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Former Member

Tax calulation for employees without PAN

Mar 23, 2017 at 12:55 PM | 48 Views

Hi SAP Team,

As per the present SAP configuration if an employee with income of INR 3,00,000 has not given any PAN then system is taxing entire INR 3,00,000 @ 20%. System is neither giving Threshold limit benefit nor Rebate u/s87A. This is not tenable as per law.

If you give benefit of both Rebate and threshold then Tax will become zero.

Again, Employees without PAN but with Income of INR 2,49,000 is not taxed anything. Thought its correct but if SAP system is taxing entire 20% on 3,00,000, it should have taxed this as well.

Please understand that Tax rate has to be applied on taxable income and not gross income.

Please change your standard SAP behavior.

HCM Payroll India | FIN Posting and Taxes
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2 Answers

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    Aman Tyagi
    Mar 28, 2017 at 08:48 AM

    Hi Ritesh,

    For an employee without PAN card, Tax Credit will NOT be given. This is as per the Note 2061673. Also, for PAN-less employees, tax is charged at higher rate. If you do not think this is a valid behavior, legally speaking, I suggest you raise an incident with Product Support.

    Best Regards,

    Aman

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    Sai Krishna
    Jul 18, 2017 at 11:49 AM

    Hi,

    SAP has released S note for above case, please refer below S note

    2465886 - Tax rebate u/s 87A for employees with no PAN

    Thanks,

    Sai Krishna

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