The salary components constituting Pay Structures are called Pay Heads. A Pay Head may be an earning, which is paid to an employee, or a deduction, which is recovered from his/her salary. The value of these Pay Heads could be either fixed or variable, for each Payroll period.
A Pay Head is categorized as Allowances, Deductions or Reimbursements.
The preset Pay Head Types in Tally.ERP 9 are as shown below:
Note: While creating the Salary, PF, ESI payable ledgers you can use Not Applicable as the Type of Pay Head, which will be used to post appropriate accounting entries.
Note: For international Customers Employees' Statutory Deductions, Employer's Statutory Contribution and Employer's other Charges Pay head Types are not applicable.
The Statutory Pay Head Type field is enabled when Employees' Statutory Deductions, Employer's Statutory Contributions and Employer's Other Charges Pay Head Types are selected in the Pay Head Type field.
The preset Statutory Pay Head Types in Tally.ERP 9 are as shown below:
Employee State Insurance
PF Account (A/c No. 1)
EPS Account (A/c No. 10)
Professional Tax
Income Tax
Voluntary provident Fund (A/c No. 1)
Admin Charges (A/c No. 2)
EDLI Admin Charges (A/c No. 22)
EDLI Contribution (A/c No. 21)
Note: Statutory Pay Head Type will appear only when the Payroll Statutory Features are enabled.
This parameter should be set to Yes, for the Pay Head components that will be used for the Gratuity calculation (e.g. Basic and DA etc.)
The method of calculation of the Pay Head is based on its Calculation Type.
Tally.ERP 9 payroll allows following calculation methods
Note: The formula defined in Calculation Type will be used for computation only while using Payroll Auto Fill functionality in the Payroll Voucher, and not in Manual entry mode of Payroll voucher.
The following computational models are supported in Calculation Types.
Flat Rate is a Calculation Type is used where the value of the Pay head is a fixed amount for a period. Pro-rata will not happen in this type of the component (Pay Head). Examples of Flat Rate Calculation Type:
Conveyance Allowance of Rs. 800.00 per month is exempt from tax and followed by many organisation.
Fixed Loan Installment deduction amount.
On Attendance type of Calculation Type is based on the attendance data where the component will get pro-rated based on the actual days the Employee is present in the office for the selected period. In Tally.ERP 9 the attendance can be recorded as positive days (Present) or loss of pay (Absent) type.
Example:
e.g. Basic Salary is calculated on Attendance.
If you want to calculate the Pay Head Value using the Positive Attendance (Present), then select the same against this field or else select Not Applicable.
If you want to calculate the Pay Head Value using the Negative Attendance (Absent), then select the same against this field.
On Production Calculation Type is used to calculate the pay value based on the Production/Work down. The production data can be entered in Attendance voucher against the Production type.
As Computed Value is used if the Pay Head value is based on a dependent component. You will be able to define the dependent component by specifying the formula or using the current sub-total or current earning or deduction total. You can also define the slab either by percentage to value or the combination in a slab.
Example:
HRA as 40% of Basic Salary.
As User defined Value allows you to manually enter the value at the time of processing the salary. This Calculation Type is used the value of pay is not fixed and does not depend upon any pay components.
Example:
Incentives or Variable Salary.
Calculation Period refers to the periodicity of Pay Head Calculation. There four pre-defined Calculation Period in Tally.ERP 9 as shown below:
Days
Fortnights
Months
Weeks
Per day Calculation Basis refers to the calculation of per day Pay Head value Computation.
As per Calendar Period refers to the perpetual calendar month, i.e. if the payroll process is carried out for the month of March, then the attendance records will be entered for 31 days.
For e.g.
Employee' Monthly Salary = Rs. 3000
Calculation Basis = As per Calendar Period
Per Day salary for Jan (31 days) = 3000/31 = 96.78
Leave Taken = 3 days in Jan
Salary Deductible = (3000/31)*3 = 290.32
Salary Payable = 3000 - 290.23 = 2709.67
User Defined refers to the consistent payroll period irrespective of calendar month, i.e. If an employee’s salary is based on a standard month of 30 days irrespective of the calendar month, then you can select User Defined as the Calculation Basis and define the periodicity of the specified period or month.
For e.g.
Employee' Monthly Salary = Rs. 3000
Calculation Basis = User Defined month of 30 Days
Per Day salary for Jan (30 days) = 3000/30 = 100
Leave Taken = 3 days in Jan
Salary Deductible = (3000/30)*3 = 300
Salary Payable = 3000 - 300 = 2700
User Defined Calendar Type option will provide the flexibility to the user to select user defined calendar days every Calculation Period. Once this option is selected the user can have different number of working days for every Calculation Period.
For example the user can enter the total number of working days after reducing the Saturdays or Sundays or even the Holidays if any, as per the requirement.
For e.g.
Employee' Monthly Salary = Rs. 3000
Calculation Basis = User Defined Calendar Type
Working Days in Jan = 31- 4 (Sundays) - 2 (Holidays) =25 Days
Per Day salary for Jan (30 days) = 3000/25 = 120
Leave Taken = 3 days in Jan
Salary Deductible = (3000/25)*3 = 360
Salary Payable = 3000 - 360 = 2640
Note: The user defined Calendar days have to be entered while passing the Attendance Voucher using the Auto Fill feature in the Default Value to Fill field that needs to be filled for every Calculation Period.
There are four methods of Rounding Off in Tally.ERP 9 which are as follows:
Not Applicable – The decimal points will be taken into consideration, and the amount will not be rounded off.
Downward Rounding – The decimal points will not be taken in to consideration and the amount will be rounded off to the lower value.
Normal Rounding – The amount will be rounded off to the nearest currency value.
Upward Rounding – The amount will be rounded off to the higher value.
When As Computed Value is selected as the Calculation Type, then you can select the Pay Head Computation as per one of the following options:
On Current Deductions Total – This Calculation Type is used when the value of a Pay Head depends upon the total of the deductions pay heads previously defined.
On Current Earnings Total – This Calculation Type is used when the value of a Pay Head depends upon the total earnings pay heads previously defined.
On Current Sub Total – This Calculation Type is used when the value of a Pay Head depends upon the net totals of earnings and deductions previously defined.
On Specified Formula – This Calculation Type is used when the Pay Head value is computed on the value of one or more pay heads already defined in the pay structure. (Tally.ERP 9 allows the addition and subtraction of pay heads already defined in the pay structure and multiplication and divisions using Attendance Types. For example, HRA is computed as 40% of the basic salary).
The Effective From date is by default taken as the Financial Year start date in which the Pay Head is created. In case of a revision in Pay Computation, you can define the revised computation information for the given pay head, by giving the Effective From date.
In case where there are multiple slabs for Computation, the start value for each slab should be provided in this field. By default, this field is skipped and assumed to be 0.
The upper Stratum value for each slab is provided in this field.
Percentage – This Slab rate is used when the amount is stated as a proportion of a whole.
Value – This Slab rate is used when the amount is stated as absolute value.
Value Basis for each slab is provided in this field, which can be either an Amount or Percentage based on the Slab Type selected the previous field.
Note: All the Pay Heads created will also appear under the List of Ledgers in the default Accounting reports.