Different deduction methods are used for calculating salary, depending on the type of salary; that is, fixed salary, non-fixed salary or a combination of fixed and non-fixed salary.

An example of a fixed salary is the monthly base salary. The taxable fixed salary amount is stored in wage type /104 and the tax amount is stored in wage type /404.

An example of a non-fixed salary is income from commission. The non-fixed salary amount is stored in wage type /105. It is multiplied by a fixed rate, for example, 6% to get the tax amount and the final value is stored in wage type /405. The fixed rate, for example, 6% is stored in Payroll Constants table (V_T511K).

An example of a fixed and non-fixed salary is the addition of a monthly base salary plus the non-fixed income salary, for example, bonus. The taxable fixed amount plus non-fixed amount (/104 + /105) is stored in wage type /103 and the final tax amount (/404 + /405) is stored in wage type /403.

This process shows the methods for calculating tax as well as the classifications of salary.

You must have created an Income Tax infotype (0353) for all employees.

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