Purpose

This component provides for the computation of:

• Tax in the current financial year, by capturing the salary, exemption, contribution, deduction details of the employee pertaining to the previous employments in the current financial year.

• Tax exemption when the employee separates from the current employment, by capturing certain lifetime exemptions from all previous employers.

Integration

• You must create a Previous Employment Tax Details infotype (0580) record

  • For an employee, whenever a new employee joins your organisation

  • For all employees who have joined your organisation in the past from some other employment, when you are going live with the SAP System.

• The Previous Employment Tax Details payroll function (P0580) reads the Previous Employment Tax Details infotype (0580) and populates the details in the internal table PET .

  • The value entered as the number of times the employee has claimed LTA exemptions, gets stored in the PET internal table as LTAEX field. This LTAEX field indicates the number of times the employee has claimed LTA Exemption with his previous employers for the current block of four years. When you create an Exemptions infotype (0582) LTA subtype record for an employee, the system will check the LTAEX field to see if the employee has claimed an LTA Exemption for this block of four years in his or her previous employment.

  • The indicator for whether the employee has carried forward an LTA claim from the previous block of four years, gets stored in the PET internal table as a checkbox. This indicates whether an LTA Exemption has been carried forward for the employee from the previous block of four years pertaining to his or her previous employers. If you create an Exemptions infotype (0582) LTA subtype record for an employee in the first year of the new block of four years, the system will check the PET internal table to see if the checkbox has been selected or not. If the checkbox has been selected, the exemption granted will be against the carried forward LTA Exemption from the previous block of four years.

    Previous Employment Tax Details payroll function (INPET) processes the internal table PET and generates the following wage types:

  • Prev Gross salary wage type (/4V1) – This wage type stores the amount entered as the salary as per provisions under section 17(1). The amount in Prev Gross salary wage type (/4V1) is added to the current Gross Salary wage type (/416).

  • Val of perk u/s 17(2) wage type (/4VJ) – This wage type stores the amount entered as the value of perquisites under section 17(2). The amount in Val of perk u/s 17(2) wage type (/4VJ) is added to the current Gross Salary wage type (/416).

  • Profts wrt sal u/s 17(3) wage type (/4VK) – This wage type stores the amount entered as the profits in lieu of salary under section 17(3). The amount in Profts wrt sal u/s 17(3) wage type (/4VK) is added to the current Gross Salary wage type (/416).

  • Prev exemp u/s10 wage type (/4V2) – This wage type stores the amount entered as the exemptions under section 10. The amount in Prev exemp u/s10 wage type (/4V2) is added to the current Section 10 exemption wage type (/130).

  • Prev prof. tax paid wage type (/4V3) – This wage type stores the amount entered as the Professional Tax. The amount in Prev prof. tax paid wage type (/4V3) is added to the Professional Tax annual deduction wage type (/422).

  • Prev PF contributed wage type (/4V4) – This wage type stores the amount entered as the Provident Fund. The amount in Prev PF contributed wage type (/4V4) is added to the Annual Provident Fund contribution wage type (/3F6).

  • Prev Tax Deducted wage type (/4V5) – This wage type stores the amount entered as the total Income Tax paid by the employee. The amount in Prev Tax Deducted wage type (/4V5) is added to the Total tax deducted so far wage type (/456).

  • Prev Medical Exempt wage type (/4V6) – This wage type stores the amount entered as the medical exemption claimed by the employee. The amount in Prev Medical Exempt wage type (/4V6) is added to the Medical Reimbursement wage type (/414).

  • Leave Encashment Exemt wage type (/4V7) – This wage type stores the amount entered as the sum of all leave encashment exemptions availed. Leave Encashment Exemt wage type (/4V7) gets processed only on the event of the separation of the employee from your organisation. The value of this wage type gets deducted from the maximum exemption limit for leave encashment exemption.

  • Gratuity Exemption wage type (/4V8) – This wage type stores the amount entered as the total gratuity availed. Gratuity Exemption wage type (/4V8) gets processed only on the event of the separation of the employee from your organisation. The value of this wage type gets deducted from the maximum exemption limit for gratuity exemption amount.

  • VRS Exemption wage type (/4V9) – This wage type stores the amount entered as the Voluntary Retirement Scheme (VRS) exemption amount availed. VRS Exemption wage type (/4V9) gets processed only on the event of the separation of the employee from your organisation. No tax exemption is given, in case the employee has availed of the same with any of the previous employers.

  • Prev Employment Edu Cess wage type (/4PE) – This wage type stores the value of education cess deducted for the financial year at previous place of employment. Previous Employment Tax Details payroll function (INPET) reads the value of Edu Cess Deducted field in Previous Employment Tax Details infotype (0580) to generate this wage type. HR-IN: India Income Tax computations payroll function (INTAX) reads the value of this wage type and adds it to the value of Edu Cess Ded Till Date wage type (/4TE) to generate the Monthly Edu Cess wage type (/4ME).

  • Prev Employment Surcharge wage type (/4PS) – This wage type stores the value of surcharge deducted for the financial year at previous place of employment. Previous Employment Tax Details payroll function (INPET) reads the value of Surcharge Deducted field in Previous Employment Tax Details infotype (0580) to generate this wage type. HR-IN: India Income Tax computations payroll function (INTAX) reads the value of this wage type and adds it to value of Surcharge Ded Till Date wage type (/4TS) to generate the Monthly Surcharge wage type (/4MS).

  • Prev Emp Tax Payable wage type (/4PT) – This wage type stores the value of tax payable deducted for the financial year at previous place of employment. Previous Employment Tax Details payroll function (INPET) reads the values of Income Tax Deducted , Education Cess Deducted and Surcharge Deducted fields in Previous Employment Tax Details infotype (0580) to generate this wage type. HR-IN: India Income Tax computations payroll function (INTAX) reads the value of this wage type and adds it to the value of Tax Payable Ded Till Date wage type (/4TT) to generate the Monthly Tax Payable wage type (/4MT).