Pay Heads for Statutory Contributions (Payroll)
You can create pay heads for employer’s contribution towards EPF, ESI, EPS, NPS, and so on.
EPF contribution pay head for employers
- Gateway of Tally > Create > type or select Pay Head > and press Enter.
Alternatively, press Alt+G (Go To) > Create Master > Pay Head > and press Enter.
- Enter pay head name in the Name field.
- Select Employer’s Statutory Contributions as the Pay Head Type from the list of Pay Head Types.
- Select PF Account (A/c No. 1) in the Statutory Pay Type field.
- Select Indirect Expenses from the List of Groups, in the Under field.
- By default, Affect Net Salary is set to No. Type Yes, to include this component in the pay slip.
- The Calculation Type is set to As Computed Value, and Calculation Period is set as Months, by default.
- Select Normal Rounding from the list of Rounding Methods, and type 1 as the rounding Limit.
- In the Compute field, select On Specified Formula, from the Computation On list.
The Compute sub-screen appears.
- Select Employee’s PF Deduction @ 12% from the List of Pay Heads, in the Pay Head column.
- Select Subtract Pay Head in the Function.
- Select End of List to return to Pay Head Creation.
- In the Effective Date field, enter the date from when the EPF will be effective.
- Select Slab Types from the List of Slabs, in the Slab Type.
- Enter the percentage in the Value Basis field.
- Accept the screen. As always, you can press Ctrl+A to save.
ESI Contribution Pay Head for employers
- Gateway of Tally > Create > type or select Pay Head > and press Enter.
Alternatively, press Alt+G (Go To) > Create Master > Pay Head > and press Enter. - Enter the name of the Pay Head in the Name field.
- Select Employer’s Statutory Contributions as the Pay Head Type, from the list of Pay Head Types.
- Select Employee State Insurance in the Statutory Pay Type field.
- Select Indirect Expenses from the List of Groups, in the Under field.
- By default, Affect Net Salary is set to No. Type Yes, if you to include this component in the pay slip.
- The Calculation Type is set to As Computed Value, and Calculation Period is set as Months, by default.
- Select Normal Rounding from the list of Rounding Methods, and type 1 as the rounding Limit.
- In the Compute field, select On Specified Formula, from the Computation On list.
The Compute sub-screen appears.- Select Add Pay Head from the List of Pay Heads to add pay head to be considered for ESI calculation.
- Select End of List to return to Pay Head Creation.
- In the Effective Date field, enter the date from when the ESI Deduction will be effective.
- Enter the percentage in the Value Basis field.
Note: The amount is not specified in the Pay Head creation screen for ESI as the same will be taken from the Statutory Master file.
- Accept the screen. As always, you can press Ctrl+A to save.
Note: ESI Contribution Pay Head should be added in salary details after Basic, HRA, Conveyance and Overtime, and Employee Deductions pay heads.
EPS Contribution Pay Head for employers
- Gateway of Tally > Create > type or select Pay Head > and press Enter.
Alternatively, press Alt+G (Go To) > Create Master > Pay Head > and press Enter. - Enter the name of the Pay Head in the Name field.
- Select Employer’s Statutory Contributions as the Pay head type from the list of Pay head types.
- Select EPS Account (A/c No. 10) in the Statutory Pay Type field.
- Select Indirect Expenses from the List of Groups in the Under field.
- By default, Affect net salary is set to No. Type Yes, if you want this component to be included in the pay slip.
- By default, the Calculation type field is set to As computed Value, and the Calculation period is set to Months.
- Select Normal Rounding from the list of Rounding Methods, and type 1 as the rounding Limit.
- Select On Specified Formula, in the Compute field, from the Methods of computation list. The Compute sub-screen appears.
- Select Basic Pay, in the Pay Head column, from the List of Pay Heads.
- In the Effective Date field, enter the date from when the EPS deduction will be effective.
- Enter the appropriate values in the From Amount and Amount Up to fields.
- Select Slab Types from the List of Slabs, in the Slab Type.
- Enter the percentage in the Value field.
- Similarly, enter the From Amount, Amount Up to, Slab Type and Value details for the next slab.
- Accept the screen. As always, you can press Ctrl+A to save.
NPS Contribution Pay Head for Employers
Any contribution by the employer towards NPS will fall under the Tier I account of the scheme. Such employer’s contribution towards NPS will be allowed to the employee under Section 80CCD (2) of the Income Tax Act, 1961, to the extent of 10% of Basic Pay and Dearness Allowance (DA).
- Gateway of Tally > Create > type or select Pay Head > and press Enter.
Alternatively, press Alt+G (Go To) > Create Master > Pay Head > and press Enter. - Enter the name of the Pay Head in the Name field.
- Select Employer’s Statutory Contributions as the Pay head type from the list of Pay head types.
- Select National Pension Scheme (Tier – I) in the Statutory Pay Type field.
- Select Indirect Expenses from the List of Groups in the Under field.
- By default, Affect Net Salary is set to No. Type Yes, if you want this component to be included in the Pay Slip.
- In the Calculation type field, select the required type of calculation, User Defined Value, Flat Rate or As Computed Value. On selection of Calculation type, the Calculation period is pre-filled with Months by default.
- Select Normal Rounding from the list of Rounding Methods and type 1 as the rounding Limit.
- If the Calculation Type is set to As Computed Value, then in the Compute field, select On Specified Formula from the Computation On list. The Compute sub-screen appears.
- Select Basic Pay from the List of Pay Heads, in the Pay Head column.
- Select Add Pay Head to add other Pay Heads to be considered for NPS calculation.
- Select End of List to return to Pay Head Creation.
- In the Effective Date field, enter the date from when the NPS deduction will be effective.
- Select Percentage from the List of Slabs, in the Slab Type field.
- Enter the required percentage for NPS in the Value field.
Note: The Calculation Type can be set to As Computed Value/Flat Rate/User Defined. If User Defined is selected as the Calculation Type, then while recording a payroll voucher, NPS Process has to be selected in the Process For field of the Payroll Auto Fill sub-screen.
- Accept the screen. As always, you can press Ctrl+A to save.