The document provides an overview of the key components and functionality of SAP's Indian Payroll module. It describes the objectives of the payroll component, introduces key terms and definitions, and outlines the statutory compliance features. The summary includes descriptions of the payroll structure, wage structure, infotypes, payroll processes, and coverage of components like taxes, allowances, and benefits.

1. SAP India Payroll

2. Objective
 To understand the key business processes of the Indian
Payroll component of mySAPHCM.
 To gain understanding of the key terms and definitions of
the Indian Payroll component of mySAP HCM.
 To provide localization of Indian Payroll according to
statutory compliance in India.
 This component enables the running of the payroll for all
employees in line with Indian legal and business
requirements.
2

3. Introduction
Payroll Coverage - Overview
Payroll Structure
Wage Structure
Payroll Related Infotypes
Payroll Coverage – Detailed
Payroll Reporting

4. Introduction
4

5. Process Flow
INPUT CALC RESULTS OUTPUT
•Master data
Gross Net Cluster
•Time Data •Statutory Reporting
• Earnings
•Past Data •Monthly
• Perks •RT
•Cumulations •Half yearly
• Income Tax •CRT •Annual
• Prof Tax
• PF
•Interfaces
• Recoveries
•FI/CO posting
•Bank transfer
•Payment of taxes
•Statutory payments
•Third party deductions
5

6. Introduction
Payroll Coverage - Overview
Payroll Structure
Wage Structure
Payroll Related Infotypes
Payroll Coverage – Detailed
Payroll Reporting
6

7. Payroll functional coverage - Legal
 Income Tax
 Professional Tax
 Provident Fund
 Payment of Gratuity
 Payment of Bonus
 ESI
 Labour Welfare Fund
7

8. Payroll functional coverage – Business
 Previous Employment Tax  Loans
 Income from other sources  Furniture
 Basic salary & increments  Other non -annual allowances
 Housing  Claims processing
 Car & Conveyance  Flexible Packages
 Medical & other  Full & Final settlement
reimbursements  Reports
 Leave Travel Allowance
 Dearness Allowance
 Other allowances
8

9. Payroll India - Vital statistics
 Modified International info types
 12 India specific info types
 60 Indian tables
 Rules, schemas, Payroll Driver
 4 Indian valuation methods
9

10. Introduction
Payroll Coverage - Overview
Payroll Structure
Wage Structure
Payroll Related Infotypes
Payroll Coverage – Detailed
Payroll Reporting
10

11. Payroll Structure
Payroll Structure consist of the
following:
 Period Parameters
 Payroll Periods
 Payroll Area
 Control Record
11

12. Period Parameters
 The period parameter determines whether payroll is run monthly,
bi-monthly, weekly or for several weeks. Each period parameter
used is assigned to a time unit. The values for the time units are
defined (monthly, semi-monthly, weekly, bi-weekly, every four
weeks, and annually.)
12

13. Payroll Periods
Payroll periods are generated for each combination of period parameters
and date modifiers assigned to a payroll area.
All periods within the specified time interval are defined based on the
period parameter.
The start date and end date for each period is defined and the payday is
calculated using a rule entered as a parameter.
The payroll year and period define the exact dates for the payroll period.
13

14. Payroll Area
 A payroll area is a unit
containing all employees for
whom a payroll runs at the
same time, for example,
weekly or monthly.
 The payroll is run per payroll
area. Each payroll area
determines:
o Specific dates for which
payroll runs.
o The earliest period for
which retroactive
accounting is possible.
14

15. Control Record
 A control record is created
for every payroll area. This
control record controls the
individual stages of
payroll.
15

16. Control Record : Periods
16

17. Retroactive Accounting
17

18. Introduction
Payroll Coverage - Overview
Payroll Structure
Wage Structure
Payroll Related Infotypes
Payroll Coverage – Detailed
Payroll Reporting
18

19. Wage structure - concepts
1§ 2
$
Earning/Deduction
Payable/Non Payable
Wage Types 1..n Taxable/Non Taxable
Recurring /Non Recurring
Attendance Based
Calculation / Entry
Allowance Grouping
% 3
Employee
Parameters like Location, Grade etc..
19

20. Wage structure - concepts
1 § 2$
 Wage Elements - salary components
 e.g. basic pay / HRA etc
 No restriction to number of wage elements
 Manually entered or computed by system
 e.g. PF - 12%(Basic + DA)
 Payment or deduction
 Wage type
% 3
 Normal payment- Basic
 Recurring payment - Overtime
 Additional payment -Bonus.
20

21. 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.
% 3  Direct integration to FI and CO
 Online or batch processing
 Parallel payroll runs (on different Appl. Servers)
21

22. Pay structure - concepts
1 § 2$



Payscale type - based on industry/ business
 e.g.Oil / Power / IT
Payscale Area - based on location
 e.g. Plant / Head office
Payscale group - on salary grade
% 3
 eg. Grade A etc
 Payscale level - further classification
 e.g. Sales / Non sales etc.
22

23. Allowance Grouping
IT 0008
IT 0001 Pay Scale Type / Area /
Employee Sub Group Group / Level
Allowance Grouping
+ Micro Criteria
+ Customer Infotypes
• Wage types
• Processing Rules
• Quantum 23

24. Indirect Valuation Module
HRA = 40% of
HRA = Rs.6000
Fixed Value Factor of WTs Basic Salary +
Rs. 2000
A B
INVAL
D C
Slabs of % Subject to
Basic Salary a limit Medical =
Basic HRA 100% of basic
< 5000 1500 s.t. Rs.15,000
5 -7000 1800
>7000 2500
24

25. Indirect Valuation Module VARIANT A
25

26. Indirect Valuation Module VARIANT B & C
Inval B
M230 = 50% (MB10 + MD10)
+ 500
Inval C
M230 = Minimum of {
50% (MB10 +
MD10)
& 500 }
26

27. Indirect Valuation Module VARIANT D
INVAL B & C
27

28. Micro Level Indirect Valuation
e.g. Children education allowance Rs 250 per child
INVAL A,B,C or D
Feature 40ECS Returns
a Factor
28

29. Introduction
Payroll Coverage - Overview
Payroll Structure
Wage Structure
Payroll Related Infotypes
Payroll Coverage – Detailed
Payroll Reporting
29

30. Infotypes - International
IT 0001 Organizational Assignment
IT 0002 Personal Data
IT 0003 Payroll Status
IT 0007 Planned Working Time
IT 0008 Basic Pay
IT 0009 Bank Details
IT 0014 Recurring Payments / Deductions
IT 0015 Additional Payments
IT 0016 Contract Elements
IT 0019 Monitoring Dates
IT 0021 Family Details *
IT 0057 Membership Fees
IT 0185 Personal IDs *
30

31. Organisational Assignment – IT 0001
 The Organizational
Assignment (0001)
info type deals with
the incorporation of
the employee into
the organizational
structure and the
personnel Enterprise Structure
structure.
 This data is very Personnel Structure
important for the
authorization and
Organisation
control of Payroll. Structure
31

32. Personal Data - IT 0002
 The Personal
Data (0002)
info type stores
data for identifying
an employee/
applicant.
 Number of
children details
are captured will
be considered for
the tax exemption
for child
education.
 Suffix is not
mandatory to
capture in this
info type.
32

33. Payroll Status - IT 0003
 Here, the system
automatically
updates Payroll
accounted to and
latest Master Data
changes etc…
 An administrator
can manually
capture the payroll
run upto or Lock
the personnel
number to exclude
from the Payroll
process during the
payroll period.
33

34. Planned Working Time - IT 0007
 Here, we
capture the
work schedule
of an employee.
34

35. Basic Pay - IT 0008
 Used to
store the
employee‟s
current basic
pay and
basic pay
history
Pay Parameters
Wage Types
35

36. Bank Details - IT 0009
 In this, we
capture the
bank details of
an employee.
36

37. Recurring Payments/Deductions - IT 0014
 Recurring Payments &
Benefits may be in the
form of allowances
made to an employee in
addition to their base
pay.
 Allowances can be
recurring (regular
payments to an
employee) or ad-hoc
(once off irregular
payments).
 Deductions are funds
that are taken from an
employee‟s pay and
forwarded to a deduction
authority e.g. health fund
payments. Depending
on the type of allowance
or deduction, both can
be entered in the Recur.
Payments/Deductions.
37

38. Additional Payments - IT 0015
 This Info type is
used to pay a
specified amount
in a single pay
period. Additional
Payments are
classified as
allowances that
are once-off types
of payments e.g.
.bonus payments
that are made at a
particular time of
the year. Certain
types of
deductions can
also be set up in
Additional
Payments, e.g.
donation
38

39. Contract Elements - IT 0016
 In this info type,
we capture the
notice pay
information and
other information
related to
employment
contract of an
employee.
39

40. Monitoring Dates - IT 0019
 Here, we
capture the
tasks of an
employee
which needs
to be carried
out during his
employment.
40

41. Family/Related Person - IT 0021
 Here, we
capture all the
dependant
details of an
employee to
avail tax benefits
as per Income
Tax law.
 Children
education Children‟s Education
allowance/Hostel / Hostel Allowance
allowance Exemption
captured
information will
be considered
for Children
education
exemption as
per Income tax
rules. 41

42. Membership Fees - IT 0057
 In this
Infotype, we
capture all
the
membership
details of an
employee.
42

43. Personal IDs - IT 0185
 Here, we capture
employee details
related to
Superannuation,
Gratuity,
Personnel
account
number(PAN).
43

44. 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
44

45. Previous Employment Tax Details – IT 0580
 PF contributed
 Sec 10 exemptions
availed
 Medical exemption
claimed
 LTA availed
 Tax deducted so far
45

46. Housing – IT 0581
 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
46

47. Exemptions (Leave Travel Assistance) – IT 0582
 Annual
Reimbursement
based on eligibility
 Definition of block
of 4 years
 Travel Details
 Link to Leave
 Carry forward of
LTA
47

48. Exemptions (Medical Reimbursement) – IT 0582
 Exemption allowed
max upto 15000 per
annum by specifying
an annual amount
for Medical
Reimbursement and
making payments
against claims
submitted by the
employee.
 To avail the
exemption ,we need
to capture the
details of medical
bills in MDA subtype
for Medical
Reimbursements.
48

49. Car & Conveyance - IT 0583
 Employees who are not
entitled for company car
schemes are eligible to
get conveyance
exemption max up to
Rs.800/ - per month.
 Company Car Scheme,
the system calculates
the perquisite value for
an employee only if the
Calculate Perk indicator
is selected in this
infotype.
 If the company is
providing the employee
with a driver or drivers
for a Car Scheme, there
is a perquisite value
attached to a driver. This
perquisite amount for a
driver is stored in the
table view Payroll
Constants (V_T511P)
49

50. Income from other sources – IT 0584
 House property details
 Business profits
 Capital gains
 Dividends
 Interests
50

51. Section 80 Deductions – IT 0585
 Investments made
by employee for
getting tax
exemptions or
rebates
 Maintain the
Section 80/88 limits
51

52. Investments details (Section 88) – IT 0586
 Investments made by employee
for getting tax exemptions or
rebates
 maintain the Section 80/88 limits
52

53. Provident Fund – IT 0587
 Multiple trusts
 Choice of Basis
 Contributions from
Employer
 Contributions from
Employee
 Payment to pension
 Voluntary Provident
Fund
53

54. Other Legal Requirements – IT 0588
 Employee State
Insurance (ESI)
 Professional Tax
 Labour Welfare fund
54

55. Employee State Insurance (ESI)
 Employee State Insurance is a benefit provided to any employee earning
wages below a specified limit to provide for:
-Hospital facilities and out-patient facilities
-Medicines provided by the hospital
-Compensation in case of accident or death
 The ESI fund requires contributions from employees and the employer.
 The amounts would be deducted as per state ESI act.
 Employees earning a salary of less than Rs.6500 are eligible for this benefit.
Table name : V_T7INE3
55

56. Professional Tax
Coverage of Multiple methods for processing
 Frequency - Monthly, Half yearly, Annual
 Salary definition - Wage types, Actual
 Retroactive processing
 Forms for returns
Coverage of states
 South
-Tamilnadu,karnataka,kerala,Andhra Pradesh
 West
- Maharashtra ,Goa,Punjab,Gujarat
 Central
- Madhya Pradesh, Chhattisgarh
 East
- West Bengal, Sikkim, Tripura, Orissa,
Meghalaya, Arunachal Pradesh
 North
- Jammu & Kashmir, Uttar Pradesh, Haryana
56

57. Labour Welfare Fund (LWF)
 Labour Welfare Fund (LWF) is a component of compensation provided to
promote the welfare of labour in the state.
 The eligibility criteria governing the contributions towards Labour Welfare
Fund differ from state to state, but typically people employed to do any
work under the following categories are eligible:
- Skilled / Unskilled
- Manual /Clerical
- Technical/Non- Technical, and
- Must have worked for a period of 30 days during the relevant period
 The contribution rates for LWF are valid for the time period specified and
may vary depending on respective state laws.
57

58. Long term reimbursements – IT 0590
 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
58

59. Nominations – IT 0591
 ESI benefit
 Gratuity benefit
 Provident Fund
benefit
 Pension benefit
59

60. Income tax
 Income tax is deducted from all employee's gross salary as per the
Income Tax Act of 1961.
 The laws for the calculation of taxes are subject to change with
changes in the Income tax act.
 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”
60

61. Introduction
Payroll Coverage - Overview
Payroll Structure
Wage Structure
Payroll Related Infotypes
Payroll Coverage – Detailed
Payroll Reporting
61

62. Company Loans – IT 0045
 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.
 Cumulating of Interest rate advantage as above to annual perk amount.
 Computation of Penal Interest due to Foreclosure of loans .
 Simulation of loan repayment Plan.
62

63. Company Loans – IT 0045 cont…
Eligibility Checks during Loans Info type Creation:
Define Loan Grouping Define Loan Grouping for India – Maintain Loan Eligibility
for India – dependent dependent on loan type and ALGRP Checks and limits
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.
63

64. Company Loans – IT 0045 cont…
 New Options in Loans Info type:
 1. Calculate Repayment Installment
 2. Display Proposed Disbursement Plan
 3. Simulate Penal Interest due to loan foreclosure
64

65. Company Loans – IT 0045 cont…
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
65

66. Off Cycle Payments – IT 0267
 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
66

67. Off Cycle Work Bench
67

68. 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
68

69. Third Party Deductions cont…
Deductions
69

70. 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
70

71. Claims Processing – Data entry
Data Upload
from External
File
71

72. Claims Processing – Results
72

73. Claims Processing – Balance Reporting
Claims Processing – Balance Reporting
73

74. 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
Employer‟s equal
contribution.
 Can be customized for
Section 80/88
exemption
74

75. 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
75

76. 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

77. Salary Packaging cont…
 Single Interface for
Infotypes
 Eligibility and limits
validity
 Payroll simulation for
take home pay analysis
 Individual eligibility
definition for claims
77

78. TDS on BONUS
Tax deducted at source during offcycle runs for bonus payments.  Methods of Tax
Calculation
Maintain Bonus payments in Infotype 0267.  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
 There are 5 different methods to compute TDS. The choice of the payment of
which method bonus
 First parameter maintained in the schema against function
INBTD.
 Multiple bonuses can be paid in the same offcycle run.
 Customer Exit provided to override TDS computed by SAP.
78

79. 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
79

80. 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 wage type and amount for
DA (both fixed and variable) by reading the configuration tables.
80

81. Dearness Allowance – Calculation
Calculation rules defined
for a Allowance Grouping CPI Value for the DA Index codes
Fixed DA
Variable DA
81

82. Basic
 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 Pay scale Group and Pay scale Level
•Minimum appraisal points
•Confirmation Status
•Report program will create a Batch session to update the basic wage type and delimit Basic Pay Infotype (IT0008)
with the reference date.
82

83. 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 Wage type
assigned to an allowance grouping
Basic slabs with the increment range and amount
83

84. Superannuation
 Customer definable
Superannuation trust ID„s
for the various trusts.
 Employer„s Contribution
percentage
 Frequency of contribution
(Monthly/Annual)
 Contributions can be for
calendar year or financial
 Option for making
provisions for monthly
contributions
84

85. Schema, PCR’s and Payroll Driver
The following Schema and PCR‟s are relevant to process Payroll in India.
• Schema
IN00
• Payroll Drivers
HINCALC0
• Personal calculation Rules (PCR‟s)
IEDL - HR-IN: Employer EDLI contrib. as 0.005% (0.01) and multiply by 1lakh
IERC - HR-IN: Employer PF/Pen contributions 1lakh division
INRT - HR-IN: Cumulate Payments for TDS in Regular Run
INVT - HR-IN: Voluntary tax deduction
IPER - HR-IN: Adding the Monthly Perk to Annual Perk
IRET - HR-IN: PF and PT Retro Carry forward in case of Arrears
I
85

86. 86

87. Introduction
Payroll Coverage - Overview
Payroll Structure
Wage Structure
Payroll Related Infotypes
Payroll Coverage – Detailed
Payroll Reporting
87

88. Displaying Payroll Results
• This report enables you to display the
contents of cluster RX, which contains
the detailed payroll results. You can
select the data records using the
following criteria:
• Personnel number
• Start date and end date of the for-period
selection period
• Status indicator of results record
88

89. Remuneration Statement
89

90. Sample Payslip
90

91. Payroll Standard Reports
Statutory Reports Non Statutory Reports
• Form 5 (PF) • Wage Type Statement
• Form 10 (PF) • Wage Type Distribution
• Form 16 (Income tax) • Payroll Journal
• Form 24 (Income tax • Payroll Annual Display
• Form 7 (ESI) • Post Payroll Check Printing
• Form 6 (ESI) • Post Payroll
• Form 3A (PF) • Data Medium Exchange
• Form 6A (PF) • Cash Breakdown List
• P.Tax returns (P.Tax)
• Form 217 2(A)
91

92. Payroll Standard Reports contd..
92

93. Bank Transfers & Cheque Payments
 Employees salaries may be paid by bank transfers where
Company transfers money from its own bank to that of the
employee; or
 Employees may be paid directly by cheque. This practice
should generally be discouraged.
93

94. Any Questions ?
94

95. Thank you
Thank you
95