SAP Payroll Concepts, Coverage and Configuration in India

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
Master data
Time Data
Past Data
Cumulations
CALC
Gross
Earnings
Perks
RESULTS
Net
Cluster
OUTPUT
Statutory Reporting
Monthly
Half yearly
Annual
RT
CRT
Income Tax
Prof Tax
PF
Recoveries
Interfaces
FI/CO posting
Bank transfer
Payment of taxes
Statutory payments
Third party deductions
Factors influencing HR Localisation
Legal & Statutory
Common
Requirements
Business Practices
Industry
Specific Practices
Private Sector
HR
Geographic
Variations
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

Housing
Car & Conveyance
allowances
Medical & other
Claims processing
reimbursements
Flexible Packages
Leave Travel Allowance
Full & Final settlement
Dearness Allowance
Other allowances
Other non -annual
Integration with SAP FI/CO

Reports
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
Wage Types 1..n
Allowance Grouping
Taxable/Non Taxable
Recurring /Non Recurring
Attendance Based?
Calculation / Entry
%# +
Parameters like Location, Grade etc..
Employee
$ Earning/Deduction
Payable/Non Payable
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.
%# +
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 {
MD10)
50% (MB10 +
& 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
Childrens 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
dependent on loan type and ALGRP
Define Loan Grouping for India dependent on

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.
Maintain Loan Eligibility Checks and limits
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

Employers 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
claims
eligibility definition for
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
oThere are 5 different methods to compute TDS. The choice of which methodafter the payment of
bonus
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
Fixed DA
Variable DA
CPI Value for the DA Index codes
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 IDs for

the various trusts.
Employers 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

system
T558C
Payroll run with

schema INLK
Sample Payslip
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SAP Payroll Concepts, Coverage and Configuration in India

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SAP Payroll Concepts, Coverage and Configuration in India

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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

Third party deductions

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

Factors influencing HR Localisation

Legal & Statutory

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

Payroll functional coverage - Legal

Labour Welfare Fund

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

Payroll functional coverage - Business

Previous Employment Tax

Income from other sources

Basic salary & increments

Medical & other

Leave Travel Allowance

Full & Final settlement

Other non -annual

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

Integration with SAP FI/CO

Payroll India - Vital statistics

Modified International infotypes

4 Indian valuation methods

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

Wage Type Statement

Wage Type Distribution

Payroll Annual Display

Post Payroll Check

Data Medium Exchange

Cash Breakdown List

Form 217 2(A)

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

Wage structure - concepts

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

Payroll - General Functionality

Gross payroll accounting with automatic wage calculation

Full gross/ net retroactive accounting

Freely definable pay slip

Data exchange with banks, insurance

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

Indirect Valuation Module VARIANT A

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

Indirect Valuation Module VARIANT B & C

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

Indirect Valuation Module VARIANT D

Micro Level Indirect Valuation

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

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

Personal Data - IT 0002

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

Payroll Status - IT 0003

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

Planned Working Time - IT 0007

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

Basic Pay - IT 0008

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