Payroll

 

Employee Master
Employee Group	Employee Category		Employee
Payroll Master
Payroll Unit		Attendance/ Production Type
Salary Details
Individual Pay Structure		Group Pay Structure
Payroll Process
Attendance Process	Payroll Process		Payroll Reports

Activating Payroll in Tally Prime

Activate the payroll feature of Tally Prime is a simple process.

GOT à F11 à Maintain Payroll-Yes à Enable Statutory Payroll à Yes.

After activation of payroll option as above, these option will appear under master creation as shown below:

Creation of Employee Master

1.      Creation of Employee Categories

An Employee category provides an additional level to classify employees in a logical manner. It is used to classify employees by further level.

GOT> Create> Employee Category

Note: An Employee category can also be used to track the salaries paid to the employees working in specific projects or locations. For example: Head Office & Reginal offices.

2. Creation of Employee's Groups

Group is used to classify the employees as required. Generally, Employees can be

classified based on function, department, location, designation and various other

parameters using Employee Groups.

GOT> Create> Employee Group

 

Dept

Accounts

CRM

Sale & Mkt

R & D

 

Note: Multiple Group can be created through single screen  by chart of account.

3. Creating Employees

Employees master stores important data regarding employees like general info.,

statutory details, Payment details, Passport & VISA details, Contract details etc.

GOT> Create> Employee

HEAD OFFICE

 

 

Same as create for others.

Note: The date of retirement/ resignation option will be available in employee alteration screen only. Once the date of resignation/ retirement is entered, you will get an option to select a reason for leaving also. Date of birth will be used to find if the employee is a senior citizen and gender will be used for the correct Income Tax computation [based on the slab].

 

4. Creation of Payroll Unit

Payroll unit are used to measure attendance or production types namely time, work or quantity. Hence further units are used to calculate Pay Components of Employees. It can be simple and compound both.

GOT> Create> Units (Work)

5. Creating Attendance / Production Types

Attendance or Production Types are used to record the attendance and production data of employees. Further basis on the attendance type different pay components of employees are calculated.

The attendance/ production type may be:

ü  Attendance/ Leave with pay: Should be used to record the positive attendance and leave with pay. [ For Example: Present, Sick Leave etc.]

ü  Leave without pay: Should be used to record negative attendance. [ For example: Absent, Leave without pay etc.]

ü  Production Type: Should be used to record the production details. [For example: Piece Production, Overtime Hours, and so on]

ü  User Defined Calendar Type: Should be used to create user defined calendar which can be later used to specify the variable number of days for each month. [For example: 25 days in january, 24 days in February, 26 days in march and so on]

GOT> Create> Attendance/ Production Type

6. Creating Earning Pay Heads:

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.

GOT> Create> Pay Heads

EARNING PAY HEADS

Pay Head	Under	awl Net Salary	Name in Pay Slip	Use for Gratuity	Calculation Type	Calculation Period/Production Type
Basic	Indirect Expenses	Yes	Basic	Yes	On Attendance	Month (As per Calendar period)
House Rent Allowance	Indirect Expenses	Yes	HRA	No	As Computed Value Month	(40% on Basic)
Conveyance Allowance	Indirect Expenses	Yes	CA	No	Flat Rate	Months (As per Calendar Period)
Overtime	Indirect Expenses	Yes	OT	No	On Production	Overtime
Incentive	Indirect Expenses	Yes	INCNTV	No	As User Defined value	--

 

 

Notes

Create the Following ledgers:

Capital -35000, HDFC Bank- 325000, Loan from Kotak Mahindra Bank- 140000, M/s Alphonsa Industries (cr.)- 30500, 0/s Rent- 25500, Machinery- 185000, Cash- 24000, M/s Srijan Tradin&s (Dr.)- 26000, M/s Vishal Retail (Dr.)- 11000, Profit & Loss A/c- 25000.

7. Employee's PF Deduction Pay Head:

The Complexity of statutory calculation has now become flexible in Tally Prime. For our statutory Pay Heads Type Tally provides predefined values. Here we seen an example of creating Employees PF Contribution.

Select Pay Head Type as per your statutory need from list and then statutory pay type. The rest of options are similar to computation-based pay head shown as below.

Employees Deduction Pay Head

Pay Head	Under	Pay Head Type	Statutory Pay Type	Calculated on	Amount Up to	value
Employees PF Deduction @ (12%)	Current Liabilities	Employees' Statutory Deductions	PF Account	Basic	15000	12%
					>15000	1800
Employees ESI Deduction @(0.75%)	Current Liabilities	Employees' Statutory Deductions	Employee State Insurance	On Current Earnings total	----------	0.75%

PF & ESI

The Employees provident fund and miscellaneous provision act, 1952 is a social security measure aimed at promoting and securing the well-being of the employees by way of provident fund, family pension anc insurance to them. The object of the Act is the institution of the compulsory contributory provident fund to the employees to which both the employee and employer would contribute. The employee's provident fund scheme was accordingly framed under the act and it came in to effect from 1-11-1952. The provisions of the employee's provident fund and Misc. Provision Act, 1952 extends to whole of india except the state of Jammu & kashmir.

Applicability-PF

The act shall apply to every establishment which is a factory engaged in any industry and employing 20 or more persons. All employees in such factory or establishment including contract labour but excluding casual labour and receiving wages (Basic Wages+ DA) up to! 15000 per month will be regulated by the provisions of the Act. Trainee and apprentices are also included in determination of the numerical strength. Once the Act applies to any establishment, it shall continue to be governed by the fact that the number of employees working therein have subsequently fallen below 20.

 

 

Wages

Basic wages include all emoluments earned by an employee while on duty or on leave/holidays with wages in accordance with the terms of contract of employment and paid/payable to him in cash. But the following are excluded from 'basic wages':

(i)                  The cash value of any food concession;

(ii)                 Any dearness allowance or any other allowance by whatever name called paid to the employee on account of rise in cost of living or in respect of work done by him in such employment, for es, HRA, OT, bonus, commission etc.; and

(iii)              Any presents made by the employer.

Membership

An employee on his own, cannot become an EPF Member. To become an EPF member, he has to work in an establishment which is covered under EPF and MP ACT,1952. If 20 or more employees are working in an establishment, EPFO will cover that establishment. If the employer and the employees of an establishment desires, that establishment can voluntarily opt for EPF coverage even if the employees employed therein is less than 20.

If the establishment is not covered and at least 20 employees are working in that establishment, the employee can approach EPFO to cover it.

Contributions

Employees Provident fund scheme takes care of the members at the time of retirement, medical care, housing, family obligations, education of children, finance of insurance policies etc. The employee may contribute 12% of the wages (Basic wages +DA). If the employee so desires, he may opt to contribute a higher rate also. However, the employer does not have to pay the voluntary contribution over and above the statutory rate. The employer's contribution of 12% shall be up 8.33% of wages towards Employee' Pension Scheme and the balance 3.67% towards the provident fund. The employer's contribution to the Employees deposit linked insurance scheme will be 0.5% of the wages. In addition, the employer has to pay @ 0.5%of wages (Min Rs 500) towards administrative charges of EPF. The employee does not have to make any contribution to the pension fund account. These amounts must be paid within 15 days from close of every month with the PF Commissioner into the respective accounts maintained with the State bank of India. If the amount is not paid, employer is liable to pay "damages". In additional, criminal prosecution can also be launched.

PF Contribution

Employee Contribution	Employer Contribution
	12%of wages (3.67% goes to EPF & 8.33% goes to pension fund.)
12% of wages goes to EPF	Administrative charges 0.5% of wages for PF subject to a minimum of Rs 500 EDLI Charges 0.5% of wages

               

 

For Example, the monthly earning of an employee is as follows:

Basic Wages                               8000

DA                                                    4000

HRA                                                 4500

Overtime                                        1400

In this case, Employee's contribution to PF will be — 1440 (12% of Rs. 12000).

Eg. Employer's contribution = 1440 (12% of Rs. 12000) out of which Rs. 440.40 (3.67% of Rs. 12000) will go to EPF and the remaining Rs. 999.60 (8.33% of 12000) will go to the pension fund. Besides that, Employer has to contribute Rs. 60 (0.5% of Rs. 12000) and to Pay Rs. 60 (0.5% of Rs. 12000) as EDLI charges. So the employer has to pay a total of rupees 1560(999.60+ 440.40+60+60). The employee will get rupees 16460 (17900 —1440) as net salary.

Filling of Returns

An employee at the time joining will give declaration to the employer in Form 2. A return in the prescribed form file in respect of employees qualifying to be member of the fund for the first time during the month, shall be filed 15 days of the closer of every month be sent of the CPFC. A monthly return of contribution in the prescribed Form12A has to be filled with the commissioner within 25 days of the close of the month. Annual return of contribution in Form3A & 6A reflecting the employer and employee contribution in respect of each employee is to be submitted within one month of the close of the period of currency to the commissioner.

SI. NO.	Form details	Form Number	Submission Date	Submitted to
1	Declaration form for new joinee	2	At the time of joining	PF Office
2	Monthly contribution of the employer & employees in chalan for previous month	Challan	Before 15th of every month	State bank of India
3	Return of employee qualifying during the last month	5	Before 15th of every month	PF Office
4	Return of the employees lived the organization	10	Before 15th of every month	PF Office
5	Monthly return	12A	Before 15th of every month	PF Office
6	Annual return	3A & 6A	Before 30th Apri	l PF Office
7	Transfer to PF Account	13	At the time of new recruitment	PF Office
8	Final Settlement	19, 10C, 100	At the time of living	PF Office

 

Withdrawal of money form EPF

To withdrawal money from EPF account you have to either — Resign or retire from the establishment and apply for the settlement of PF in Form — 16.

How to get Pension

If you have attained the age of 50 years or more, and if you have completed a total service of 10 years or more and if you are not getting any other EPF pension then you have to apply in Form 10D at the EPF office where you last work through your last employer.

If you want to draw pension from a different place, you have to furnish appropriate Bank / Post Office address in the application from.

 

Pension is distributed through Post Office or through some designated bank only (e.g.: Indian Bank, SBI, Indian Overseas Bank, HDFC Bank, ICICI and UTI Bank).

Four situations when pension can be applied for:

1. On superannuation: Age 58 years or more and at least ten years of service	The member can continue in service while receiving this pension. On attaining 58 Years of age, an EPF member cease to be a member of EPS automatically.
2. Before superannuation	Age between 50 and 58 years at least ten years of service. The member should not be in service.
3. Death of the member	Death while in service or Death while not in service.
4. Permanent disability	Permanently and totally unfit for the employment which the member was doing at the time of such disablement.

 

No pensioner can receive more than one EPF Pension.

Transfer of Account

An employee has to apply in from 13 (Received) thilough the new employer at the EPF office from which transfer is sought clearly stating the new and old EPF Numbers. He has to obtain new EPF number from his New Employer. New EPF Number will be allotted by new employer, not EPFO.

Employees' Deposit Linked Insurance (EDLI) Scheme

On death of a member, the Family Members or Nominee (whoever has the entitlement to claim Provident Fund amount) can claim for EDLI Benefit. Maximum amount payable is Rs 60,000. No amount is taken from the Member for this facility. Employer contributes for this.

 

The minimum monthly pension will be Rs 1,000 per month

Under the new rules, widow of a member will get a minimum monthly pension of Rs 1,000. For children, it fixed at Rs 250 and the orphans it is Rs 750 per month. In addition, to arrive at pension, salary will be average of 60 months last drawn salary instead of earlier rule of last 12 months' average salary.

Insurance coverage to member Increased to Rs 3,00,000

Earlier each member who is part the EPF scheme had an insurance coverage of Rs 1,56,00. This insurance coverage has now risen to Rs 6,00,00.

Employees' State Insurance (ESI)

The main objective of the Employees' State Insurance Act, 1948 is to provide to the workers medical relief, sickness cash benefits, maternity benefits to women workers, pension to the dependents of deceased workers and compensation for fatal and other employment injuries including occupational diseases, in an integrated from through a contributory fund. Where a workman is covered under ESI Scheme, no compensation could be claimed from his employer under the Workmen's Compensation Act in respect of employment injury sustained by him.

Applicability

ESI Act, 1948 is a applicable to:

a) All factories (non seasonal) using power and employing 10 or more pension;

b) Factories not using power employing 20 or more persons;

c) Shops, hotels, restaurants, cinemas, motor transport undertakings and newspaper           establishments employing 20 or more persons.

 

ESI Act has been implemented area wise b staves. Now it has been implemented in all the states expect Nagaland, Manipur, I r ipur a, Sikkim, Arunachal P(adesh and Mizoram. It is also implemented in union territories- Delhi, Chandigarh and Pondicherry.

Employees covered

Every employee (including casual and temporary employees), whether employed directly or through a contractor, who is in receipt of wages up to Rs 21,000 p.m. is entitled to be insured under the E.S.I. Act However, apprentices engaged under the Apprentices Act are not entitled to the E.S.I. Benefits. Coverage of part time employees under the ESI Act will depend on whether they have contract of service or contract for service with the employer. The former is covered whereas the latter are not covered under the ESI Act.

Contribution

E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured. The contribution payable to the Corporation in respect of an employee shall comprise of employer's contribution and employee's contribution at a specified rate. The rates are revised from time to time. Currently, the employee's contribution rate is 0.75% of the wages and that of employer is 3.25% of the total wages. Employees in receipt of a daily wages up to Rs 100 are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

An employer is liable to pay his contribution in respect of every employee and deduct employees' contribution from wages bill and shall pay these contributions to the Corporation within 21 days of next month. Before payment, the employer has to log on to the website www.esic.in and to submit the contribution details for that month. Payment can be online (through SBI Net Banking) or by cash / Cheque / DD. Cheque should be in favour of "SBI — A/c -ESIC A/c No. 1".

Employee's salary	Employee Contribution	Employer Contribution
Rs 2,200-21,000	0.75% of Gross Salary	3.25% of Gross Salary
less than Rs 2,200	Nil

ESI limit has increased to Its 21,000 from Its 15,000 applicable from 1^st  Oct 2016.

For example, the monthly earning of an employee is as follows:

Rs

Basic Wages                                             5,000

DA                                                                  2,500

HRA                                                               2,000

In this case, Employee's deduction to ESI will be Its 71.25 (0.75% of Its 9,500) and employer's contribution will be Its 308.75 (3.25% of Rs 9,500).

Contribution Period and Benefit Period

There are two contribution periods each of six months' duration and two corresponding benefit also of six months' duration as under:

Contribution Period	Corresponding Cash Benefit period
1" April to 30th Sept	1" January to 30th June of the following year
1" Oct. to 31" March	1" July to 31" December of the following year

 

 

 

 

 

 

 

 

Benefits provided to the employees under the provisions of ESI Scheme.

Different Benefits	Benefits as provided by ESI Corporation
Medical Benefit (Treatment)	Full Medical facilities with hospital treatment to the insured person & his family members.
Sickness Benefits	Sickness Benefit in the form of cash compensation at the rate of 70 per cent of wages is payable to insured workers during the periods of certified sickness benefit for a maximum of 91 days in a year. In order to qualify for sickness, benefit the insured worker is required to contribute for 78 days in a contribution of 6 months.
Permanent Disablement Benefit	The benefit is paid at the rate of 90% of wage in the form of monthly payment depending upon the extent of loss of earning capacity as certified by a Medical Board.
Dependent Benefit	Paid at the rate of 90% of wage in the form of monthly payment to the dependents of a deceased Insured person in cases where death occurs due to employment injury or occupational hazards.
Maternity Benefit	Maternity Benefit for confinement/ pregnancy is payable for three months, which is extendable by further one month on medical advice at the rate of full wage subject to contribution for 70 days in the preceding year.
Funeral Expenses	10,000 in lump sum.

 

8. Employer's Contribution Pay Heads:

Employees Contribution Pay Head
Pay Head	Under	Pay Head Type	Statutory Pay Type	Calculated on	Amount Up to		value
Emplover's EPS @ 8.33%	Indirect Expense	Employer's Statutory Contribution	EPS Account  (A/c No. 10)	basic	15000		8.33%
					>15000		1249.50
Employer EPF @ 3.67%	Indirect Expense	Employer's Statutory Contribution	PF Account (A/c No. 1)	Employees PF Deduction @12% Employer's EPS  8.33%	----		100%
PF Adrnin Charges @ 0.5%	Current Liabilities	Emplover's Other charges"	Admin Charges (A/c No. 2)	PF Gross	-----		0.5%
EDL1 Contribution 10.5%	Current Liabilities	E.mplover's Other charges	EDL1Contribution (A/c No. 21)	PF Gross	------	0.5%
Employers ES1 4 3.73%	Indirect Exp	Employer's Statutory Contribution	Employer State Insurance	Current Earning Total	-------	3.75%

 

9. Other Important Pay Head Creation :

Salary Payable à Current Liabilities

Pf Payable à Current Liabilities

ESI Payable à Current Liabilities

10. now create ledger:

Pf Admin Charges à Indirect Expenses

11. Defining Salary Structure

Pay structure of employees is defined through different. The little differences can be altering by individual salary details screen.

GOT> Alter> Define Salary

Salary Structure
Employee	Basic	HRA 40% on Basic		Conveyance	Incentive		Overtime/hr.	PF	ESI
Anup Kundu	Rs.14,800.00	Computed	Rs.2,500.00		User Defined	Rs.100.00		Computed	Computed
Neelu Dutta	Rs.5,200.00	Computed	Rs.1,400.00		N/A	Rs.$0.00		Computed	Computed
Rimjhim Gupta	Rs.14,500.00	Computed	Rs.1,500.00		User Defined	Rs.150.00		Computed	Computed
Gaurav Das	Rs.3,900.00	Computed	Rs.1,950.00		N/A	Rs.200.00		Computed	Computed
Koyel Ghosh	Rs.4,600.00	Computed	Rs.2,000.00		N/A	Rs.120.00		Computed	Computed

 

In Define Salary Press F12:

                                                        Configuration

Allow to Override Slab Percentage :              Yes

Allow copy from Employee                  :              Yes

Show Pay Head Type                                            :             Yes

Show Calculation Type :                       :              Yes

Show Computed On                              :              Yes

Note.1. Same as create Salary Details for other Employees.

          2.Now Change the Date of Retirement of Neelu Dutta to 1.8.2020.

 

Voucher: Recording Attendance/ Production

This voucher allows you to enter attendance, overtime, leave or production details.

Here we pass the attendance voucher first.

1.   Attendance/ Production Voucher:

 GOT> Voucher> F10:More Vouchers> Attendance> Press Ctrl+F

Autofill

Type of transaction Attendance                       :                 Autofill

Voucher Date                                                             :                 31-7-2020

Employee Category                                                :                 Head Office

Employee/Group                                                      :                 All Items

 

Auto Fill Values

Attendance                                                                 :                 Production Type Present

Default Value to Fill                                                                       :                 31

 (Value entered above will be prefilled for all the Employees)

Sort by                                                                             :                 Employee Name

      Absent & leave entry:

      Production entry:

2.   Processing for Payroll Voucher:

GOT> Vouchers> Ctrl+F4 (Payroll Voucher)> F2(31-7)> Press Ctrl+F4

Autofill

Type of transaction Payroll                :                 Autofill

Process for                                                :                 Salary

From (blank for beginning)                :                 1.7-2020

To (blank for end)                                   :                 31-7-2020

Employee Category                               :                 Head Office

Employee/Group                                                      :                 All Items

Sort by                                                         :                 Employee Name

Payroll/bank/cash/Ledger                                  :                 Salary Payable

Process: user defined

3.   Processing For Employer's ESI Contribution:

GOT> Voucher> Ctrl+F4> Ctrl+F

Autofill

Type of transaction                                                 :                 Payroll Autofill

Process for                                                                  :                 ESI Contribution

From (blank for beginning)                                  :                 1-7-2020

To (blank for end)                                                     :                 31-7-2020 

Employee Category                                                :                  Head Office

Employee/Group                                                      :                 All Items

Sort by                                                                           :                 Employee Name

Payroll/Bank/Cash                                                  :                 Ledger ESI Payable

 

 

4.   Now Salary Payment :

GOT> Voucher> F5 (Payment)> F2 (1-8)> CtrI+F

Autofill

Type of transaction                                                 :                 Payroll Autofill

Process for                                                                  :                 Salary Payment

From (blank for beginning)                                  :                 1-7-2020                

To (blank for end)                                                     :                 31-7-2020

Voucher Date                                                            :                 1-8-2020

Employee Category                                                 :                 Head Office

Employee/Group                                                                        :                 All Items

Payroll Ledger                                                            :                 Salary Payable

Bank/Cash Ledger                                                  :                 Hdfc Bank

Use Mode of Payment/Transaction Type      :                 No

 

 

5.   Now PF Payment to EPFO:

GOT> Voucher> Press F5 > Press CTRL+F

Autofill

Type of transaction                                                      :                 Payroll Autofill

Process for                                                                     :                 PF Challan

From (blank for beginning)                                        :                 1.7-2020

To (blank for end)                                                         :                 31.7-2020

Voucher Date                                                                :                 1-8.2020

Employee Category                                                     :                 Head Office

Employee/Group                                                         :                 All Items

Payroll Ledger                                                               :                 PF Payable

Bank/Cash Ledger                                                       :                 HDFC Bank

 

6.   Now Pay ESI to ESIC Department:

GOT> Voucher> F5 (Payment)> CTRL+F

Autofill

Type of transaction                                                      :                 Payroll Autofill

Process for                                                                     :                 ESI Challan

From (blank for beginning)                                        :                 1-7-2020

To (blank for end)                                                         :                 31-7-2020

Voucher Date                                                                :                 1-8-2020

Employee Category                                                     :                 Head Office

Employee/Group                                                         :                 All Items

Payroll Ledger                                                               :                 ESI Payable

Bank/Cash Ledger                                                                         :                 HDFC Bank

 

-Reporting-

Salary Payment Advice:

Now a day's most of companies using direct crediting employee's salary in their bank accounts. For direct crediting the salaries company need to send for the same with payroll details in tally prime payment advice can be generated and print directly at ease.

To print the payment Advice letter:

GOT> Display> Payroll Report> Payment Advice

 

 

Payroll Practice

Payment Advice

The Manager

Hdfc Bank                                                                                                                                                                31-Mar-21

Dear Sir.

Payment Advice from Payroll Practice A/c No. for period 1-Aug-20 to 31-Aug-20

Please make the payroll transfer from above account number to the below mentioned account numbers towards employee salaries:

SI. No.	Name of the Employee	Account No.	Amount
1.	Neelu Datta	162014589236025	7. .90
2.	Anup Kundu	164851203148523	23,527.90
3.	Rimjhim Gupta	164852013245870	22.857.50
4.	Gaurav Das	168594625630124	8.43142
5.	Koyel Ghosh	168594652301458	9,003.79
Total			71,811.51
Amount (in words) : INR Seventy One Thousand Eight Hundred Eleven and Fifty One paise

 

            Yours Sincerely

            For Payroll Practice

 

           Authorized Signatory

 

Print and View Pay Slip:

To Provide pay Slip to employees, you can view and print it from Tally.

GOT> Display> Payroll Reports> Pay Slip