You can use the Pay Head Configuration screen to configure the Income Tax Component for all existing pay heads. You can also configure the ledgers which are used for making the Payroll payments for the respective Income Tax Component.
To configure income tax components,
1. Go to Gateway of Tally > Payroll Info. > Income Tax Details > Pay Head Configuration.
Pay heads which are already configured for income tax appear in bold, and those which are not configured appear in Italics.
: The EPF A/c No. 1 and Professional Tax are also configured internally.
2. Press Enter on any of the pay heads configure/re-configure the same for income tax.
3. In the Income Tax Configuration screen,
● Name of Pay Head / Ledger: By default, this field displays the pay head/ledger name .
● Master Type: Indicates whether this is a pay head or a ledger..
● Income Tax Component: From the List of Income Tax Components, select the required Income Tax Component for correct tax computation.
● Tax Calculation Basis: Select the appropriate Tax Calculation Basis from On Projection and On Actuals.
On Projection: You can select this to use the pay head/ledger value from Salary Details, or from the voucher (in case of User Defined pay head), and project it for the remaining period.
On Actuals: Using this option, you can project the latest pay head value and the same will be projected for the remaining months as well.
o Deduct TDS Across Period(s): To deduct entire TDS in the same month, set this option to No. If you want to spread the TDS deduction across the remaining period, set this to Yes.
● Press Enter to Accept
Similarly, all other pay heads can also be configured for income tax.
● Click on A: Add Ledger to select and configure any ledger for income tax. For example, conveyance can be paid as an expense by the employer. To compute income tax on conveyance, the employer must configure the Conveyance ledger for income tax.
● Press Enter to save.
After configuring the ledger for income tax, the ledger appears in the Pay Head / Ledger Configuration screen:
● Click on T: Tax Config to view the Tax Configuration screen.
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