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One time tax deduction

Former Member
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Hi,

Our client want to calculate one time tax on variable components. Around 10 variable WT’s are there.

Scenario is whenever employee gets lump sum amount on any of the variable component or components, tax should be deducted on that month itself for whole amount. The system should check the current slab and this value should be added to the current calculation but tax should be deducted on that particular month for that ad hoc amount based on new slab. But it should not disturb the original tax deduction for the year because of adhoc payment.

Please provide a solution on this.

Regards,

Sai

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Answers (1)

Answers (1)

Former Member
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Hi

I will explain my requirement in detail.

When we get any Bonus or variable pay or incentive, then it should add to gross amount and tax should be deducted based on the slab and same month tax should be deducted for that bonus amount.

Tax amount should not distribute to next months (till march).

In SAP if any incentive/Bonus is given then it will add to gross salary and calculate the tax and distribute the amount equally to next months.

But our client requirement is, bonus amount tax should be calculated on the same month and for next months it should not calculate tax on bonus/incentive.

How to map this requirement in SAP

Regards

Sai

VKP
Contributor
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Hi Sai,

You can use the below mentioned links as reference for this -

Tax deduction for one time payments - ERP Human Capital Management - SCN Wiki

Former Member
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Hi Vishwas

Thxs for the above.

Now i have configured one time tax deduction as below. But still it is not working as per expectation .

In the schema I have kept INBTD function as below.

INBTD BON5  SBON  X      tax on bonus

April month I have run payroll and results are below. Income tax is 1450.

Again I have run offcycle in APR and paid  exgratia 1lac. Icome tax deducted is 20600.

Again payroll is run for MAY month , 1066 is the income tax.

Now in offcycle it has compared with slab based on the slab it has deducted the tax.

example 1lac exgratia on that 20% = 20000

and cess 3%=600 and total is 20600.


Apr AND May month same tax should be deducted as per our requirement.but diffrent amount is deducted here.


438970 in apr taxable income and 1lac in offcycle in APR.

in the regular run of May month it is adjusting the slab, ex :

upto 5lac -


Former Member
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sorry continued here

438970 in apr taxable income and 1lac in offcycle in APR.

Acual results should be :

upto 5lac - means 5lac - 438970 = 61030 on 10%=6103

and remaining 38970 on 20% slab should come. = 7794

6103+7794=13897 should have been deducted on offcycle payment.

and in may month it should have beeen the same amount of income tax deducted in APR.


but it is adjusting the amount in may month. and distributing the amount equally to coming months.


Any setting is required  to meet our requirement.




Former Member
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HI.

As per Vishwas suggestion this is right solution but if we apply these so in future if we required some components then system will not deduct I tax correct. for example... On Bonus wage type we have to deduct one time tax use BON5, but in future if we required Bonus amount then It will create problem I have configured this in DEV but whole cycle is not working properly there is user dieseline is must.

BMs  

former_member350573
Participant
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Hi,

While the above done configuration is correct,we have to modify another rule Inrt and include your wage types to added to the standard tax code Stdr

The rule works when the person getting the money is already in a tax slab.if the employee is in a non taxable range of salary a rule or enhancement needs to put in to check the same

The irregular payment when made to employee calls the rule inrt in payroll run,checks against the Inbtd rule and stdr tax code and deducts tax accordingly in one month..

Regards

Sandhya

former_member350573
Participant
0 Kudos

The above inrt in combination with Inbtd works when the payment is being in a regular payroll run .

Regards

Sandhya

Former Member
0 Kudos

Dear Sandhya,

In this case I have paid bonus rs 50.000.00 in the month of April 2015 and after posting I found that I have made excess amount now in the month of I have to recover Rs 25000.00 as a bonus then system will not work in proper manner.

BMs

former_member350573
Participant
0 Kudos

Dear sir ,

Whatever u have stated is correct.But a deduction wage type configured for 15 infotype with irregular payment selected can be used to handle the issue .I have already done this.as a faced a similar issue and it recovers the bonus and reduces tax as well .the matter was posted to sap and this was advised by sap

Regards

Sandhya

Former Member
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Hi Sandya

I have given our client requirement above. They are paying  many components in the offcycle payment like bonus, variable pay etc.

In the schema I have kept INBTD function as below for one component. Bonus. i have  assigned tax code SBON to my bonus wage type.

 

INBTD BON5  SBON  X      tax on bonus

But as  explained in my above thread, April month tax is 1450. and Apr I have run off cycle and 100000 amount is paid in off cycle. System is calculating tax of 20600( bonus is added to taxable income and based on that amount, slab is calculated on Bonus, it also includes education cess).

In May month regular salary 1066 income tax is calculated.

But as per our requirement  In April and May month regular run tax should be same.(Plz refer my above thread).

1, How do we do it in offcycle run

2, How to do it for all components.

Can you plz give the steps.

Former Member
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Hi All

Can any one give the steps to meet the above requirement.

Regards

Sai

Former Member
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Hi Sai,

What I can see is you are processing for the Month of April. Before that can you please check whether any result is there or not because INBTD function will take the tax rate from the previous payroll result and then it applies on the one time payment component.

But if it is a first run, then system will not calculate as there is no previous result so for that you have to use an User Exit  Determine Income Tax Rate on Bonus Paid through Off Cycle to determine the rate for One time Tax.

Hope this will help you.

Thanks & Regards

Saroj Hial


Former Member
0 Kudos

Hi Saroj

Thxs for the reply. I understand that first run it will not calculate tax since no previous results, But for other months which has previous results , tax should be calculated as below.

When we get any Bonus or variable pay or incentive  in off cycle payment, then it should add to gross amount and tax should be deducted based on the slab(after adding bonus to gross sal) and same month tax should be deducted for that bonus amount.

I have  kept INBTD with BON5 as below.

INBTD BON5  SBON  X      tax on bonus.

Apart from this what else we need to do to calculate the tax as above.

I am not clear of using INRT pcr and STDR tax code.


ex :

may month regular run tax is 1500

Offcycle for June month tax is"x" amount

June month regular run tax is 1500.

Regards

Sai

Former Member
0 Kudos

Hi Sai,

The system will not calculate One time Tax along with regular Tax. If you go inside schema INN1, the function INBTD comes first, then comes INTAX function.

So always INBTD will calculate tax on the one time payment component and generate /460.

Then INTAX function will calculate Tax on the Regular component and then system will be get the tax amount which was calculated under INBTD function and it adds with the /460 amount of the regular tax.

Example: After INBTD Function my /460 = 1000

After INTAX Function /460 = 2000 ( 1000 is coming from INBTD and the other 1000 is from regular tax which got calculated under INTAX).

Hope this will help you.

Thanks & Regards

Saroj Hial