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Configuring Income Tax Components – Pay Head Configuration (Payroll)

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.

 

Pay Head Configuration

  1. Gateway of Tally > Alter > type or select Income Tax Pay Heads Details.
    Alternatively, press Alt+G (Go To) > Alter Master > type or select Income Tax Pay Heads Details > and press Enter.

    Pay heads which are already configured for income tax appear in bold, and those which are not configured appear in Italics.
    Note: 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. 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.
  4. 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.
    • Deduct TDS Across Periods: 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.
  5. Accept the screen. As always, you can press Ctrl+A to save.

Similarly, all other pay heads can also be configured for income tax.

 

Button options in Pay Head Configuration screen

  • Press F3 (Company): to change the company.
  • Press F8 (Tax Config): to view the Tax Configuration screen.
  • Press Alt+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.

    Accept the screen. As always, you can press Ctrl+A to save.
    After configuring the ledger for income tax, the ledger appears in the Pay Head / Ledger Configuration screen:
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