Indian Payroll SAP

SAP - Payroll
Agenda
Background
Payroll Concepts
Payroll Coverage - Detailed
 SAP India 2001, India Payroll Core , P.Rajesh 2

Functional Procedure
The Process
Master Data
Payroll
Post Payroll Reports

Process Flow
INPUT CALC RESULTS OUTPUT
•Master data
Gross Net Cluster
•Time Data •Statutory Reporting
• Earnings
•Past Data •Monthly
• Perks •RT
•Cumulations •Half yearly
• Income Tax •CRT •Annual
• Prof Tax
• PF
•Interfaces
• Recoveries
•FI/CO posting
•Bank transfer
•Payment of taxes
•Statutory payments
•Third party deductions

Factors influencing HR Localisation
Legal & Statutory Common

Requirements Business Practices
Industry Geographic
HR Variations
Specific Practices
Private Sector Public Sector

Payroll Coverage
- Overview
Payroll functional coverage - Legal
•Income Tax
•Professional Tax
•Provident Fund
•Payment of Gratuity
•Payment of Bonus
•ESI
•Labour Welfare Fund

Payroll functional coverage - Business
•Previous Employment Tax •Loans

•Income from other sources •Furniture
•Basic salary & increments •Other non -annual
•Housing allowances
•Car & Conveyance •Claims processing
•Medical & other •Flexible Packages
reimbursements
•Full & Final settlement
•Leave Travel Allowance
•Integration with SAP FI/CO
•Dearness Allowance
•Reports
•Other allowances

Payroll India - Vital statistics
Modified International infotypes
12 India specific infotypes
60 Indian tables
Rules, schemas, Payroll Driver
4 Indian valuation methods

Payroll reports
Form 5 Wage Type Statement

Form 10 Wage Type Distribution
Form 16 Payroll Journal
Form 24 Payroll Annual Display
Form 7 (ESI) Post Payroll Check
Form 6 (ESI) Printing
Form 3A Post Payroll
Form 6A Data Medium Exchange
Ptax returns Cash Breakdown List
Form 217 2(A)

PAYROLL
CONCEPTS
Wage structure - concepts
1§ 2
$ Earning/Deduction
Payable/Non Payable
Wage Types 1..n Taxable/Non Taxable

Recurring /Non Recurring
Attendance Based?
Calculation / Entry
Allowance Grouping
% 3 Employee

Parameters like Location, Grade etc..
Payroll - General Functionality
1 § 2$Gross payroll accounting with automatic wage calculation
Full gross/ net retroactive accounting
Freely definable pay slip
Data exchange with banks, insurance

agencies, etc.
% 3 Direct integration to FI and CO
Online or batch processing
Parallel payroll runs (on different Appl. Servers)

Indirect Valuation Module VARIANT A

Indirect Valuation Module VARIANT B & C
Inval B
M230 = 50% (MB10 + MD10)
+ 500
Inval C
M230 = Minimum of {
50% (MB10 +
MD10)
& 500 }

Indirect Valuation Module VARIANT D
INVAL B & C
Micro Level Indirect Valuation
e.g. Children education allowance Rs 250 per child
INVAL A,B,C or D
Feature 40ECS
Returns a Factor

PAYROLL
COVERAGE -
DETAILED
Organisational Assignment
Enterprise Structure
Personnel Structure
Organisation
Structure

Personal Data - IT 0002

Payroll Status - IT 0003

Planned Working Time - IT 0007

Basic Pay - IT 0008
Pay Parameters
Wage Types

Bank Details - IT 0009

Recurring Payments/Deductions - IT 0014

Additional Payments - IT 0015

Contract Elements - IT 0016

Monitoring Dates - IT 0019

Family/Related Person - IT 0021
Children’s Education
/ Hostel Allowance
Exemption

Membership Fees - IT 0057

Personal IDs - IT 0185

Master Data (Indian)
IT 580 Previous Employment Tax Details
IT 581 Housing (HRA/CLA/COA)
IT 582 Exemptions
IT 583 Car & Conveyance
IT 584 Income From Other Sources
IT 585 Section 80 Deductions
IT 586 Investment Details (Section 88)
IT 587 Provident Fund Contribution
IT 588 Other Statutory Deductions
IT 590 Long Term Reimbursements
IT 591 Nominations

Previous Employment Tax Details
PF contributed
Sec 10 exemptions availed
Medical exemption claimed
LTA availed
Tax deducted so far

Income from other sources
House property details
Business profits
Capital gains
Dividends
Interests

Housing
Eligibility details
House Rent Allowance
Rent details
Co. Leased Accommodation
Co. Owned Accommodation
Differential payment
HRA exemption amount
Calculation of perk value in case
of leased accommodation
Value of helper
Value of furniture

Leave Travel
Annual Reimbursement based on eligibility
Definition of block of 4 years
Travel Details
Link to Leave
Carry forward of LTA

Medical Reimbursement

Car & Conveyance - IT 0583

Investments
Investments made by employee for

getting tax exemptions or rebates
maintain the Section 80/88 limits

Hard Furnishing Scheme
Perk value of assets can be maintained
Maintenance of block of years
Amount check against eligibility
Perk calculation for the year
based on the total value
Other non - annual
reimbursements
Transfer of asset

Provident Fund
Multiple trusts
Choice of Basis
Contributions from Employer
Contributions from Employee
Payment to pension
Voluntary Provident Fund

Other Legal Requirements
ESI
Professional Tax
Labour Welfare fund

Professional Tax
Coverage of Multiple methods for processing

 Frequency - Monthly, Half yearly, Annual
 Salary definition - Wage types, Actuals
 Retroactive processing
 Forms for returns
Coverage of states
 Tamilnadu
 Gujarat
 Maharashtra
 Madhya Pradesh
 Karnataka
 West Bengal
 Andhra Pradesh
 Kerala

Nominations
ESI benefit
Gratuity benefit
Provident Fund benefit
Pension benefit

Income tax
As per Indian tax laws
Calculation of the tax based on the investments made and the standard
deduction
User definable tax slabs and percentages
Tax calculation based on “actual investment” or “ Proposed investment”

Company Loans
Classify a loan as an Installment or Annuity loan.

Configuration of Interest Calculation method.
Configuration of Interest Calculation days.
Configuration of Interest rates
Configuration of frequencies for repayment and interest
Loan payment / repayment can be via payroll / external means.
Disbursement of the approved loan amount in installments.
Display the Proposed Disbursement Plan for the employee for the loan
being created.
Computation of interest rate advantage on interest free or subsidized
loans.
Cumulation of Interest rate advantage as above to annual perk amount.
Computation of Penal Interest due to Foreclosure of loans .
Simulation of loan repayment Plan.

Company Loans
Eligibility Checks during Loans Info type Creation:
Define Loan Grouping for India – Define Loan Grouping for India – dependent on Maintain Loan Eligibility Checks and limits
dependent on loan type and ALGRP
loan type and ALGRP
Check for the following during a new loan creation
Minimum Experience
Maximum Age
Months allowed between Current and Previous
loan
Number of outstanding loans allowed at a time
Maximum number of loans allowed during the
entire service
Total Outstanding loan amount allowed
Approved loan amount a minimum of Salary , %
asset value and a fixed amount definable by
customer.

Company Loans
 New Options in Loans Info type:
 1. Calculate Repayment Installment
 2. Display Proposed Disbursement Plan
 3. Simulate Penal Interest due to loan foreclosure

Company Loans
Reports for Company Loans:
Loan Summary Report :

For a given period and loan types,the
report displays various details like interest,
principal, interest subsidy etc. employee wise.
2. Batch Program for Penal Interest due

to Loan Foreclosure:
This report is used to update the Additional Payments Info type

(0015) with the Penal Interest Amount in case of loans foreclosure

Off Cycle Payments
Info type 0267 for capturing
Off cycle payments
Off cycle for Bonus type

runs have been enabled
Professional Tax
computation for bonus
payments in off cycle is
considered
Tax on bonus can be

computed using different
methods
Reimbursements can be paid

in off cycle payments using
claims module

Off Cycle Work Bench

Third Party Deductions
Infotype 0057
Deduction in Payroll
Frequency of the Payment
can be defined
Linkage to Sec88 Rebate in
Payroll
Linkage to Sec80
Exemptions in Payroll
Different Payee options

Third Party Deductions
Deductions

Claims Processing
Processing reimbursements to the employee in regular or off cycle payroll run

Eligibility Types
Amount e.g. Rs. 24000 for Medical Reimbursement
Numbers e.g. 250 Liters of petrol
Amount subjected to number of times e.g Stitching allowance eligibility upto Rs. 1000 can be
claimed in a year and can be claimed twice
Validity periods for each reimbursement type can be configured
Monthly, Financial year, Calendar year, customer definable year ..etc
Capture company specific additional data for each reimbursement.
Upload balances at the beginning of the validity period
Check on balance available against component - Carried Forward & Current Year eligibility
Validity period (Year) end processing options
Payment of outstanding balance, Taxation of Amount
Carry forward of the balance to the next year
Lapse

Claims Processing – Data Entry
Data Upload from

External File

Claims Processing – Results

Claims Processing – Balance
Reporting
Claims Processing – Balance Reporting

One Day Salary Deduction
Configurable at the pay

scale grouping for
allowances.
 Pay Period and the Year
for the deduction can be
defined.
 Different calculation
methods for basis
 Factor
 Can be configured for
Employer’s equal
contribution.
 Can be customized for
Section 80/88 exemption

Salary Packaging
Companies switching from traditional pay structure to Flexible pay
Total Package offering and Cost to the company
Flexible arrangement for employees to choose from a range of benefits

together with a cash salary and fixed set of components.
Take home pay analysis for employee.
Salary packaging combines data from all sources into a manageable

central location and then updates data when process of Salary packaging is
complete.
Employee Self Service

Salary
Packaging
Grouping of components
at organization level
 Common Interface for all

type of payments and
eligibility
e.g. Employee can opt for

Leave Travel allowance only
if he is eligible
 Mandatory components
and fixed % of some
components
 Maximum and Minimum

limits
 Customer specific
checks

Salary Packaging
Single Interface for Infotypes
Eligibility and limits validity
Payroll
simulation for take
home pay analysis
Individual eligibility definition for

claims

TDS on BONUS
Tax deducted at source during offcycle runs for bonus payments.

Maintain Bonus payments in Infotype 0267.
Methods of Tax
Calculation
Tax at a standard rate
to be used across a
Company.
Tax at the individual
employee's marginal
rate of tax (excluding
surcharge or including
surcharge) before the
payment of bonus or
after the payment of
bonus
oThere are 5 different methods to compute TDS. The choice of which method
first parameter maintained in the schema against function INBTD.
oMultiple bonuses can be paid in the same offcycle run.
oCustomer Exit provided to override TDS computed by SAP.

Rounding off net pay
Rounding options
can be configured at
the Pay Scale for
allowances Grouping
level.
Configurable
rounding Options
Configurable
recovery of rounded
off options

Dearness Allowance
Fixed DA,Variable DA
Configurable Index codes for various Consumer Price
Indices.
Methods of calculating DA.
 Non-Slab based calculation.
 Basic slab based calculation.
 Incremental basic slab based calculation.
 CPI slab based calculation.
 Incremental CPI slab based calculation.
 Basic slab based calculation, subject to minimum
value
A report program generates a batch session, which will

populate the Basic Pay Infotype (IT0008) with relevant
wagetype and amount for DA (both fixed and variable) by
reading the configuration tables.
DA calculations
Calculation rules defined

for a Allowance Grouping CPI Value for the DA Index codes
Fixed DA
Variable DA

Basic
Increments
Increment method based on
Amount
Percentage
Definable Basic codes for Increment methods.
Slabs can be defined for basic codes
For Percentage based increment, the increment can be calculated as a Percentage of
Average of Minimum Basic and Maximum Basic of slab,
Minimum Basic of slab,
Current Basic
Customer Configurable Increment Criteria
Promotion criteria is based on
Minimum age for promotion
Minimum experience in the current Payscale Group and Payscale Level
Minimum appraisal points
Confirmation Status
Report program will create a Batch session to update the basic wagetype and delimit Basic Pay
Infotype (IT0008) with the reference date.

Basic Increments
Increment method assigned to a basic

code and Allowance Grouping
Amount based increment given

for a set of employees
Basic pay and personal pay

Wagetype assigned to an allowance
grouping
Basic slabs with the increment range and amount

Superannuation
•Customer definable
Superannuation trust ID‘s for
the various trusts.
•Employer‘s Contribution
percentage
•Frequency of contribution
(Monthly/Annual)
•Contributions can be for
calendar year or financial
•Option for making provisions
for monthly contributions

Mid Year Go Live
Going Live on India Payroll
How ?
 From 1st April
 Mid year - effective from April
 Mid year – using schema INLK
 Legacy data
 Tax calculation
 Reports and legal forms

Mid Year Go Live
Pre go live periods

T558B
Value from the legacy T558C

system

Payroll run with
schema INLK

Sample Payslip

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Indian Payroll SAP

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SAP - Payroll

Payroll Coverage - Detailed

 SAP India 2001, India Payroll Core , P.Rajesh 2

Post Payroll Reports

 SAP India 2001, India Payroll Core , P.Rajesh 3

INPUT CALC RESULTS OUTPUT

•Third party deductions

 SAP India 2001, India Payroll Core , P.Rajesh 4

Legal & Statutory Common

Private Sector Public Sector

 SAP India 2001, India Payroll Core , P.Rajesh 5

 SAP India 2001, India Payroll Core , P.Rajesh 8

•Previous Employment Tax •Loans

 SAP India 2001, India Payroll Core , P.Rajesh 9

Modified International infotypes

12 India specific infotypes

Rules, schemas, Payroll Driver

4 Indian valuation methods

 SAP India 2001, India Payroll Core , P.Rajesh 10

Form 5 Wage Type Statement

 SAP India 2001, India Payroll Core , P.Rajesh 11

Wage Types 1..n Taxable/Non Taxable

 SAP India 2001, India Payroll Core , P.Rajesh 14

1 § 2$Gross payroll accounting with automatic wage calculation

Full gross/ net retroactive accounting

Freely definable pay slip

Data exchange with banks, insurance

% 3 Direct integration to FI and CO

Online or batch processing

Parallel payroll runs (on different Appl. Servers)

 SAP India 2001, India Payroll Core , P.Rajesh 16

 SAP India 2001, India Payroll Core , P.Rajesh 20

M230 = 50% (MB10 + MD10)

 SAP India 2001, India Payroll Core , P.Rajesh 21

 SAP India 2001, India Payroll Core , P.Rajesh 23

 SAP India 2001, India Payroll Core , P.Rajesh 26

 SAP India 2001, India Payroll Core , P.Rajesh 27

 SAP India 2001, India Payroll Core , P.Rajesh 28

 SAP India 2001, India Payroll Core , P.Rajesh 29

 SAP India 2001, India Payroll Core , P.Rajesh 30

 SAP India 2001, India Payroll Core , P.Rajesh 31

 SAP India 2001, India Payroll Core , P.Rajesh 32

 SAP India 2001, India Payroll Core , P.Rajesh 33

 SAP India 2001, India Payroll Core , P.Rajesh 34

 SAP India 2001, India Payroll Core , P.Rajesh 35

 SAP India 2001, India Payroll Core , P.Rajesh 36

 SAP India 2001, India Payroll Core , P.Rajesh 37

 SAP India 2001, India Payroll Core , P.Rajesh 38

IT 580 Previous Employment Tax Details

IT 581 Housing (HRA/CLA/COA)

IT 583 Car & Conveyance

IT 584 Income From Other Sources

IT 585 Section 80 Deductions

IT 586 Investment Details (Section 88)

IT 587 Provident Fund Contribution

IT 588 Other Statutory Deductions

IT 590 Long Term Reimbursements

 SAP India 2001, India Payroll Core , P.Rajesh 39

 SAP India 2001, India Payroll Core , P.Rajesh 40

House property details

 SAP India 2001, India Payroll Core , P.Rajesh 41

House Rent Allowance

Co. Leased Accommodation