IMportant::Section 80GG Deduction problem

[#1]

Dear friends,

I am stuck with a problem in payroll which is given below.

System is not considering some conditions, i am illustratiing it below.

<b>when HRA is not paid to an employee by the company & rent is to be exempted from Income.</b>

conditions given by Income tax department.

1. 24,000 yearly

or

2 .25%of total income

OR

3 rent paid in excess of 10 % of total income

Minimum of the above 3 condition is to be considered for exemption.

But when we update that section 80GG amount in Infotype 0585 (rent paid) the system is just deducting complete amount in IT0585 with out checking the above conditions.

Please guide on this issue.

2nd problem is

when Leave encashment is done PF is deducted as usual by 12 % but the same 12 % amount is getting cumulated for 12 months which affects the total taxable income.(technical wage type /434 .

i checked my wage type's all cumulation class,processing class etc..its seems same as SAP standard wage type for leave encashment.

<b>My previous Posted PRoblems are lying Unanswered in this site,please do help me dear friends.</b>.

Really i am in a bad situation.

Is availability of people who know Indian payroll iWELL is so less????

Thanks in Advance.

[Former Member]

Hello Abhilash,

Problem 1: I dont think Payroll India handles this requirement. The value entered in IT 0585 is taken directly for exemption. It assumes it to be a computed value and the system does not check for the conditions mentioned by you. I think you have to handle this on your own. (maybe by a rule )

Problem 2: I dont understand the problem clearly. Do you mean PF deduction (WT /3F6) is getting cumulated into /434? Ideally, the cumulated annual value of /3F6 is added to the Sec 80 C deductions.

If you dont do leave encashment and have just only PF deduction, do you still have the same problem?

A wagetype gets into regular income (WT /124) and eventually into /434 based on Processing Class 20 and Cumulation class 24 setting.

Maybe you can verify futher with your wagetype. SAP standard wagetpe for leave encashment MLE0 is set for PC 20 (specification 😎 and marked for Cum class 25. This means the payment gets into Irregular income (/125) and is never projected.

Regards,

Rajesh.

[Former Member]

Dear Rajesh,

Thanks a lot for answering.

As u had mentioned about Problem 1 ,the same kind of answer was given to me by one senior person my company.I had seen that amount given in 585 is assumed to be already worked amount for tax exemption.

My 2nd Problem : I will eloborate it for better understanding.

Eg: Let me give a scenario.

my leave ancashment amount is 10,000

the PF on this is 12% = 1200

Assume that this leave encashment is done in April , then this amount isof PF 1200 is getting multiplied by 12 and cumulated into that technical wage type of Section 80 C deductions .

So it affects the wage /434 type inturn .Its not getting cumulated into /434,instead its just affecting it to reduce.

if i dont do leave encashment then there is no problem at all.

I compared the processing class and Cumulation & evaluation class of my wage type with SAP standard MLE0. Its correct.

Please throw some light.

[Former Member]

Hello Abhilash,

I think the solution is quite simple. Just remove (unmark) the cumulation class 11(EPF Basis) setting for your leave encashment wagetype.

Please let me know if this solves your problem.

Regards,

Rajesh