This component provides for the calculation of Section 80 deduction and Section 88 rebate when payments to external parties are made directly from the payroll of the employee. For example, LIC Premium, Mediclaim. These deductions are in addition to the declarations that an employee makes for the Section 80 and Section 88 contributions through Section 80 Deductions infotype (0585) and Investment Details (Sec88) infotype (0586), respectively. You do not require to maintain the details in these two infotypes for the the Section 80 and Section 88 deductions processed through the payroll.
For Third Party Deductions, you can make an entry through Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014), Additional Payments infotype (0015) and Membership Fees infotype (0057).
If the Third Party Deductions are made through Membership Fees infotype (0057), along with the past and the present payments, the projected payments will also be considered while calculating tax. The amount the employee proposes to contribute in the future months of the financial year is also taken into consideration, by the system, while calculating the total Section 80 and Section 88 contributions.
If you make the Third Party Deductions through Basic Pay infotype (0008), Recur. Payments/Deds. infotype (0014) or Additional Payments infotype (0015), the system will only consider the past and present contributions while calculating tax and not the projected contributions.
· The different types of deductions through Membership Fees infotype (0057) have to be maintained as subtypes of the infotype. To do this, go to the IMG under Payroll India ® Tax ® Third Party Deductions ® Define Membership/Deduction Types.
· If you are making Third Party Deductions through the Membership Fees infotype (0057), you must maintain the wage type for this infotype through the IMG for under Payroll India ® Tax ® Third Party Deductions ® Check entry permissibility for Membership Fees Infotype (0057).
The Third Party Deductions payroll function (INTPD) reads the internal tables S80, S88, P0057 and the wagetypes in the internal table, and updates the internal tables S80 and S88.
If you are making Third Party Deductions and you want the system to calculate tax after taking Section 80/Section 88 contributions into consideration, you must configure the wage types for the different:
· Divisions or the subsections through the IMG for Payroll India ® Tax ® Third Party Deductions ® Configure Wagetypes for Section 80.
· Types of contributions through the IMG for Payroll India ® Tax ® Third Party Deductions ® Configure Wagetypes for Section 88.