Dearness Allowance 

Purpose

This component enables the computation of Dearness Allowance.

Dearness Allowance is a non-statutory allowance that you pay to an employee on a monthly basis. The payment of this allowance relates to the changes in the cost of living in a particular location. The Dearness Allowance is related to the Consumer Price Index (CPI) for a given location, and the state authorities generally revise the CPI on a quarterly basis.

A change in employee status, such as a transfer or a promotion, may affect Dearness Allowance. The allowance consists of a fixed and a variable portion.

For a non-management category, you generally call this component the Dearness Allowance. For a supervisory category, you may call it the Cost Of Living Allowance (COLA).

Integration

DA forms a part of the salary basis for the other components of Payroll India. For example, the Dearness Allowance along with the basic salary typically forms the salary basis for computation of:

·        Income Tax

·        Gratuity

·        Professional Tax

Features

·        Batch Program - DA (Report) (HINIDAB0)

This report computes the Dearness Allowance for a selected range of employees and generates a batch program. Upon execution, the batch program updates the Basic Pay infotype (0008) of the employees.

·        Dearness AllowanceComputations

The standard SAP system provides the following methods for the computation of Dearness Allowance:

¡        Non-Slab based calculation

¡        Basic slab based calculation

¡        Incremental basic slab based calculation

¡        CPI slab based calculation

¡        Incremental CPI slab based calculation

¡        Basic slab based calculation, subject to minimum value

You can configure the Dearness Allowance computation method through the IMG under Payroll India ® Dearness Allowance.