Field

Action

Component Details Section

Component Name

In the text box, enter the name of the component. For example: House Rent Allowance, Basic Pay.

The system identifies the component by this name, when calculating payroll.

Note: Enter only alpha-numeric characters, without spaces.

Display Name

In the text box, enter a name for the component, as it should be displayed to PW users. For example, Component name can be HRA, but if the display name is House Rent Allowance, it is visible to PW users in reports and payslip as House Rent Allowance.

Header

Select the check box if the component should be a header in PW display. The component may store any value, but is a text to be displayed as the header of a section in the pay structure definition.

Note 1:            Header name: In order to segregate components into relevant sections while defining pay structures, you can add headers. These headers will be available in bold letters in Manage Pay Structure. We can create different sections of components by using these headers. For example, basic and HRA are categorized as fixed emoluments, therefore, you can create a header named fixed emoluments and then all components that are categorized as fixed emoluments are displayed under this header.

Note 2:            If you have selected the Header check box, only the Component Name and Display Name fields are enabled for admin to enter details because the header is only for display purpose and will have no values.

Category

Select one of the options:

•  Select Fixed, if the component value is fixed and changes only when the employee gets a revision. The amount is payable to the employee every month.

• Select Variable, if the component value is paid to the employee when the organization decides to pay.

Type

Select one of the options:

• Select Earning, if the component value is considered as earning or income to the employee in payroll. On selection of this option, Earning Priority has to be entered:

Earning Priority

• Select Deduction, if the component value is considered as deduction or deducted from the employee’s income in payroll. On selection of this option, the following fields are available and should be configured:

-       Deduction Priority

-       Deduction type

-       Page Layout

Deduction Priority

IT Benefit Type

On the drop-down box, select the required option to avail IT benefit against the component. The available options are: Exemption, Tax adjustment and Deduction.

•  If the component should be exempted from IT, select Exemption. For example, if the component being configured is Conveyance and if IT Benefit Type selected is Exemption, then as per IT rules, the amount corresponding to this component will not be charged to income tax.

•  If the component should be adjusted with tax payments, select Tax Adjustment. For example, if the component being configured is Petrol allowance and if IT Benefit type selected is Tax Adjustment, then as per IT rules, for the amount corresponding to this component, tax amount is adjusted on submission of proofs.

•  If the component should be deducted from IT, select Deduction. For example, if the component being configured is Medical Insurance Premium, and the IT Benefit selected is Deduction, then as per IT rules, the amount corresponding to this component is deducted from the taxable income. This reduces the taxable income by the amount specified for this component.

Proportionate

On the drop-down box, select how the component should be calculated. The options are:   Prorated, Non-Prorated.

• If the calculation should be date based, for example, from the effective date of joining, select Prorated.

•  If the calculation should be from the first day of the month, select Non-Prorated.

Non-Proportionate means calculation is made for the financial year.

Payroll Section

Process Mode

Select from the options whether the component should be considered for Payroll or not.  The options are: Pay and Non-Pay. By default, Pay is selected.

If the component should be considered for payroll process, select Pay. Example: Basic Pay.

If the component should not be considered for payroll process, select Non-Pay. Example: Car Lease scheme.

Income Tax

Select the check box to consider a component for income tax calculation, else clear the check box. The component will appear in Income tax statement only if selected for income tax calculation.

If the Income Tax check box is selected, in the corresponding Income Tax drop-down box, select one of the following: Normal Tax, Net-Off Tax, Grossed-up Tax.

• If the total tax liability on the component should be evenly distributed throughout the financial year, select Normal Tax. For example, on Basic, Special Allowance.

• If the tax liability on the component should be deducted in the same month, select Net-off Tax. For example, on an incentive of 10000, if employee taxable income falls under 10% then tax on 10000 will be (10000*10.3% (Raw tax + education cess)). Then, 10000-1030= 8970 will be paid to employee.

• If the component is a one-time taxable payment, where the tax liability on the component should be borne by the employer on behalf of the employee, select Grossed up Tax. The additional tax liability value arising due to payment of this amount will get added to the earning component which is configured as Grossed up tax. For example, notice buyout.

Perquisites

Select the check box to consider a component for perquisite calculation, else clear the check box.

Note:              If you select the check box, the components appear in FORM 12 BA of Form 16.                        
                    Based on the selection in the drop-down box, the system will calculate the perk                     value and consider the same for income tax calculations.

LOP

Select the check box to consider the component for LOP during payroll processing, else clear the check box.

Note:             If the LOP check box is cleared, loss of pay is not made against the component during payroll processing. For example, if basic salary is 3100 PM and if the employee is absent for 3 days in December, the actual payout should be 2800 if the LOP is selected, else full amount (Rs. 3100) will be paid to the employee.

PF

Select the check box to consider PF calculation for payroll processing, else clear the check box.

Note:   If the PF check box is cleared, the component is not considered for Provident fund calculation during payroll processing.

PT

Select the check box to consider PT calculation for payroll processing, else clear the check box.

Note:   If the PT check box is cleared, the component is not considered for professional tax  
          deduction during payroll processing.

          If the PT check box is selected for Basic, HRA, components, then the system will
          check the selected components’ total earning value and will compare with the
         Professional Tax slab (which is defined at PT Master). Accordingly PT amount will be
         deducted during payroll processing.

ESI

Select the check box to consider the component for ESI calculation during payroll processing, else clear the check box.

Note:     If the ESI check box is cleared, the component is not considered for ESI calculation
             during payroll processing. For example, if the ESI check box is selected for Basic,
            HRA components, then system will check selected components total earning value
            will compare with eligibility value (defined in Control Parameter) accordingly ESI
           amount will be deducted in payroll.

CLA/COA

Displays whether the component is company leased accommodation or company owned accommodation.

Display in Paystructure

Select the check box to display the component in pay structure, else clear the check box.

Display in Payslip

Select the check box to display the component in payslips and payroll reports, else clear the check box.

Round Off

Select the check box to round off the component value to the nearest value, else clear the check box. For example:

Component value is 51.23 is displayed as 51

Component value is 51.56, is displayed as 52

Round Up

Select the check box to round up the component value to the nearest value, else clear the check box. For example:

Component value is 51.23, is displayed as 52

Component value is 51.56, is displayed as 52

Active

Select the Active check box for the component to be active, else clear the check box. The component is visible to employees in PW.

Note:      If the Active check box is cleared, the component is not visible to employees in the
             CTC details.