HRA Monthly Exemption

[Former Member]

Hi Seniors,

HRA Exemption computation at my client:

April Month Legacy Calculation:

Basic	HRA	CA	Total	Rent Paid	HRA Rcvd.	40% of Basic	paid over 10%	Exemption
14849.00	7425.00	4284.00	26558.00	7500.00	7425.00	5940.00	6015.00	5940.00

System is picking up the minimum of 7500.00, 5940.00 and 6015.00

HRA Exemption computation in SAP:

I have done all related configuration right from infotype 8 and 581 to tables like V_512W_D, V_T7INA9, V_T7INT9 AND v_T7INR* series.

I am running payroll for the month of April 2012.

In SAP system is computing as per below logic.

Finding the annual basis
Elig (Annual) = Elig(YTD) + Elig (Curr Mon) + Proj Months * Latest Value

Non Metro HRA Elig :  89,100.00 =       0.00 +   7,425.00 +    1.10E+01 *   7,425.00

Basis (Annual) = Basis(YTD) + Basis (Curr Mon) + Proj Months * Latest Value
  Non Metro HRA Basis : 178,188.00 =       0.00 +  14,849.00 +       0.00 +    1.10E+01 *  14,849.00

Non-Metro HRA Exemption is the minimum of the following three
   71,275.20 =      40.00 * 178,188.00 /     100.00
   89,100.00
   90,000.00 =  90,000.00 - {       0.00 * 178,188.00 /  89,100.00

Total HRA Exemption =  71,275.20

System is computing exemption on annual basis and reflecting in /4E4.

My client wants to have HRA exemption on monthly basis and not on annual basis.

Please guide me.

[raghu_c]

HRA exemption is an annual exemption as per existing IT rules and what the system is doing is correct. This is because IT-581 is maintained for the year or till 31.12.9999. Try maintaining IT-581 monthly and test

Raghu

[Former Member]

Hi,

Do test like the below you will get solution your self.

Step 1: Maintain IT0581 with rented accommodation and select the HRA exemption, Give Rent value also for the first month. Run payroll check Section 10 Exemptions

Step2:Next month change the accommodation type as Company accommodation then check payroll results and check Sec 10 exemptions also in Payslip.

Find difference from both payroll results. Which wage type you need to split for monthly tax exemption for payslip purpose.

You will get one Idea (which is simple thing) how you have to solve this Issue your self.