To create the reimbursement pay head
Go to Gateway of Tally > Payroll Info. > Pay Heads > Create.
Enter the pay head name in the Name field.
Select Reimbursement to Employees as the Pay Head Type from the list of Pay Head Types.
Select the Income Type for the pay head.
Select Indirect Expenses from the List of Groups in the Under field.
By default, Affect Net Salary is set to Yes. Set this option to No, if you do not want this to appear in the pay slip.
By default, the pay head component name entered in the Name field appears in the pay slip. Enter the Name to appear in Payslip if you want to change the default pay head component name.
Enable the option Set Alter Income Details.
In the Income Tax Details screen:
Select Other Earnings/Allowances (Fully Exempted) as the Income Tax Component, if the pay head is exempted from Income Tax.
Set On Actual Value as the Tax Calculation Basis as reimbursements are not projected, and may vary each month.
By default, the Deduct TDS Across Period(s) field is set to No because tax is deducted in the same month as when the reimbursement is paid.
Select As User Defined Value as the Calculation Type.
Press Enter to accept.
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