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Former Member

Indian Payroll - LIC Membership Fee_Service Tax

Dear SAP Gurus,

Kindly suggest some solution for the below case related to LIC Membership fee

Requirement: Client is paying LIC premium on behalf of employee and same is been recovering as Membership fee in their every month Payroll. As discussed with client that they wanted to recover the LIC premium amount and Service tax separately and they are paying separately to LIC office.

If we add both service tax and Premium amount in same wage type and recover in Payroll, as per section 88 investments only premium amount is eligible to get the exemption, so we cannot add both the amount and same need to recover separately.

If we recover separately, then we are facing the issue with deduction priorities, if the employee is not having sufficient amount to deduct Premium then system will deduct only service tax amount (i.e employee is having sufficient amount for service tax deduction) and Premium will go for ARRRS, which is not correct i.e without premium amount we are recovering only Service tax amount.

Kindly through some light on the above issue to get the solution.

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2 Answers

  • Best Answer
    Oct 03, 2015 at 06:04 AM

    Hi Antony,

    Kindly let me know Is there any calculation process behind Service tax?

    Based on LIC Membership Fee Is there any calculation?

    If yes, you can directly generate Service tax amount with using PCR with the respective condition (when LIC Membership will Deduct then only deduct Service tax also) including the calculation and Insert this Rule after processing of deduction priorities.

    Regards,

    Venkat Polisetty.

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    • Hi Antony,

      Your query is if Premium is not deducting then service tax should not be deducted.

      And you are using two different wage type. So before the priority table you have to merge the two wage types amount pass that. This wage type will be generated internally and will be played into deduction part from the gross salary as total.

      Say suppose your two wage type is XXXX (LIC Premium) & YYYY (Service Tax). Remove the cumulation class 10 tick from V_512W_D table for this two wage type. Creat a third wage type as ZZZZ as deduction wage type where it's cumulation class 10 will be ticked.

      After function P0057 you will insert the below PCR with PIT function.

      ZTST

      3

      ****

      ADDWT *

      XXXX

      ADDWT *

      AMT= XXXX

      AMT+ YYYY

      ADDWT ZZZZ

      This wage type ZZZZ will be played for deduction and deduction priority case also. Where wage type XXXX will be used for tax exemption case.

      Remove Wage type XXXX & YYYY from the deduction table priority V_51P6 where only insert wage type ZZZZ.

      Check and let me know.

      Regards,

      Sankarsan

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    Former Member
    Oct 03, 2015 at 07:38 AM

    Try this:

    1) Create a new wage type (LIC +Service tax). For this wage type, cumulation class 10 should be checked and for the other two (separate LIC & service tax wage types), uncheck cumulation class 10). This new wage type will be internally generated through PCR.

    2) Write a PCR ZSUM to add the individual LIC & Service tax amounts into this new wage type. The PCR will be something like this:


    *

    <lic wage type>

    ADDWT <new wage type>

    ADDWT *

    *

    <service tax wage type>

    ADDWT <new wage type>

    ADDWT *

    Call the new PCR above the PRPRI function:

    PIT ZSUM <blank> NOAB

    3) In the Deduction priorities table (V_T51p6), do not create entries for the individual LIC & service tax wage types. Instead create an entry for the new wage type.

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