payroll in tally, how to process payroll in tallyerp9

Simple and complex payroll computation made easy in tally. Tally has evolved flexible option for the benefit of different organization for its different payroll nature and policy. It allows you auto computation of payroll by using predefined value, and flexible pay by enabling user defined value. Statutory forms are also available in tally and you can take printout from the software itself. In this tutorial we will explain payroll computation manually, and then same has been transformed in to Tally. For learning purposes we can divide this tutorial in to two. At first we are going to publish a tutorial on salary based on attendance.

1. Salary Based on attendance

1. Salary based on production or hours worked

Salary based on attendance

Most of the organization follows this method; this method is suitable for office administration, accounting, documentation departments etc. Salary will be calculated based on calendar month, or you can fix 30 days for all months. You can pay salary even 15 days; tally allows you to do so.

Manual payroll calculation

Let us discuss Abc Ltd payroll processing as on 31.05.2009. The company has following salary policies.

1. Payroll calculated on 30 days per month.
2. Leaves are allowed as per Labor rules for example sick leave 8, Casual leave 8, Paid leave 20 per year etc.
3. Loss of pay can be calculated after allowed leave limit in a year.
4. Loss of pay is calculated in proportionate with number days worked after allowed leave limit.

Consider two staff’s salary, MrAnand of sales department and MrKrish of administration department

Calculation of MrAnand Salary

Monthly Salary Structure of MrAnand( Sales Dept.)
Pay heads	Amount
Basic	3750.00
D.A	3500.00
H.R.A	25 % on Basic + DA
Conveyance	3500.00
Entertainment allawance	2500.00
Performance allowance	2500.00
Washing allowance	1500.00

Let us calculate Anand’sMay month salary.

Anand was advanced Rs 3500 against his salary, also two days loss of pay as he has taken leaves above his allowed limit.Hence each pay head has to be divided proportionally for 28 days.

Anand is eligible for only 28 days’ pay. So basic pay calculation will be

Basic = 3750 /30 x 28 = 3500.00

Use the formula on each earning head.

Pay heads	Amount
Basic	3500.00
D.A	3267.00
H.R.A	1692 (Basic+DA = 6766 x 25 %
Conveyance	3267.00
Entertainment allawance	2333.00
Performance allowance	2333.00
Washing allowance	1400.00
Total	17792.00

Anand’s  Salary deduction

As Anand’s monthly salary is higher than ESI Ceiling limit, ie,above 10000.00 he is not eligible for ESI. EPF ceiling limit is fixed to 6500.00; normally epf is calculated on basic+ DA. Which is = 3750+3500=7250 is higher than the limit.  Henceepf is calculated on 6500, only.

Anand Salary Deduction as on 31.05.2009

Deduction head	Amount
ESI contribution	00.00
Anand’s contribution towards EPF= 6500x 12%	780.00
Professional tax	200.00
Salary advance	3500.00
Total	4480.00

Anand’s Net salary for the month of sepRs               17792.00- 4480.00 =13312.00

Nowcalculate employer expense part.

Employer Statutory contribution & other expenses for Anand

Statutory contribution and other expenses	Amount
Esi employer contribution @ 4.75 % ( not eligible for ESI)	00.00
Employer pension scheme @8.33%  on 6500	541.00
EPF employer contribution @ 3.67% on 6500	239.00
EPF admin charges@ 1.10 % a/c No.2 on 6500	71.50
EDLI contribution@0.5% a/c No21 on 6500	32.5.00
EDLI admin charges@ 0.01 a/c No.22 on 6500	0.65.00
Total Employer Liabilty towards ESI, EPF for Mranand	884.65

Salary Calculation of Mr Krishna

Monthly Salary Structure of MrKrishna( Admin Dept.)
Pay heads	Amount
Basic	1250.00
D.A	1450.00
H.R.A	1000.00
Conveyance	1500.00

Krishna has taken 2 days leave with pay as he is still having leave balance.

Krishna salary is below the ESI exemption limit hence he is eligible for ESI.

Krishna Salary Deduction as on 31.05.2009

Deduction head	Amount
Esi contribution 5200 x 1.75 %	91.00
Krishna’s contribution towards Epf = 2700 x 12 %	324.00
Professional tax	60.00
Total	475.00

Krishna’s Net salary for the month of  May 2009 Rs   5200.00- 475.00 =4725.00

Employer Statutory contribution & other expenses for Krishna

Statutory contribution and other expenses	Amount
Esi employer contribution @ 4.75 %  on 5200	247.00
Employer pension scheme @8.33%  on 2700	225.00
EPF employer contribution @ 3.67% on 2700	99.00
EPF admin charges@ 1.10 % a/c No.2 on 2700	29.50
EDLI contribution@0.5% a/c No21 on 2700	13.50
EDLI admin charges@ 0.01 a/c No.22 on 6500	00.35
Total Employer Liabilty towards ESI, EPF for Mranand	614.35

So we have calculated net salary of the employee, Employer statutory liability, Employee’s statutory deduction etc.

Now let us do the payroll in tally ERP9

How to activate Payroll in tally

Gateway of tally » F11» Company Features »Accounting Features.

Set maintain payroll to Yes.

Set More than one payroll/ Cost Category to Yes

Now go to the following screen.

Gateway of tally » F11» Company Features »Statutory& Taxation.

Set Enable payroll statutory to Yes

Set/Alter Payroll statutory details to Yes

Tally will prompt you statutory details.

Don’t change the Eligibility amount Rs 10000.00 until the limit changes as per rules .Enter all the details & save the screen.

Gateway of tally »Press F12»Configuration » Payroll configuration

Now you have successfully activated  payroll . Check gate way menu .payroll info  and payroll vouchers  will displayed . Now we need to enter payroll data and vouchers. I dont want this page too long. The second part is published as Lesson – 2 payroll master creation

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