SAP - Payroll

Agenda

Background Payroll Concepts Payroll Coverage - Detailed

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Functional Procedure

The Process

Master Data

Payroll

Post Payroll Reports

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Process Flow
INPUT
Master data Time Data Past Data Cumulations

CALC

RESULTS

OUTPUT

Gross Earnings Perks

Net Income Tax Prof Tax PF Recoveries

Cluster RT CRT

Statutory Reporting Monthly Half yearly Annual Interfaces FI/CO posting Bank transfer Payment of taxes Statutory payments Third party deductions

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Factors influencing HR Localisation

Legal & Statutory

Common Business Practices

Requirements

Industry Specific Practices

HR

Geographic Variations

Private Sector

Public Sector

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Payroll Coverage - Overview

Payroll functional coverage - Legal

Income Tax Professional Tax Provident Fund Payment of Gratuity Payment of Bonus ESI Labour Welfare Fund

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Payroll functional coverage - Business

Previous Employment Tax Income from other sources Basic salary & increments Housing Car & Conveyance Medical & other reimbursements Leave Travel Allowance Dearness Allowance Other allowances

Loans

Furniture
Other non -annual allowances Claims processing Flexible Packages Full & Final settlement Integration with SAP FI/CO Reports

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Payroll India - Vital statistics

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

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Payroll reports

Form 5 Form 10 Form 16 Form 24 Form 7 (ESI) Form 6 (ESI)

Wage Type Statement Wage Type Distribution Payroll Journal Payroll Annual Display Post Payroll Check Printing

Form 3A
Form 6A Ptax returns Form 217 2(A)

Post Payroll
Data Medium Exchange Cash Breakdown List

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PAYROLL CONCEPTS

Wage structure - concepts

1 2 % 3
Wage Types 1..n Allowance Grouping
Parameters like Location, Grade etc..

$ Earning/Deduction Payable/Non Payable Taxable/Non Taxable

Recurring /Non Recurring Attendance Based? Calculation / Entry

Employee

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Payroll - General Functionality

1 2$ % 3
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)

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Indirect Valuation Module VARIANT A

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Indirect Valuation Module VARIANT B & C

Inval B M230 = 50% (MB10 + MD10) + 500

Inval C M230 = Minimum of { 50% (MB10 + MD10) & 500 }

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Indirect Valuation Module VARIANT D

INVAL B & C
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Micro Level Indirect Valuation

e.g. Children education allowance Rs 250 per child INVAL A,B,C or D
Feature 40ECS Returns a Factor

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PAYROLL COVERAGE DETAILED

Organisational Assignment

Enterprise Structure Personnel Structure Organisation Structure

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Personal Data - IT 0002

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Payroll Status - IT 0003

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Planned Working Time - IT 0007

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Basic Pay - IT 0008

Pay Parameters

Wage Types

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Bank Details - IT 0009

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Recurring Payments/Deductions - IT 0014

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Additional Payments - IT 0015

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Contract Elements - IT 0016

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Monitoring Dates - IT 0019

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Family/Related Person - IT 0021

Childrens Education / Hostel Allowance Exemption

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Membership Fees - IT 0057

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Personal IDs - IT 0185

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Master Data (Indian)

IT 580 IT 581 IT 582 IT 583 IT 584 IT 585 IT 586 IT 587 IT 588 IT 590 IT 591

Previous Employment Tax Details Housing (HRA/CLA/COA) Exemptions Car & Conveyance Income From Other Sources Section 80 Deductions Investment Details (Section 88) Provident Fund Contribution Other Statutory Deductions Long Term Reimbursements Nominations

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Previous Employment Tax Details

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

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Income from other sources

House property details Business profits Capital gains

Dividends
Interests

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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

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

Carry forward of LTA

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Medical Reimbursement

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Car & Conveyance - IT 0583

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Investments
Investments made by employee for getting tax exemptions or rebates maintain the Section 80/88 limits

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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

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Provident Fund

Multiple trusts Choice of Basis

Contributions from Employer

Contributions from Employee Payment to pension

Voluntary Provident Fund

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Other Legal Requirements

ESI Professional Tax Labour Welfare fund

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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

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Nominations

ESI benefit Gratuity benefit Provident Fund benefit Pension benefit

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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

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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.
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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 Maintain Loan Eligibility Checks and limits

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.

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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

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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

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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

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Off Cycle Work Bench

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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

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Third Party Deductions

Deductions

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Claims Processing
Processing reimbursements to the employee in regular or off cycle payroll run
Eligibility Types Amount Numbers e.g. Rs. 24000 for Medical Reimbursement 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

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Claims Processing Data Entry

Data Upload from External File

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Claims Processing Results

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Claims Processing Balance Reporting

Claims Processing Balance Reporting

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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

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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

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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

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Salary Packaging

Single

Interface for Infotypes and limits validity

Eligibility Payroll

simulation for take home pay analysis

Individual

eligibility definition for

claims

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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.

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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

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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.
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DA calculations
Calculation rules defined for a Allowance Grouping

CPI Value for the DA Index codes

Fixed DA Variable DA
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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.

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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

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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

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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

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Mid Year Go Live

Pre go live periods T558B

Value from the legacy system

T558C

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Payroll run with schema INLK

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Sample Payslip

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THANK YOU

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