Retroactive Professional Tax
Calculation
Purpose
This process describes how the SAP system computes professional tax during a retroactive payroll run.
Retroactive professional tax calculation is possible for both, an increase and a decrease in salary. A change in one or more of the following infotypes triggers a retroactive payroll run:
· Actions infotype (000)
· Organizational Assignment infotype (0001)
· Planned working time infotype (0007)
· Basic Pay infotype (0008)
· Cost Distribution infotype (00027)
· Other Statutory Deductions infotype (0588), PTX (Professional Tax Eligibility) subtype (0003)
Retroactive processing of professional tax depends on the state or the region, for the in period that triggered the process.
For period is the period for which professional tax is being retroactively calculated. In Period is the period in which, the professional tax calculated for the For period is being deducted from the salary of the employee. For example, the current payroll period is May and the retroactive professional tax is being computed for the month of April. In this case, the For period is April and the In period is May. In May, the In period, the professional tax for April, the For period, is being deducted.
The system processes retroactive professional tax by taking the following factors into consideration:
· State or the region to which an employee belonged in the previous payroll run, for the payroll period under consideration.
· State or the region to which an employee belongs in the current payroll run, for the payroll period under consideration.
· State or region to which the employee belongs in the current period.
If an employee has worked in more than one state in the current period, then the latest state of employment is considered for retroactive processing.
For example, an employee was treated as belonging to Karnataka while processing the payroll for the period of May. Subsequently, the employee was reassigned to Gujarat with retrospective effect for the period of May. Currently, the employee information in the system stands as:
¡ Whole of May in Gujarat
¡ 1st to 15th June in Karnataka
¡ 16th June onwards in Gujarat
Assuming payroll is being run retrospectively for May in June, then:
¡ Karnataka will be the state that the employee belonged to in the previous payroll run (May in May) for a given period (May).
¡ Gujarat is the state that the employee belongs to, in the current payroll run (for May in June) for a given period (May ).
¡ Gujarat is the state that the employee belongs to, in the current payroll period, as the latest state of employment is considered while computing professional tax.
Process Flow
During a retroactive calculation of professional tax, the system:
...
1. Determines whether the state or region for retroactive professional tax calculation period is the same as that in the current professional tax period.
2. Determines the method of retroactive professional tax computation. There are two methods for calculating professional tax, and the method used depends on the state or region in the current professional tax period. The two methods are:
Gross carry forward
Deduction carry forward
You can view and maintain the method of professional tax calculation for a state, in the IMG under Payroll India: Professional Tax ® Maintain Method and Form Layout for PTax Grouping.
3. Determines the professional tax amount for the past periods for a Deduction Carry Forward state. The system:
Calculates the new professional tax amount that is applicable for a past payroll period. It stores the result in a Professional Tax – split period wage type (/3P1)
Computes the difference between the previous results and the current results for the professional tax amount.
Stores the difference in professional tax amount in an Interim Deduction Carry Forward wage type (/ZPG)
Repeats this process for every payroll period in the past, for which you are running a payroll retroactively. The state must however, be a Deduction carry forward state.
In the current payroll period, the system creates a Professional Tax Deduction Carry Forward wage type (/ZP1). In this wage type it stores the sum of all the Interim Deduction Carry Forward wage types (/ZPG).
4. Determines the professional tax basis for the past periods in a Gross carry forward state. In a Gross carry forward method, the system:
Calculates the new professional tax basis for a past payroll period. It stores the result in a Professional Tax Basis wage type (/3P2).
Computes the difference between the previous results and the current results for the professional tax basis.
Stores the difference in the professional tax basis in an Interim Gross Carry Forward wage type (/ZPT).
Repeats this process for every payroll period in the past, for which you are running a payroll retroactively. The state must however, be a Gross carry forward state.
In the current payroll period, the system creates a Professional Tax Basis Arrears wage type (/ZP2) and stores the sum of all the Interim Gross Carry Forward wage types (/ZPT). This amount is taken for further processing in the payroll run for the current period. For more information, refer to Professional Tax Computation.
Refund of Professional Tax
The system computes the professional tax refund amount under the following conditions:
· There is a retroactive change in the state, and the professional tax has already been deducted in the past. For example, you have maintained the information for an employe as having worked in Karnataka untill the 15th April, and in Gujarat from 16th April onwards. The current payroll period is May.
You now change the dates of employment in Karnataka from 15th April to 10th April. In this case, the system computes the refund of professional tax for the period between 10th April and 15th April.
· The employee is working in a Gross Carry Forward state and with retroactive effect, need not pay a professional tax. If the professional tax has already been deducted, the system computes the professional tax refund amount.
While calculating retroactive professional tax for a refund, the system re-computes the professional tax amount for the past periods in a Gross Carry Forward state. It saves the amount refunded to the employee in the /3P1 [ORT] brought forward wage type (/ZPB).
See also: