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Defining Professional Tax 
This process describes the events involved in setting up the Professional Tax functionality in the SAP system.
Professional Tax calculation varies from one state to another, and you must define the Professional Tax calculation rules applicable to the employees depending on the state in which they are working.
In the system you organize your employee information within Personnel Areas and Personnel Subareas. This identifies the state of employment. Within a state, the employees also need to be grouped into different professional tax groups.
It is depending on the combination of the Personnel Area, Personnel Subarea and the professional tax grouping of the employee, that the system identifies factors such as the:
· Components of the professional tax basis.
· Method and the frequency of calculating and deducting professional tax.
· Salary range for the employee. The system deducts the professional tax amount based on the salary range that an employee falls into. The salary ranges and the tax applicable on a salary range is state specific.
· Format for the professional tax reports
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1. Define Professional Tax groups based on the different regions or states in which your company is located. You can define the different tax groups within a state by taking into account the different reporting needs of that state.
To define the Professional Tax groups, go to the IMG under Payroll India: Professional Tax ® Professional Tax Grouping Details.
2. Assign the Professional Tax Groups to a combination of Personnel Areas and Personnel Subareas. To do so, go to the IMG under Payroll India: Professional Tax ®Assign PTax Groupings for Personnel Areas and SubAreas.
In the standard SAP system, the Personnel Area and Personnel Subarea of the employee determines the state in which the employee is working. Depending on the state, you further group your employees into professional tax groups.
If you want to create your own professional tax groups that go beyond the state boundaries, you can do so through a user exit provided in the. IMG under Payroll India: Statutory Social Contribution ® Labour Welfare fund ®User Exit: Determine Personnel Subarea grp for PTax, LWF, and ESI.
3. Enter the amount of Professional Tax to be deducted for the different salary ranges. The salary ranges and the professional tax amount for a salary range is state specific. The system deducts the Professional Tax of an employee based on the salary code of the employee.
You assign the Professional Tax amount through the IMG under Payroll India: Professional Tax ® Assign amounts for Professional Tax Deduction.
4. Assign the Professional Tax calculation method for a region, the basis type, the frequency, and type of report to be generated by the system. You assign the same in the IMGunder Payroll India: Professional Tax ®Maintain Method and Form Layout for PTax Grouping.
5. If you are following a method other than the standard to calculate Professional Tax, execute the following steps:
a. Implement the Business Add-in (BAdI) HR_IN_CALC_PTX_BASIS to determine the basis of an employee. You can implement this BAdI in the IMG under Payroll India: Professional Tax ® BAdI: Determine Basis for Professional Tax.
b. Implement the Business Add-in (BAdI) HR_IN_CALC_PTX_BASIS to calculate the deduction amount for Professional Tax. You can implement this BAdI in the IMG under Payroll India: Professional Tax ® BAdI: Calculate Professional Tax Deduction Amount.

If you are implementing the above BAdIs, in the IMG activity Payroll India: Professional Tax ® Maintain Method and Form Layout for PTax Groupings(V_T7INP3), leave the following fields blank:
● Method
● Form layout
6. Maintain Cumulation of PTax basis rules INPT and INPB, for cumulating the basis components, including components such as bonus and gratuity. You can maintain the same in the IMG under Payroll India: Professional Tax ® Maintain Cumulation Rules for Professional Tax.
See also: