Apart from salary expenses an employer need to pay some amount to government also towards employees benefit as per govt act or rules such as Employees providentfund share, ESI shares etc. Every registered organization is liable to comply this. The accountant has a vital role in its accurate calculation and on time payment. Tally will allow you to calculate statutory contribution with complete accuracy and assist you in payment and statutory returns etc.In this lesson we are discussing employer’s statutory contribution pay heads.
Employer ESI contribution @ 4.75%
Being an accountant you know that this is an expense to the company where as employee share is a liability. Employers are liable to pay ESIC @4.75% on total salary for ESI eligible employees. So let us see how ESI share pay head is created.
Select pay heads applicable for the calculation of ESI under field Specified formula
Employer share on EPS @ 8.33%
Below picture will explain you everything perfectly.Employers share EPS is limited to a maximum up to 6500.00 on basic salary. This means employer contribution is limited up to an amount of Rs 541.00. Even if the company is contributing 12% share on more than 6500.00. To know more click here
EPF employer share@3.67%
Out of total 12% contribution, 8.33% goes to EPS account and balance 3.67 % goes to EPF account. Some employer contribute EPF Share on more than the limit 6500.00, In such cases you need to find out total 12% on basic minus employer pension share which is equal to 541.00 fixed to find out the employer share on EPF . To cover such situation we need to create employer EPF share pay head as mentioned in the picture by specifying a formula Employee share on EPF – Employer share on EPF. This will solve the situation. You can read more about EPF calculation here.
EPF Admin charges@ 1.10%
EPF admin charges should be paid on total epf salary towards account # 2. It is the charges paid towards account maintenance expenses.
EDLI Contribution@05%
Employees deposit linked insurance should be paid to a/c # 21
EDLI admin charges @0.01%
You have to create edli admin charges same as above,under pay head info statutory pay type should be selected Admin charges (A/c No 2) and percentage should be 0.01%, rest of the things are same as above.
Next task is defining salary structure of employee and employee group,will be discussed in the next lesson.
Read complete Lesson in our Tally payroll tutorial
Lesson-1 How to process payroll in tally
Lesson-2 Payroll master creation
Lesson-3 Pay head creation
Lesson-4 Employees salary deduction pay head creation
Lesson-5 Employer statutory contributions and other charges pay head creation
Lesson-6 Defining Salary structurein tally for faster data entry
Lesson-7 creating payable ledger and attendance voucher entry
Lesson-8 Processing of Salary PF, ESI
[...] Lesson-5 Employer statutory contributions and other charges pay head creation [...]
[...] Lesson-5 Employer statutory contributions and other charges pay headcreation [...]