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Former Member

ESI & Professional Tax not deducted on Arrears

Hi,

Currently I'm facing one issue - ESI & Professional Tax not deducted on Arrears.

I've made changes to configuration for necessary arrear wagetypes - Check Cumulation Class 12 (ESI Basis) and 18 (Ptax Basis)/ Processing Class 72 as 1 (Prorate, cumulate into ESI/PTX/). However the problem is still not resolved.

Please advise me to do the necessary.

Regards,

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    author's profile photo Former Member
    Former Member
    Posted on Jul 08, 2012 at 06:10 AM

    Dear Professional,

    Hope you maintained the 588 info type(ESI-0001 and PTax-0003).

    • As you know,If the ESI basis amount is above 15000 then the person is not eligible for the ESI.Hence ESI will not deducted on arrears amount.
    • Similary if the PTax basis amount in with in the same bracket,the PTax might have been already deducted for that month.Hence there wont be any deduction in the same bracket amount for this month.

    If the above two scenarios are occurred in your system calculation,then we can say that the system is calculating right.

    Regards

    Govardhan Reddy

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  • Posted on Jul 09, 2012 at 04:32 AM

    Hello Macha

    PTAX

    Please check the state for which ptax is deducted. Kindly note that incase it is a gross carryforward state then the amount would be deductedin current month.

    Incase the state is deduction carry, then amount would be deducted in previous as well as current month .

    ESI

    ESI follows the gross cary forward method so only basis amount will be carry forwarded to the current month and the full ESI will be deducted in the current month.

    The negative arreas are not brought forward for ESI and if there is any loss of pay it will not adjust/refund the ESI.This is the standard functionality.

    In case of a retro payroll run, arrears in ESI can be either due to salary changes or IT 588 changes.

    For a case of a salary change, all postive arrears is brought forward to current period and ESI computed(taking arrears into consideration) if the employee is in the esiable period.
    All negative negative arrears due to salary change is brought forward to current period and ESI computed(without taking arrears into consideration) if the employee is in the esiable period.

    Hence,if the arrears sum is positive, it is added to current ESIbasis,otherwise not.

    Please refer to the documentation of function INESI for more details.

    Thanks and Kind Regards

    Ramana

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