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PAY_IN_EXM_300 - Maintain Schema for Exemption on Other Allowances and Reimbursements

PAY_IN_EXM_300 - Maintain Schema for Exemption on Other Allowances and Reimbursements

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In this activity, you must set up the parameters for the General Payroll function for Allowance/Reimbursement Treatment Payroll Function (INCTX) in the Gross to Net Calculation - India Schema (INN1). This payroll function processes tax exemption, according to your parameter settings, on any allowance or reimbursement that you may want to give to your employees.

The options for parameter settings are:

  • parm1 - Tax code defined by you in table view Taxability of Wage Types (V_T7INT9)
  • parm2 - Annual tax exemption wage type. You have been provided with a model wage type Cust. Sp. Annual Exmp. (MCAX) for this purpose.
  • parm3 - Whether the payment should be treated like an allowance or a reimbursement while calculating tax exemption
  • A - Allowance

  • R - Reimbursement

If in table view Taxability of Wage Types (V_T7INT9), you have maintained the Frequency of the Exemption Limit as annual, then
  • In case of A, the amount paid will be projected for the entire financial year, as it is treated like a regular payment.

  • In case of R, only the payments made till date for the financial year will be cumulated, as it is treated like an irregular payment.

If in table view Taxability of Wage Types (V_T7INT9), you have maintained the Frequency of the Exemption Limit as monthly, the payroll function will read the payments and exemption amount from Exemptions Infotype (0582) only for the current month. Also,
  • In case of A, the monthly exemption amount is projected for the entire financial year to arrive at the annual exemption amount.

  • In case of R, the monthly exemptions till date, for the financial year, are cumulated to arrive at the annual exemption amount.

  • parm4 - Monthly tax exemption wage type. You have been provided with a model wage type Cust. Sp. Monthly Exmp. (MCMX) for this purpose. This parameter is optional.
  • If the tax exemption is annual, that is, you have not specified parm4, then in table view Taxability of Wage Types (V_T7INT9), Frequency of the Exemption Limit can be either monthly or annual.

In this case, you should configure parm2 (annual tax exemption wage type) such that its value is cumulated in Exemption U/S 10 Wage Type (/130) and Annual Exemptions Wage Type (/133).
  • If the tax exemption is monthly, that is, you have specified parm4, then in the table view Taxability of Wage Types (V_T7INT9), Frequency of the Exemption Limit should be monthly.

In this case, you should configure parm4 (monthly tax exemption wage type) such that its value is cumulated in Monthly Exemptions Wage Type (/132). Parm2 (annual tax exemption wage type) is calculated from parm4 (monthly tax exemption wage type). You should configure parm2 (annual tax exemption wage type) such that its value is cumulated in Exemption U/S 10 Wage Type (/130). The value of parm2 (annual tax exemption wage type) should not get cumulated in Annual Exemptions Wage Type (/133).

You must insert the Payroll Function General Payroll function for Allowance/Reimbursement Treatment (INCTX) in the Gross to Net Calculation - India Subschema (INN1) anywhere before the Cumulations for COA/CLA Basis Rule (IN76), that is, anywhere before the line of code PIT IN76 P76 NOAB.

NOTE

All the parameters, except for Parm4, are mandatory.

You must not insert this payroll function in an IF - ENDIF structure.

The syntax for this payroll function will be INCTX parm1 parm2 parm3 parm4. Here, parm4 is optional.

If you want to maintain the parameter settings of General Payroll function for Allowance/Reimbursement Treatment Payroll Function (INCTX):

  1. In the schema, find the line that contains function INCTX and according to the above example, set the parameters to the following:
Fct Par1 Par2 Par3 Par4 D P Text
INCTX SEXM MCAX A MCMX   Customer specific
      tax exemption

  1. Save and generate the schema.
 

Your company gives uniform allowance to its employees. The tax exemption given is monthly. In table view Taxability of Wage Types (V_T7INT9), Frequency of the Exemption Limit is also defined as monthly.

You must maintain the entries in Exemptions Infotype (0582) subtype created you, every month.

Payroll Function General Payroll function for Allowance/Reimbursement Treatment (INCTX) will have to be specified in your schema equivalent to Gross to Net Calculation - India Subschema (INN1), as:

INCTX SEXM MCAX A MCMX

  • SEXM - Tax code specified in table view Taxability of Wage Types (V_T7INT9) for uniform allowance

  • MCAX - Annual tax exemption wage type

  • A - The allowance paid to the employees is projected for the entire financial year to arrive at annual exemptions.

  • MCMX - Monthly tax exemption wage type






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