Period End Treatment of Balances
Purpose
This component enables the processing of the unclaimed balances at the end of the validity period of a reimbursement wage type.
When an employee claims less than what the employee is eligible for within a validity period, you need to specify how the system must process the unclaimed balances. The unclaimed balances can be monetary (amount), or non-monetary (unit or number) in nature.
For example, an employee is eligible for Rs.10, 000 as Medical Reimbursement, for the period between 1st April 2000 and 31st March 2001. The employee, however, has claimed only Rs.8,000 in this period, and you need to specify how the system must process the remaining Rs.2,000.
The system can process these unclaimed balances in three ways:
· Pay and Tax
In this method, the system treats the unclaimed balances like any other fully taxable allowance of the employee. The system saves the unclaimed amount in a separate reimbursement wage type that you have configured as Pay and Tax.
For example, an employee is eligible for a Medical Reimbursement allowance of Rs.10,000. The employee has submitted proof of expense and claimed Rs. 8,000. The system will store Rs.8,000 in a reimbursement wage type for Medical Reimbursement, and the unclaimed balance of Rs.2,000 in another wage type which has pay and tax component.
You must define the wage type in which the system must store the unclaimed balances of a Reimbursement Type. You can also store the unclaimed amounts of all Reimbursement Types in a common wage type. For more information on configuration of wage type, see the IMG under Payroll India ® Reimbursements, Allowances and Perks ® Maintain Salary Year and Period End Treatment of RAP.
In the Pay and Tax method, the employee receives the total amount that the employee is eligible for. The employee, however, receives the benefit of a tax exemption only for that portion of the benefit, for which the employee has submitted a proof of expense.
Use the Claims Balance Disbursement report (HINCREMT) to process claims using the Pay and Tax method.
· Carry Forward
In this method the system carries forward the unclaimed balance to the next validity period. Depending on the rules of carry forward, you may be able to carry forward the balances to more than one validity period. The employee can claim the carried forward balance in the carried forward validity period(s).
For example, if the unclaimed balance of a Medical Reimbursement is Rs.2,000, then the system carries forward the amount to the next validity period. When the employee makes a claim in the new validity period, the system first processes the claim using the carried forward amount. It uses the reimbursement amount of the new period only after exhausting the carried forward amount.
Depending on the type of reimbursement, the unclaimed amount can be carried forward to more than one validity period. The amounts carried forward from the previous periods are taken up in a chronological order for the claim.
Use the Claims Carry Forward Balance report (HINCREMC) to process claims using the Carry Forward method.
You also have an option to create your own company specific dates, for carrying forward the unclaimed balances, at the end of their validity period. Using this option, you can specify the date until when, in the next validity period, the benefit is available. For more information, refer to the IMG under Payroll India ® Reimbursements Allowances and Perks ® Claims ® User Exit: Determine Carry Forward Dates.
· Lapse
In this method, the unclaimed balances of a Reimbursement Type are not available to the employee at the end of the validity period. In the next validity period, the employee can only claim the eligible amount of that period.
If you have not configured the system to Pay and Tax, or Carry Forward for the unclaimed balances, the unclaimed balances will lapse.
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