconciliation Statement the transactions are listed based on the details updated in Bank Allocations.

The Salary Payment transactions recorded through Payroll Vouchers by selecting Bank Ledger are not displayed in Bank Reconciliation Statement, because Bank Allocation screen is not displayed to update the Bank Details.

To display Salary payment transactions in BRS, now users have to first record Payroll Voucher to account the Salary Payable and for making salary payment separate Payment Voucher has to be recorded by defining the Bank details in Bank Allocations.

Method 1

Step 1: Create/Alter the Pay Head

Create a Pay Head under Current Liabilities. Select Not Applicable for Pay Head Type.

Step 2: Record the Payroll Voucher to account Salary Payable

In Payroll Auto Fill select Salary Payable Ledger as Payroll Ledger instead Bank Ledger

Auto filled Payroll Voucher will be displayed as shown:

Step 3: Record the Payment Voucher to account the Salary Payment

Fill the details in auto fill along with Payment Voucher Date and select the Bank Ledger and Salary Payable as Payroll Ledger.

Step 4: View the Salary Payment Voucher in Bank Reconciliation Statement

Salary Payment Voucher recorded on 30-4-2011 is listed as shown

Method 2

1. Record the Payroll Voucher using Autofill and Save.

2. Select the voucher recorded for alteration. During alteration change the payroll voucher format to Voucher using Ctrl+V and enter the Bank Details to save. Now voucher will be displayed in BRS.

Note: On altering the payroll voucher format (to Voucher) don’t change it back to Payslip format. If you change the format the Bank Details entered will not be stored and the voucher will not be displayed in BRS.

You cannot enter the leave opening balance for all the employees while creating a new company for payroll.

This will be handled when the Leave Management module is provided as part of the payroll module in the future releases.

The Payroll Auto Fill button is available only in the Single Entry mode. In the Double Entry mode Auto Fill button is not available and hence you need to change the view to Single Entry mode by pressing F12 and enable the option Use Single Entry mode for Pymt/Rcpt/Contra in the Payment Configuration screen.

The employees' signature can be taken on the Pay Sheet while making the payment to the Employee. In Tally.ERP 9 the option to print the Pay Sheet with additional width is provided for this.

You can also affix a revenue stamp and take signature on that in the Pay Sheet printed with additional width.

The Employer's Contribution towards PF is divided into two parts:

● 3.67% which goes to PF A/c No. 1 (EPF Account)

● 8.33% or a maximum of Rs. 541, which goes to PF A/c No. 10 (EPS Account)

For the employees more than 58 years the entire amount should be deposited to A/c No. 1 and hence you need to create a separate Pay Head for Employer PF Contribution and the same should be included in the Employee's Salary Details.

To create separate Pay Head only for employees more than 58 years:

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

Enter the details as shown below:

Note : If the PF contribution is made on maximum of 6500, the same can be specified in the Amount Upto field under Computation info.

Alter the Employee's Salary details by including the above Pay Head and removing the Pay Heads created for PF @ 3.67% and EPS @ 8.33% by specifying a new Effective Date as shown:

Note : EPS Account Number should be removed in Employee Master for the employees more than 58 Years of age.

Yes, a Tax Rebate (U/s 87A) of an amount equal to hundred per cent of income tax or an amount of Rs. 2,000, whichever is less will be applied on the income of persons whose taxable income does not exceed Rs. 5,00,000.

● Ensure that the Salary Details have been defined appropriately for the employee(s) for whom income does not exceed Rs. 5,00,000.

● Record salary payment entry.

The effect of tax rebate can be seen in Tax on Total Income report.

1. Go to Gateway of Tally > Display > Statutory Reports > Payroll Reports > Income Tax > Computation .

2. Select the employee.

3. Press Enter on Tax on Total Income . The report is displayed as shown below:

According to the Employee State Insurance (ESI) scheme, the contribution to Employee State Insurance Corporation comprises the employer's contribution and the employee's contribution at specified rates. Currently, the employee's contribution rate is 1.75% of the wages received and that of the employer's is 4.75% of the wages paid or payable to the employees in a wage period.

Employees receiving a daily wage below Rs. 100/- (or monthly wage below Rs. 3000) are exempted from contribution to ESI. However, employers will contribute their share (that is, 4.75%) in respect of these employees. On the other hand, employees receiving a monthly wage of more than Rs. 21,000 are not eligible for the ESI scheme.

From Release 5.5 onwards, ESI contributions from the employee and employer are automatically calculated in Tally.ERP 9 while recording salary payment and ESI payment transactions. If you are using an older version of Tally.ERP 9, then you have to define the ESI eligibility amount in the Payroll Statutory Details screen by going to Gateway of Tally > F11: Features > Statutory and Taxation , and enabling the Set/alter payroll statutory details? option .

Note :

♦ For Release 5.x users - Ensure that Release 5.5 or above is installed on your computer.

♦ For Release 4.9x users - Ensure that the statutory file (Stat.900, version 268 or above) is installed on your computer. Alternatively, you can upgrade to the latest Tally.ERP 9 release .

Go to Gateway of Tally > Payroll Info. > Income Tax Details > Tax Configuration .

1. Select Value of Perquisites u/s 17(2) (as per Form 12BA) and press Enter .

2. Select Perquisite Details (Form 12BA) - as Single Employee/Multi Employee .

3. Press Enter .

4. Select the Employee and the Perquisite as Rent Free Accommodation .

5. Enter the Effective Date from which this is applicable and the Value for the year to be taxed.

6. Accept the screen.

Alternatively, deduction of income tax on rent free accommodation can be set from:

1. Gateway of Tally > Display > Statutory Reports > Payroll Report > Income Tax > Computation .

2. Select the employee for whom the perquisite is to be taxed.

3. Press Ctrl+Enter on Value of Perquisites u/s 17(2) (as per Form 12BA) .

4. Press Enter to define values for the perquisite details.

5. Select the Nature of the Perquisite as Rent Free Accommodation and enter the value.

6. Accept the screen.

Now, Income Tax will get deducted on Rent Free Accommodation .

Similarly, you can enter the value of other perquisites.

The current Professional Tax slabs for the state of Maharashtra as given below:

For monthly salaries less than Rs. 5000 - Rs. 0.

For monthly salaries from Rs. 5000 to Rs. 10,000 - Rs. 175 per month

For Salaries more than Rs. 10,000 - Rs. 200 per month for all months and Rs. 300 for February alone.

To implement the above scenario in Tally.ERP 9 the PT Pay Head should be created with multiple slabs for one year with different Effective Dates in the Computation Info section.

The completed Professional Tax Pay Head Creation screen for the above scenario is shown below:

Note : The slab rates should be changed in the subsequent year also as shown in the above screen.

You cannot calculate the Leave encashment amount using the payroll module. But you can handle the Leave encashment amount calculated outside, the effects on PF, ESI and PT is also handled in the payroll module.

For more information, you can visit your website http://www.tallysolutions.com/ for the detailed product roadmap.

Some pay components are considered for the ESI Amount computation once the Employees falls under ESI purview, but the same may not be used for the ESI eligibility computation. e.g. Overtime which is not regular in nature is usually not considered for ESI Eligibility but once the Employee starts paying ESI, even the Overtime amount will be considered to compute the ESI Contributions.

From Tally.ERP 9 Series A Release 1.6 onwards a new feature has been provided in the Pay Head Creation screen to allow or disallow the particular Pay Head (which is not regular in nature). e.g. Overtime.

The Overtime Pay Head Creation/Alteration screen appears as shown:

Note : The Exclude for ESI Eligibility option will be available if the same is set to Yes in F12: Configuration > Pay Head Configuration screen.

The ESI Pay Heads for both Employee and Employer should also consider the Overtime Pay Head for the Computation purpose in the specified formula.

Employee ESI deduction Pay Head is as shown:

Employer's ESI contribution Pay Head is as shown:

If the Pay Heads are created as per the above descriptions, then the computation for the ESI Amounts will consider the Overtime Pay Head though it's not considered for the ESI Eligibility criteria.

The PF Contribution from Employer and Employee can be either on the entire Basic (or Basic+DA) or it can be on a maximum of Rs. 6500 (Basic or Basic +DA) i.e. a maximum of Rs. 780 is contributed by both Employer and Employee.

Employees share of PF goes to EPF (A/c. No -1), while the PF Contribution from Employer is further divided into two parts:

● EPF (A/c. No -1)

● EPS (A/c. No- 10)

Let us assume that PF is computed on Basic and DA components and DA is 30% of Basic salary.

Create the following Pay Heads.

Basic Pay Head

DA Pay Head

Employee PF Deduction Pay Head

Employer EPS Contribution Pay Head

Note : 8.33% of 6500 is Rs. Rs. 541.45 which is rounded off to 541 while creating the Pay Head.

Employer EPF Contribution Pay Head

Note : The Pay Heads should be created in the specified orders as the Employer EPF Contribution Pay Head is dependant on the Employee EPF Deduction and Employer EPS Contribution Pay Heads. In Salary Details also, the Pay Heads should be specified as per the order mentioned.

You can convert Cost Centres masters to Employee masters.

1. Go to Gateway of Tally > Accounts Info. > Cost Centres > Single Cost Centre > Alter .

2. Select Cost Centre which has to be converted to an Employee master, from List of Cost Centres . The Cost Centre Alteration screen appears as shown below:

3. In the Cost Centre Alteration screen, set the option Use as Employee to Yes .

4. Press Ctrl+A to save.  The Cost Centre gets converted into an Employee master.

Note: More than one Cost Centre can be converted into Employee Masters through Multi Cost Centres alteration screen.

Form 16 displays the amount based on the Payroll Vouchers processed (salary paid) till date, whereas Income Tax Computation report displays the Yearly Projection.

Note: Both the reports will match by the end of the Financial Year.

Labour Welfare Fund is a fund constituted for financing and conducting activities to promote welfare of labour in the State. Every employee and Every Employer has to pay the yearly specified contribution to the fund. Contribution to the fund by employee, employer and state Government (if any) and the month in which it has to be deducted (from employees) and paid varies from stat to state.

For example: In Karnataka, in respect of every employee whose name stands in the register of an establishment on 31st December of a year sum of [ three rupees, six rupees and three rupees] respectively shall be payable as contribution for that year by the concerned employee, the employer and the state Government. The employer's contribution and the employee's contribution in respect of a year shall be paid by the employer to the Board on or before 15th January of the following year.

● Create a Pay Head as shown below.

● Select Deductions from Employees i n Pay Head Type filed.

● In Computation Info section, define the Effective From and Value Basis as applicable.

Note: The value will be deducted only for the month (December) specified in the Pay Head .

Before exporting the Pay Slip(s),ensure that the Company Logo feature is enabled in F11: Features .

Note : If you haven't enabled this feature, follow the process explained under the step Enable Company Logo feature for Printing Pay Slips with the company logo

Go to Display > Payroll Reports > Statements of Payroll > Pay Slip > choose Single/Multi Pay Slip (as required). The Pay Slip is displayed.

1. Click on E : Export button or press Alt+E to view the Exporting screen.

2. In Exporting screen, press Backspace .

3. Select the Language and appropriate Format for exporting the pay slip

4. Give the Location path where you want to store the file.

5. Give the File Name.

6. Set the option Open Exported File to Yes . The completed Exporting screen appears as shown:

7. Press Enter to export the Pay Slip. The exported Pay Slip appears with the company logo as shown below:

Note: When the option Open Exported File is set to Yes , the file will automatically open for view on exporting the Payslip

Unable to select the Cost Category or Employee Category for passing the Payment Vouchers for Salary, PF, ESI, and PT payments.

Solution

To successfully make the Payments for the Salary, PF, ESI, and PT, the option Allocate Non-Revenue Items should be set to Yes along with the option Allocate Revenue Items for the Category which is selected for processing. For example, if you are selecting the Primary Cost Category for processing the Payments, then the mentioned options should be set to Yes for Primary Cost Category.

To set these options

1. Go to Gateway of Tally > Payroll Info. > Employee Categories > Alter .

2. Select the required Category from the list.

3. Press Enter.

4. Set the options as shown:

For the previous version of Tally.ERP 9 (prior to Release 1.8):

1. Go to Gateway of Tally > Accounts Info. > Cost Categories > Alter .

2. Select the required Category from the list.

3. Press Enter .

4. Set the options as shown:

5. Save the above.

6. Retry the payment process for Salary, PF, ESI and PT.

You can generate Salary Information File (SIF) in SDF or Excel Format.

Process Payroll Voucher using ''Salary Payable" ledger/account

If the Salary components of employees contain Fixed, Variable and User Defined Pay Heads, you have to record 2 different Payroll Vouchers. One to account Fixed and Variable components (using Payroll Auto Fill Process for - Salary )  and another one to account the User defined components (using Payroll Auto Fill Process for - User Defined ).

Payroll Voucher to account Fixed and Variable components:

Payroll Voucher to account User Defined components:

Process Payment Voucher

Record the payment voucher using Auto fill.

Here, Salary Payment is calculated by considering: Basic Salary (Fixed) 10000 – Loans and Advance (Deduction) 1750 + Conveyance Allowance (Variable) 1000 = 9250.

Generate the SIF Record in SDF Format

Go to Gateway of Tally > Display > Payroll Reports > SIF Reports > press Enter to view Exporting SIF Records screen.

In Exporting SIF Records screen,

· Format : In this field select the Format - SDF (Fixed Width) to export the SIF file

· Export Location: This field displays the Tally.ERP 9 installation path. You can specify the path to export the file.

· Output File Name: Tally.ERP 9 displays 25 digit Output File Name. File Name Format is - Employer Unique ID (13 Digits) Year Month Date Hour Minutes Seconds .SIF

Example: 0001234567891120221180600.SIF

· Open Exported Folder : set this option to Yes to open the exported folder.

· Payment Period - From & To : In this field mention the salary payment period in From and To field. Based on this Date the Actual Salary paid is captured in EDR line.

· Employee/Group: in this field select the Employee or the Employee Group to generate the SIF Records.

· Bank Ledger: Select the Bank ledger through which the payment is processed.

Note : In Payroll Bank Ledgers list, Tally.ERP 9 will list only those ledgers which are used for salary payment during the payment period.

· Payroll Period: In this field mention the Payroll Period i.e. the period for which salary is paid in Form & To field. Example: If salary for the month of April is being processed then mention 1-4-2011 & 30-4-2011 in From & To field. Based on this Date the Total Salary for the month is captured in SCR line.

· Employer Reference: In this field you can mention Remarks, if any. The remarks mentioned in this field will be captured in Salary Information File (SIF)

The Exported file appears as shown:

The information in Exported file appears as shown:

Exporting SIF Records in Excel Format

SIF Records can also be exported in Excel Format. To generate SIF Records in Excel format follow the given steps

Go to Gateway of Tally > Display > Payroll Reports > SIF Reports > press Enter to view Exporting SIF Records screen.

In Exporting SIF Records screen, select Excel (Spreadsheet) in Format field and fill the details as shown:

The information in Exported file appears as shown:

Salary paid to Mr. Gopal includes Basic, Allowance, Overtime paid on monthly basis.

The Monthly rate differs every month due to the number of Sundays falling in a month i.e. the number of days considered for calculating salary are excluding Sundays.

Note : In the above illustration we are taking April, May and February as the number of days varies for each of this month. So, the “Working Days” considered for April, May and June are 26, 27 & 24 respectively.

Attendance and Overtime details of Mr. Gopal for the month of April, May and February,

Note : For information purpose, Absent days (instead of Present) will be considered for salary calculation to reduce data entry.

Expected Salary to be calculated/paid for the month of April:

● Basic: 4000 / 26 * 24 = 3692/-

● Allowance: 7000 / 26 * 24 = 6462/-

● Overtime: 10500 / 26 * 3 = 1212/-

● Total: 11366/-

Expected Salary to be calculated/paid for the month of May:

● Basic: 4000 / 27 * 24= 3556/-

● Allowance: 7000 /27 * 24 = 6222/-

● Overtime: 10500 / 27 * 3 = 1167/-

● Total: 10945/-

Expected Salary to be calculated/paid for the month of February:

● Basic: 4000 / 24 * 24 = 4000/-

● Allowance: 7000 / 24 *24 = 7000/-

● Overtime: 10500 / 24 * 3 = 1313/-

● Total: 12313/-

To handle this scenario in Tally

1. Create the Attendance masters Absent, Overtime and Calendar Days under “Attendance Type” Leave without Pay, Leave with Pay and User Defined Calendar type respectively.

2. Create Basic Pay & Allowance Pay head based on Leave without Pay i.e. Absent and taking the Per Day Calculation basis as User Defined Calendar Type i.e. Calendar Days.

3. Create Overtime Pay head based on Leave with Pay component i.e. Overtime  and taking the Per Day Calculation basis as User Defined Calendar Type i.e. Calendar Days.

4. Define Basic, Allowance and Overtime in the Salary details of Mr. Gopal.

5. Process Attendance Voucher for Absent, Overtime & Calendar Days.

6. Process Payroll Voucher.

Creation of Attendance Masters.

1. Go to Gateway of Tally > Payroll Info > Attendance/Production Types > Create

2. Creation of Attendance Type – Absent.

3. Select the Attendance Type as Leave Without Pay .

Creation of Attendance Type – Overtime

Select the Attendance Type as Attendance/Leave with Pay.

Creation of Attendance Type – Calendar Days

Select User Defined Calendar Type as Attendance Type

Creation of Pay heads

Basic Pay Head

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

2. Create Basic under Pay Head Type > Earnings for Employees .

3. Select Calculation Type as On Attendance .

4. Select Attendance/Leave with Pay as Not Applicable .

5. Select Leave without Pay as Absent .

Note: We are defining the Basic pay head on Negative attendance - Absent so that the entries can be passed only when the Employee is Absent this will reduce the data entry.

6. Select Calculation Period as Months .

7. Select Per Day Calculation Basis as User Defined Calendar Type .

8. Select Calendar Days in User Defined Calendar field .

Similarly, create Allowance Pay Head.

Overtime Pay Head

1. Create Overtime under Pay Head Type > Earnings for Employees .

2. Select Calculation Type as On Attendance .

3. Select Attendance/Leave with Pay as Overtime .

4. Select Calculation Period as Months .

5. Select Per Day Calculation Basis as User Defined Calendar Type .

6. Select Calendar Days in User Defined Calendar field .

Define Basic, Allowance and Overtime in the Salary details of Mr. Gopal.

Process Attendance voucher for the month of April

Note : Calendar Days (Number of days to be considered every month excluding Sundays’) need to be entered every month for all employees.

Passing Attendance voucher for Calendar days

1. Go to Gateway of Tally > Payroll Voucher > Attendance Voucher (Ctrl+F5)

2. Press ALT+A (Attendance Auto fill) and enter the required details as shown below.

3. Enter the value (Working Days i.e. No. of days in a month excluding Sundays) in Default Value to Fill and accept the screen.

In case of multiple employees, the Default value to Fill gets filled against all the employees.

Passing Attendance voucher for Absent and Overtime.

Process Payroll voucher for the month of April

Similarly, process the Attendance Voucher for the month of May.

Note : Calendar Days (Number of days to be considered every month excluding Sundays’) need to be entered every month for all employees.

Passing Attendance voucher for Calendar days

Payroll Voucher for the month of May

Attendance voucher for the month of February

Note : Separate voucher can be passed for the “No. of days” to be considered for all employees.

Payroll Voucher for the month of February

While processing salary, from Gross salary, Employee's PF Contribution amount will be deducted (withheld) along with other deductions (if any) and Net Salary will be paid to the employee. Later the deducted Employee's PF contribution along with Employer's Contribution will be paid to the PF department. The procedure of withholding employees PF contribution to arrive at NET Salary is the same, even when salary is paid in Cash. PF payment is not made during salary payment. PF payment is made separately.

Process Salary for the Employees using Payroll Voucher

1. Go to Gateway of Tally > Payroll Vouchers .

2. Pass a Payroll voucher to process salary for the employees.

3. When salary is processed, Employees' PF Contribution will be deducted from the gross salary, as shown:

4. Press Ctrl+A to accept and save the voucher.

Record Employer's PF Contribution using Payroll Voucher

1. Go to Gateway of Tally > Payroll Vouchers .

2. Pass another Payroll voucher to account for Employer's PF Contribution

3. Click A : Payroll Auto Fill for Payroll Auto Fill . The Payroll Auto Fill screen appears.

4. Select PF Contribution in the field Process for .

5. Fill appropriate details in From and To date fields, Employee Category , and Employee/Group fields.

6. Choose PF Payable as the Payroll Ledger , as shown.

7. Press Enter to automatically process the PF Contribution of the Employer for the Employees. The auto filled payroll voucher appears as shown below.

8. Press Ctrl+A to accept and save.

Record PF Payment in Payment Voucher

1. Go to Accounting Vouchers > F5: Payment > click on A : Payroll Auto Fill . The Payment Auto Fill screen is displayed.

2. Choose PF Challan for the Process for field.

3. Fill appropriate details in From and To date fields, Employee Category , and Employee/Group fields and the Bank/Cash Ledger fields.

4. Choose PF Payable as the Payroll Ledger .

5. Press Enter for automatic recording of PF Payment . The Auto Filled Payment Voucher appears as shown below.

You can export the Pay Slips for all Employees on the click of a button.

1. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Slip .

2. Select Multi Pay Slip

3. Press Enter .

4. Select the required Payroll Category and Employee Group.

5. Press Enter .

6. Click E: Export from the Multi Pay Slip report.

7. Complete the details required in the Exporting Pay Slips screen.

8. Press Enter to Export the Pay Slips.

Note: The Pay Slips can also be exported for all the employees from Gateway of Tally > Multi Account Printing > Multi Payslip Printing > Alt+E.

While creating the Professional Tax Pay Heads, you can select the Computation Period as either Months or Period.

● Months: For regular professional tax computation and payments with frequency of deduction and payment as Monthly .

● Period: For professional tax computation and payments on periodic basis; for example, once in six months as in case of Tamil Nadu.

For more information, refer to Configure Payroll to Compute and Pay Professional Tax for a Specified Period .

You can account the payment of different salary components paid at different intervals and can view the total cost per employee in single report.

The compensation to an employee,can be calculated such as,

● Salary: at the end of the month

● Overtime: at the end of every week

● Daily Allowance: Fortnightly

and view the details of cost per employee in a single report.

Create Masters

1. Units - Hours and Day

2. Attendance/Production Type

3. Pay Heads

Create the Pay Heads for the Basic Salary , Overtime and Daily Allowance as shown below by giving the position index as 1, 2 and 3 by pressing F10: Edit Sort to appear in the Pay slip in order.

Note: F10: Edit Sort button will be displayed in buttons bar only in Pay Head Alteration mode.

4. Liability Pay Head for the Payable Ledgers

5. Salary Details

In Salary Details select the pay heads based on the basis of payment. Over Time as the first Pay Head as it is paid weekly, then the pay head payable Fortnightly and then the pay head (s) payable monthly.

Note: Salary Details will be enabled only when the Employee is already created. Hence, create the Employee by providing General Info, Payment Details and Statutory Details.

Record Payment towards Overtime

1. Record Attendance Voucher

Provide the number of hours worked as over time.

2. Record Payroll voucher (to account the Overtime payable)

Account the OT payable using Payroll Auto Fill (OT Payable can also be accounted without auto fill)

3. Record a Payment Voucher (to account the Payment of OT)

Account the OT Payment using payroll Auto Fill (OT payment can also be accounted without auto fill)

Record payment towards Daily Allowance

1. Record Attendance Voucher

2. Record Payroll voucher (to account the Daily Allowance Payable & Payment)

Payment towards Salary

1. Record Attendance Voucher

2. Record Payroll voucher (to account the Salary payable and payment)

View the Reports (to check the cost per employee)

1. Payslip

Payslip displays the components of payment made to the employee.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payslip > Single Payslip > select the Employee

2. PaySheet

PaySheet displays the details of earnings for a given month.

Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > PaySheet > select the Employee

3. Attendance Sheet

The Attendance Sheet report displays details related to Attendance/Production.

For the Employees more than 58 years the entire Employer Contribution goes into the PF A/c no. 1 as there is no contribution towards the EPS A/c.

In the earlier releases, it was necessary to create a separate Employer PF Contribution Pay Head with 12% as slab , but from Release 2.0 onwards it is not required to create separate Employer PF Pay Head for Employees more than 58 years.

Note: For Employees more than 58 Years the EPS Pay Head should not be included in the Salary Details as the contribution towards EPS is zero for these employees.

The method of computing the total income has been changed in the budget for the current year by allowing a deduction under section 80C. However, the present Form No. 24Q shows a column for rebate under section 88, 88B, 88C and 88D.

In the process of filling up Form No. 24Q, the columns pertaining to sections 88, 88B, 88C and 88D may be left blank. Regarding the deductions under section 80C, the same can be shown in the column 342 pertaining to 'Amount deductible under any other provision of Chapter VI-A'.

To print the details of the Amount paid as Inspection Charges, Penal Damages, Interests and Arrears in the Combined PF Challan the following needs to be done apart from the normal PF processing.

● Create the Expenses Ledger for each of the above under Group Indirect Expenses.

● Select the Expenses Ledger at the end while passing the PF Payment Voucher and specify the nature of charges

For illustration purpose, we will consider that the Penal Damages needs to be paid along with the regular monthly PF payment.

Create PF Penalty as an Expense Ledger

● Go to Gateway of Tally > Accounts Info. > Ledgers > Create .

Note: Though Tally.ERP 9 allows to use the same expense ledger for recording all types of additional expenses incurred. It is recommended to create separate ledgers for Inspection Charges, Penal Damages, Interests and Arrears.

Select the PF Penalty Ledger at the end while passing PF Payment Voucher

Before passing the PF Payment Voucher, ensure that the required Payroll, Employer Contribution and Employer Other Charges are processed.

● Go to Gateway of Tally > Accounting Vouchers > F5 (Payment Vouchers) .

o Press Alt+A .

o Select the required details.

o Press Enter to go to the Payment Voucher.

o In the Payment Voucher, keep pressing Enter to reach at the end as shown:

o Select the PF Penalty Ledger from the list and press Enter. The Payment Type screen will appear as shown:

1. 1. Select the required Payment Type from the list ( in this case Damages).

   o Specify the Value of the Damages against the PF Penalty Ledger name.

o

o Select End of List

Note : For Illustration only Penal Damages is explained, the process for other kind of expenses is same except for the Payment Type selection.

o Specify the Challan details in the Provide Details section. The completed PF Payment Voucher is as shown:

o Press Enter to save the Payment Voucher.

To print the challan, press Page Up and Alt+P. The printed Challan appears as shown below:

Note : Similarly, the expenses on other three expenses can also be captured and shown in the Challan.

Let us consider Canteen deduction as an example. To account for Canteen deduction on per day basis for an employee:

● Create a Group under Indirect Expenses

● Create Canteen deduction (Earnings) Pay Head

● Create Canteen deduction (Actual) Pay Head

● Create Voucher Class for Payroll Voucher Type

● Define Salary Details

● Process Payroll voucher using Voucher Class

Canteen Expenses Group

Go to Gateway of Tally > Accounts Info. > Groups > Create

● Select Indirect Expenses in the Under field

● Press Ctrl+A to accept.

Canteen Deduction (Earnings) Pay Head

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

2. Select Earnings for Employees as the Pay Head Type .

3. Select the newly created group – Canteen Expenses in the Under field.

Note : Two different pay heads for Canteen Deduction (one categorised under Earnings for Employees and the other under Deduction from Employees) are created here. This is because, if only the Deduction pay head is created, then the deduction value is not computed properly in the Payroll Voucher.

4. Set the option Affect Net Salary to No .

5. Select Calculation Type as On Attendance and select the relevant Attendance Type (as followed for Basic Pay ).

Note : If Absent days are considered for salary computation, then select Not Applicable in the field Attendance/Leave without Pay and select Absent in the field Leave without Pay.

6. Select Days as the Calculation period to calculate Canteen deduction on per day basis.

7. Press Ctrl+A to accept.

Create Canteen Deduction (Actual) Pay Head

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

2. Select Deductions From Employees as the Pay Head Type .

3. Select As Computed Value in the field Calculation Type .

4. Select On Specified Formula in the Compute field.

5. Select the pay head Canteen Deduction (Earnings) against Add Pay Head .

6. Select End of List

7. Select Percentage in the Slab Type field

8. Specify 100% in the Value Basis field

9. Press Ctrl+A to accept.

Voucher Class for Payroll Voucher Type

1. Go to Gateway of Tally > Payroll Info. > Voucher Types > Alter > Select Payroll

2. Create a Voucher Class by specifying a name in the Name of Class field and press Enter .

3. In the section Exclude these Groups , select Canteen Expenses . This will prevent the Canteen Expenses from appearing in the Payroll voucher.

4. In the Ledger Name section, select Cash or Bank or Salary Payable ledger so that the same will be used by default in the Payroll Voucher .

Define Salary Details

1. Go to Gateway of Tally > Payroll Info. > Define Salary Details > Select an employee from the list .

2. Select the newly created Canteen Deduction pay heads as shown:

3. Press Ctrl+A to accept

Process Payroll Voucher using Voucher Class

1. Go to Gateway of Tally > Payroll Vouchers > Press Ctrl+F4 or click Ctrl+ F4 : Payroll button.

2. Select the created Voucher Class as shown:

3. Press Alt+A or click A: Payroll Auto Fill .

4. Specify the required details in the Payroll Auto Fill screen and press Ctrl+A . The completed Payroll Voucher with the Canteen Deduction pay head appears as shown:

5. Press Ctrl+A to accept.

It is possible to maintain the Salary Details history in Tally 9 for the previous financial years also.

Scenario 1: If you are entering the Present years data in Tally 9 which contains the data for previous years also without splitting the company, then the History for Salary Details will be automatically available.

Scenario 2: If you started using Tally 9 only now, but want to maintain the data for the Previous Financial Years also. In this case you need to enter the Salary details (and transactions) for the previous financial years first and then for the recent Financial years.

Alter/Create Salary Details

1. Go to Payroll Info > Salary Details > Alter > select the Employee and mention the Effective Date , Pay heads (As applicable for the employees), Rate (As applicable for different period).

You can view the salary details for the current and previous periods using Show Last Period / Show All Period (Ctrl+L).

Note: Create the Pay Heads according to your requirement.

In picture given below, you can see the salary details of the employees for four different years.

View the Salary Details for the current period

● Press Ctrl+L (Show Last Period)as shown below:

View the details of previous years

● Press Ctrl+L (Show All Periods). This will show you the first snap shot containing all the details.

No, it is not required to create Voucher Class for using PF, ESI and PT. Tally.ERP 9 provides the default Processes for the processing of Employer’s PF Contribution, Employer’s ESI Contribution and Salary Computation. The Payment Processes for Salary, PF, ESI and PT are also available separately for a faster and accurate processing of the Payroll.

While processing the Salary the employer may want to stop/hold salary for some employees who have either resigned or are absent for a long period or as notice pay deductions. In this case employer would just want to stop/hold employee’s salary but the statutory contributions should be paid for PF, ESI and PT as required.

Employer may stop/hold employee's salary in the following scenarios:

1. Employee resigned. Salary to be stopped and PF, ESI & PT should be paid to department.

2. Employee absent for 20 days out of 30 due to long absent employer want to pay his along with next month but statutory should go as per worked days.

3. Full and Final settlement for resigned employee after deducting notice pay.

To hold/stop salary

1. Create separate ledger to stop/hold salary (Go to Gateway of Tally > Payroll Info. > Pay Head > Create )

2. Process for stop/hold salary (regular salary process using payroll voucher, pass the values to hold/stop ledger)

3. Payment for hold/stopped salary

4. Hold/stop salary report

Create separate ledger to stop/hold salary

Create a Pay head under Current Liabilities as Hold/Stop Salary as shown below:

Process of Stop/Hold Salary

To process the transaction

1. Go to Payroll Voucher Creation > Press Alt + A .

2. Select the Salary in Process list and enter the period.

3. Select the employee whose salary has to be stopped and select Hold/Stopped Salary ledger (created as Payroll Payable ledger) as shown below:

The voucher will be processed with selected employee's salary and payable amount will be passed on to Hold/Stopped Salary Ledger.

Payment for Hold/Stopped Salary

To make the payment for the employee whose salary was kept on hold

1. Go to Gateway of Tally > Accounting Vouchers > F5: Payment .

2. Press Alt+A for Payment Audto Fill .

o Select the Stop/Hold Salary ledger as payroll ledger.

o Select the required Employee from the List of Employees .

o Select the other parameters as required.

The Payment voucher process for the particular employee by Hold/Stopped salary account as shown below:

Hold/Stop Salary Report

Using Employee Pay Head Break-up report you are able to list the Hold/Stop salary Payable/Paid List.

The Pay Heads appear in the Pay Slip as per the order mentioned in the Salary Details. But in Pay Sheet they appear as per the alphabetical order.

Create the Pay Heads with specific Position Index

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

2. Similarly create HRA and Conveyance Pay Heads also.

Note: If the Pay Heads are already created, then you can skip the step 1 and directly go to step 2

Alter Pay heads to Specify the Position Index

The position indexes for sorting of Pay Heads in the reports is available only in the alteration mode. To alter Basic Pay Head,

1. Go to Gateway of Tally > Payroll Info. > Pay Heads > Alter

· Select Basic from the List of Pay Heads

· Press F10: Edit Sort and specify the index number as 1

2. The Basic Pay Head with sorting position index for sorting in reports as 1 is as shown:

3. Similarly specify 2 for HRA and 3 for Conveyance.

4. Altered HRA Pay Head appears as shown:

5. Altered Conveyance Pay Head appears as shown:

Define Salary Details

Go to Gateway of Tally > Payroll Info. > Salary Details > Define. The Salary Details is as shown:

Note:

§ The order in which Pay Heads are defined in Salary Details will only determine the order of the Pay Heads in Pay Slip. The order of Pay heads in Pay Sheet will be as per the order of position index specified in each Pay Head.

§ Salary Details can be defined from Employee/Employee Group masters. Click here to know how.

Record Payroll Voucher

Go to Gateway of Tally > Payroll Vouchers > Ctrl+F5 for Payroll Voucher. The completed Payroll Voucher is as shown:

Note: The Attendance Voucher should be passed before the payroll Voucher.

Check the Pay Sheet

Go to Gateway of Tally >Display > Payroll Reports > Statements of Payroll > Pay Sheet.

Note: Conveyance should have come before HRA (in alphabetical order) if the position index for the Pay Heads was not specified.

You can configure your professional tax pay head with the new slabs that are applicable with effect from 1-4-2015, if you were using the old slabs that existed prior to 31-3-2015.

Note: Professional tax has to be paid and returns have to be filed before the 15th of the subsequent month.

The new slab rate with effect from 1-4-2015 is shown below:

The old slab rate prior to 31-3-2015 is shown below:

If Professional Tax pay head is already created with the existing slab, then you need to alter the details with the new rate.

1. Go to the Gateway of Tally > Payroll Info > Pay Heads > Alter > Professional Tax .

2. Specify the Effective From date (1-Apr-2015) .

3. Enter the Amount upto as 14,999/- .

4. Leave the column From Amount blank.

5. Enter zero in Value Basis.

6. Enter 14,999/- in the column From Amount .

7. Leave the column Amount Upto blank .

8. Enter 200/ - in Value Basis.

9. Press Enter to save the changes.

Yes. You can create the PF Pay Heads based on any of the formulae as required.

The Number of Employees in the A/c. No-1, A/c. No-10, A/c. No-21 is captured automatically in the PF combined Challan based on the following:

● A/c. No 1 - based on the EPF number specified for the Employees in the Employee Master

● A/c. No 10 - based on the EPS number specified for the Employees in the Employee Master

● A/c. No 21 - based on the EPF number specified for the Employees in the Employee Master

The Challan will display the total count based on the number of Employees for which have the above numbers are specified in the Employee Master.

For new employees if the PF number is not known you can mention Applied for and generate the Challan successfully.

Note: The option to modify these numbers is provided while printing the challan in the print configuration screen.

Yes, you can allow/disallow a particular Pay head/component from appearing in the Payslip while the salary components are being created.

You cannot alter the decimals or remove Pay Heads in Pay Sheet . However, you can alter the pay sheet’s format or value by exporting the Pay Sheet to Excel.

1. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Sheet

2. Select the Employee Category and the Employee / Group . The Pay Sheet is appears.

3. Press E : Export to display the Export Report screen.

4. Press Backspace .

5. Select Excel (Spreadsheet) i n the Format field.

6. Press Ctrl+A to export to Excel.

In Excel, the decimal values can be altered and the unwanted Pay Head columns can be deleted in the Pay Sheet .

Using the Payroll feature in Tally.ERP 9, you can have different working days for each month. In addition, you can have different number of working days for a Payroll Category or Employee Group or for each employee.

You have to create a User-Defined Calendar Type and enter the required number of days before capturing attendance.

You cannot take the print out of salary details for all employees in a single sheet.

Employees’ master details can be viewed or printed.

View and Print Contact Number and E-mail ID of the employees

● Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payslip > E-mail IDs

● To print, press Alt+P or click on the button P : Print from the E-mail IDs screen.

Note: Press F5 to view details of all employees.

View and Print Employee Profile

● Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Employee Profile

● To print, press Alt+P or click on the button P : Print from the Employee Profile screen.

Note: Press F12 . Enable the required options to display the information on the Employee Profile screen.

View and Print Payroll Statement

● Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payroll Statement

● To print, press Alt+P or click on the button P : Print from the Payroll Statement screen.

Note: Press F12 . Enable the required options to display the information on the Payroll Statement screen.

Error message

T-FV-4040 'Total Taxable Income(355-366)' not equal to the Difference of 'Gross Total Income(338+352)' - 'Gross Total of 'Amount deductible under provisions of chapter VI-A under associated Salary Details-Chapter VIA Detail'

Cause

This error appears while validating the text file of Form 24Q for the 4th quarter in the File Validation Utility (FVU) tool. This occurs when the amount in 8. Deductions under Chapter VI-A is higher than 7. Gross Total Income of Income Tax Computation .

Solution

You can avoid this error by ensuring the amount in 8. Deductions under Chapter VI-A is less than or equal to 7. Gross Total Income . You can correct this by navigating to any of the following:

Income Tax Computation

● Gateway of Tally > Display > Statutory Reports > Payroll Reports > Income Tax > Computation .

● Select the Employee and press Enter .

● Under 8. Deductions under Chapter VI-A

o Press Ctrl+Enter on Investments (U/s 80C, 80CCF, 80CCG, etc.) and make the required changes.

o Press Ctrl+Enter on Others (U/s 80D, 80DD, 80E etc.) and make the required changes.

Or

Income Tax Declarations

● Gateway of Tally > Payroll Info. > Income Tax Details > Declarations .

● Under Deductions Under Chapter VI-A > Investments (U/s 80C, 80CCF, 80CCG, etc.)

o Select Single Employee Multiple Components > select the Employee > make the required changes.

o Select Multiple Employees Single Component > select the Employee Name/Group > make the required changes.

● Under Deductions Under Chapter VI-A > Others (U/s 80D, 80DD, 80E, etc.)

o Select Single Employee Multiple Components > select the Employee > make the required changes.

o Select Multiple Employees Single Component > select the Employee Name/Group > make the required changes.

Or

Tax Configuration

● Gateway of Tally > Payroll Info. > Income Tax Details > Tax Configuration .

● Under Deductions Under Chapter VI-A > Investments (U/s 80C, 80CCF, 80CCG, etc.)

o Select Single Employee Multiple Components > select the Employee > make the required changes.

o Select Multiple Employees Single Component > select the Employee Name/Group > make the required changes.

● Under Deductions Under Chapter VI-A > Others (U/s 80D, 80DD, 80E, etc.)

o Select Single Employee Multiple Components > select the Employee > make the required changes.

o Select Multiple Employees Single Component > select the Employee Name/Group > make the required changes.

You can update the relieving date of an Employee.

1. Go to Gateway of Tally > Payroll Info . > Employees > Alter .

2. Select the Employee to view Employee Alteration screen.

The employer may, at his option, pay income tax on the whole or part of perquisite provided by way of non-monetary payments. Such payment of tax is not taxable as a perquisite in the hands of the employee.

Determination of tax payable by employer:

Step 1

Average Rate of Income Tax =  Tax on Income under “Salaries” (including non-monetary benefits) x 100

Income under the head Salaries

Step 2

Tax payable on Non-Monetary benefits=  Average Rate of Income Tax (Step 1) x Value of Non-Monetary Benefits

Follow the given procedure to create and record the payroll vouchers to account the tax paid on non-monetary benefits by the employer:

1. Create Tax Paid by Employer Pay head as shown:

2. Define the Pay head in Salary Details of the Employee.

3. Specify the Amount on which Tax is paid by Employer.

o Go to Gateway of Tally > Payroll Info. > Income Tax Details > Tax Configuration > Value of Perquisites u/s 17(2) (as per Form 12BA) > Single/Multi Employee .

o Select the nature of Perquisite.

o Mention the required details as shown below.

3. Computing Income Tax of an Employee.

Tax on Income under “Salaries” (including non-monetary benefits) = Rs. 74,160/-

Income under the head Salaries = 6,00,000/- + 1,00,000/- = Rs. 7,00,000/-

= Tax on Income under “Salaries” (including non-monetary benefits) x 100

Income under the head Salaries

=  74,160  x 100

7,00,000

= 10.6%

Tax payable on Non-Monetary benefits:

= Average Rate of Income Tax (Step 1) x Value of Non-Monetary Benefits

= 10.6% x 50,000

= 5,300/-

Monthly Tax Payable on Non-Monetary benefits:

= 5,300 / 12

= 442/-

4. Processing Payroll Voucher.

5. Computing IT after Processing Payroll Voucher.

If you are entering the Present Year's Salary Details in Tally.ERP 9 which contains the data for previous years also without splitting the company, then the History for Salary Details will be automatically available.

If you started using Tally.ERP 9 only now, but want to maintain the Salary Details for the Previous Financial Years also. In this case you need to enter the Salary Details (and transactions) for the previous financial years first and then for the current Financial Year.

1. Go to Gateway of Tally > Payroll Info > Salary Details > Define > select the Employee and mention the Effective Date , Pay heads (as applicable for the employees), Rate (as applicable for different period)

2. Create the Pay Heads according to your requirement.

In the screen, you can see the salary details of the employee for four different years.

3. To view the salary details of the current and previous periods by clicking on the button ' Ctrl+L: Show Last Period / Show All Period '.

4. To view the details of previous years, click on the button Ctrl+L: Show All Periods . This will show you the first snap shot containing all the details.

Note : Salary Details can also be altered from Employee master/Employee Group Master.

In some scenarios there would be a necessity to generate payment advice for previous month salary paid in the current month.

For example: On 30th April, ABC Company accounted Salary Payable for the month of April, but later realised that balance in bank is not sufficient for salary payment and withheld the payment. For Payroll transfer on 15th May, company wants to generate Payment Advice by clearly indicating the Salary/Payroll period (as April month’s salary).

1. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payment Advice . The Printing Payment Advice screen is displayed.

2. Press Backspace to enter the details to be printed on the Payment Advice .

o From and To: In the first two date fields enter the period during which the salary payment transaction is recorded. Here, it is the current month i.e.,1-5-2011 to 31-5-2011.

o Employee Category: Select the Employee category for which the Payment Advice to be generated.

o Employee/Group: Select a specific employee or group to generate the Payment Advice

Note: In Employee/Group Tally.ERP 9 will display only the employees/groups created under the Employee category selected in Employee Category field.

o Bank Ledger: Select the Bank for which the Payment Advice is to be generated.

o Date Range to Print: Specify the period for which salary is being paid, here ABC company is making the payment for the month of April (1.4.2011 to 30.4.2011).

o Date of Printing: The date on which the Payment Advice is being printed has to be specified here. ABC Company is printing the Payment Advice on 15-5-2011.

3. Press Enter to get a print preview of the Payment Advice . The Payment Advice appears as shown.

Payment Advice contains a statement that the salary is being paid for the previous month (here, April), the date of printing, and the details of the employees such as account number and salary amount.

When salary is being processed for certain employees, the warning Some Employee(s) has Negative Values gets displayed.

Reason

This Warning Message appears when:

● Only Deduction Pay Heads are processed for the Employee . This occurs when User Defined Process in Payroll is used for deduction entries alone.

● Total Earnings of the Employee is lesser than the Total Deductions . E.g.: Loss of Pay, deduction of salary against any loans & advances made to the Employee, etc.

● Professional Tax is being processed, as it is a Deduction Entry, for certain States, say, Tamil Nadu.

Checklist

When this Warning Message is displayed:

● Press Alt+P or click on P: Print , and in the Print Preview , check for the Employees with Negative Values .

● If salary calculation is based On Attendance , and Attendance Type is Present , ensure that Attendance Voucher has been recorded for all Employees.

After verifying the above mentioned checklist, if you are certain about the negative values press enter and save the voucher.

Alteration of rounding method in PF Other Charges pay head is not allowed. The PF value will be automatically calculated with rounded value on total value of other charges in journal voucher Auto Fill Calculation.

In Employee Master Creation/Alteration, under Statutory Details section NI Number will be displayed instead of PAN,

● If you have installed Tally.ERP 9, by selecting the Country as Others .

● If you have changed the Country to International for the option Use Accounting terminology of in F12: Configuration > General

You cannot print the Professional Tax Form for your state. But Tally.ERP 9 displays all the required information to fill the professional Tax forms for all the states.

Printing of Professional Tax Forms for each state will be provided in our future releases.

Yes. If the employees are located in different states, you may have to create separate Professional Tax Pay Heads for each state.

Yes, the statutory information for each employee can be recorded during employee master creation/alteration.

Contract details of an employee can be recorded in the employee master. The feature is enabled in the F12: Configure of employee master. The contract details will include the start and expiry date.

To record contract details

1. Go to Gateway of Tally > Payroll Info > Employees > Alter . The Employee Alteration screen appears as shown below:

2. Click F12: Configure and enable the option Show Contract Details .

3. Press Ctrl+A to accept.

Note: you can also set the above options from Payroll Configuration screen from Gateway of Tally > F12: Configure > Payroll Configuration .

4. Enter the contract details as shown below:

To view the report

1. Go to Gateway of Tally > Display > Payroll Reports > Expat Reports > Contract Expiry .

You can export the Employee Details into Excel Sheet.

1. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Employee Profile > All Employees .

2. Click E: Export or press Alt+E to export the Employee Profile report.

3. Click Backspace and provide the details as shown:

The exported Employee Profile file will be available in the location specified in the Export Configuration screen.

4. Open the destination folder where file is exported.

5. Double click the file.

The exported All Employee profile reports with Employee Details is shown below:

Tally.ERP 9 also supports to export the details of a single Employee or Group of Employees.

Tally.ERP 9 takes care of the ESI Computation automatically when moving from one Contribution Period to another.

In Tally.ERP 9, you can specify the period and print pay slips for all employees, group of employees or an individual employee.

1. Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Slip

2. Select the required Employee.

3. Press F2 : Period to specify/change the period.

4. Press Alt+P to print the Pay Slip or Alt+M to e-mail the Pay Slip.

To pint pay slip for multiple employees, select Multi Pay Slip in the Pay Slip menu. Select the required category and employee group.

If PF (Provident Fund) is withdrawn before 5 years of continuous employment, then it is taxable.

Points to remember:

● An individual has to pay tax on withdrawal of PF accumulations if the same has been withdrawn from a recognized PF account without rendering continuous services for five years or more with the employer.

● On change in employment in the past, if the accumulated PF balance has been transferred to the PF account of the new employer, then the period of previous employment will be considered as part of continuous service and accordingly, the five years is computed.

● The aggregate of employer’s contribution to PF and interest earned thereon will be taxable as salary.

● Deduction claimed will be under section 80C of the Income-tax Act, 1961, on your own contribution to the recognized PF shall be taxed as salary.

● Interest earned on own contribution to PF shall be taxed as “income from other sources”. The tax rate would depend on employees applicable income slab in each of the FY(s) during which the PF contributions were made.

● You are entitled to avail relief under section 89.

● Tax will be deducted at source at 10% if the taxable PF amount is more than Rs.30,000 and provided the Permanent Account Number (PAN) of the individual is available.

Yes. It is possible to print Form 16 and e-form and annexures from Tally.ERP 9.

To print the forms

1. Go to Gateway of Tally > Display > Statutory Reports > TDS Reports .

2. Select the required form and print.

The exemption amount can be altered using Override Exemption Value. Also, using this option employee’s medical bill amount for the year can be entered.

1. Go to Gateway of Tally > Payroll Info > Income Tax Details > Override Exemption Value .

2. From the List of Employees , select the Employee whose Exemption value is to be altered.

3. Select the Income Tax Component Medical Reimbursement .

4. Enter the Effective from date.

5. Enter the Exemption amount for the year.

Note: Annual amount should not exceed Rs. 15,000.00.

The above amount will be taken for the IT calculation from the effective date and the same will be printed in all IT-related reports.

Release 3.61 onwards, zero value can be entered in the Exemption field.

You can create masters for paid holidays and to pay double the amount on National Days.

1. Create the Attendance Type

2. Create the Pay Head to account the payment on National Holiday (Double Pay)

3. In Salary Details include the Holiday Pay Head.

Note : Salary Details Creation/Alteration screen can also be accessed from Employee/Employee Group Master.

4. Record Attendance Voucher to account the Number of national Holidays for which Double pay to be paid

5. Process Salary

Yes. You can start using the payroll data for the current financial period and simultaneously update the old/historical payroll information also.

A certificate of lower deduction or no deduction of tax from salary is given by the Assessing Officer on the basis of an application made by the deductee. In cases where the Assessing Officer has issued such a certificate to an employee, the deductor has to only mention whether no tax has been deducted or tax has been deducted at lower rate on the basis of such a certificate.

Where an employee has worked with a deductor for part of the financial year only, the deductor should deduct tax at source from the employee's salary and report it in the quarterly Form No. 24Q of the respective quarter(s) up to the employees date of employment. Further, while submitting Form No. 24Q for the last quarter, the deductor should include particulars of that employee in Annexures II and III irrespective of the fact that the employee was not employed with the same company on the last day of the year.

Similarly, when an employee joins employment with the deductor during the course of the financial year, the TDS particulars should be reported by the current deductor in Form No. 24Q of the relevant quarter. Further, while submitting Form No. 24Q for the last quarter, the deductor should include particulars of TDS for these employee for the actual period of employment in Annexures II and III.

Particulars of only those employees are to be reported from the 1st quarter onwards in Form No. 24Q in whose case the estimated income for the whole year is above the threshold limit.

● In case the estimated income for the whole year of an employee after allowing deduction for various savings like PPF, GPF, NSC etc. falls below the taxable limit, the particulars need not be included in Form No. 24Q.

● In case, due to some reason, the estimated annual income of an employee exceeds the exemption limit during the course of the year, tax should be deducted in that quarter and the particulars reported in Form No. 24Q from that quarter onwards.

For the Employees more than 58 Years the entire Employer Contribution goes into the PF A/c no. 1 as there is no contribution towards the EPS A/c. Accounting the entire Employers contribution under PF Account no .1 has been supported from Tally.ERP 9 Release 2.0.

The steps involved for successful computation of Conveyance Exemption in Tally.ERP 9 are:

● Conveyance Pay Head should be configured for Income Tax

● Declaration of conveyance allowance paid and the Employee Status (Physically challenged or Others)

Configuring Conveyance Pay Head

1. Go to Gateway of Tally > Payroll Info. > Income Tax Details > Pay Head Configuration .

2. Select Conveyance Pay Head and press Enter .

3. In the Income Tax Configuration screen,

o Name of Pay Head/Ledger appears by default with Ledger Name .

o Master Type is prefilled with Pay Head or Ledger .

o Select Conveyance Allowance in Income Tax Component field.

o Select Tax Calculation Basis and Deduct TDS across Period(s) as shown below.

o Press Enter to save.

Declaration of Conveyance Allowance (capturing Employee Status)

Once the Conveyance Pay Head is correctly configured for Income Tax , you will have to specify the status of the Employees as Physically Challenged or Others .

1. Go to Gateway of Tally > Payroll Info. > Income Tax Details > Declarations .

2. In the Income Declarations screen, select Conveyance Allowance .

3. Select All Items from the List of Employees / Groups and press Enter .

4. Specify the date in the Effective From field.

5. In Employee Status select required Employee Status from Physically Challenged or Others and press Enter .

6. Specify these details for all the Employees.

The completed Conveyance Declaration screen appears as shown below.

Once the above three steps are completed, the Conveyance exemptions can be computed successfully.

Tally.ERP 9 provides you with the flexibility of creating user definable PF rates and slabs. Based on your company’s HR requirements you can create the PF related Pay Heads with uniform slabs (rates) for all the employees or with separate slabs (rates) for different employees.

The Total Number of employees should match with Number of employees contributed the PF for the current month. As the current month resigned employees have also contributed towards PF for the current month, they cannot be excluded.

Hence, the Number subscribers left service (vide Form 10) shows the previous month left so that the total number of employees will match with current month Nett Total Number of Subscribers.