PY-TW Income Tax on Overtime (SAP Library

PY-TW Income Tax on Overtime

Purpose

According to current tax law, the total overtime hours (non-taxable hours) must not exceed 46 hours each month for male employees and 24 hours for female employees. Therefore, overtime payment for excess hours is listed as other taxable items. The law can change from time to time according to government regulations.

This process describes how the overtime pay of an employee is calculated.

Prerequisites

Overtime data must exist in Create Overtime infotype (2005) or Create Employee Remuneration Information infotype (2010).

Non-taxable overtime hours for male and female employees must exist in Payroll Constants table (V_T511K, payroll constants-OTFEM for female employees and OTMAN for male employees).

Process Flow

The following process describes how overtime is read and stored for tax calculation.

Overtime hours are read from data created in infotype.
According to the Time Wage Type Selection Rule table (V_T510S) and Mapping Overtime Wage Types table (T7TW6A), the total overtime hours are split into two or more wage types, taxable and non-taxable, before and after cutoff-date.

Example

The following example shows how the overtime hours of a male employee is stored in the wage types:

Non-taxable overtime hours for male employees

Total overtime hours

Based on rates set in Table T7TW6A, total overtime hours

= 46 hours

= 50 hours

(from infotype and stored in wage type MO13)

= 46 hours (stored in MO13-non-taxable) +

4 hours (stored in MO03-taxable)