Managing payroll of employees is a very tedious task and one of the statutory compliances that make it more complex and difficult. Fortunately, the business solution and accounting software from the Tally Solutions Pvt. Ltd, offers easy management of Payroll in Tally.ERP9.
How is Payroll defined from the scope of accounting viewpoint?
The term (P)ayroll refers to a series of accounting deals and contracts involved in the process of compensating employees for the service rendered after taking all the statutory and non statutory deduction into account, in conformance with the term of employment, company policy and the law of the nation.
Tally.ERP9 Payroll feature is very simple and easy to use. At the same time, users can also set up and implement salary structures, align and automate payroll processes and directly integrate them with the main stream accounting applications.
Tally.ERP9 Payroll provides informationin the prescribed formats like
Payroll Statements, Attendance,Pay Slip, and Overtime Registers, Gratuity, Provident Fund (PF), Employees’ State Insurance or ESI, National Pension Scheme or NPS, Professional Tax (PT), Income Tax (IT), Expat Reports and so on and so forth.
Enabling Payroll in Tally.ERP9
To enable Payroll in Tally.ERP9, follow the below mentioned steps;
Step 1: Go to Gateway of Tally (GOT) àF11: Features à (A)ccounting Features
Step 2: Set Maintain Payroll to Yes.
Step 3: Users can set More than 1 Payroll or Cost (C)ategory to Yes, if users wish to process payroll for multiple (G)roup of employees.
Step 4: Press Enter to Accept the F11: Accounting Features screen.
The option More Than 1 Payroll or Cost Category is set to Yes, when separate are created to allocate (E)mployee cost. In cases, where only 1 cost category i.e., primary cost category is used to allocate multiple Cost Centres, this option may be set to No.
The (P)ayroll info allows the user to set up default (E)mployee and standard (P)ayroll information with common (P)ayroll fields for calculating earnings and deductions.
To access payroll info;
Go to Gateway of Tally (GOT) and then click on Payroll Info.
5 Easy Steps to Generate a Pay slip
Tally.ERP9’s new and improved version of Payroll requires negligible effort for precise processing and it takes only 5 easy steps to process and generates Pay slip in Tally.ERP9
Payroll generally involves the calculation of amounts due for an employee on the following basis;
- Pay on Hourly wages
- Pay on a fixed basis such as certain amount per week, per month and so on and so forth
- Pay to sales persons as commissions
- Reimbursements of expenses such as travel expenses, either as paid by the employee or based on per item rate
- Pay on the basis of number of pieces either produced or manufactured or even sold.
Step 1: Create Employee Masters
Create an Employee Master. Underneath Employee Master create Employee Groups and Master as per their department or designation or even the function they perform.
In Tally.ERP9 the user can record all the necessary information of the employees in the Employee Master. Tally.ERP9 allows users to configure settings from the Employee Creation screen by pressing F12: Configure. To access Payroll Configuration, follow the steps.
Step 1: Go to Gateway of Tally (GOT) àF12: Configure à Payroll Configuration
Step 2: Initiate the following options;
- Show Statutory Details to Yes
- Show Passport and Visa Details to Yes
- Show Contract Details to Yes
Step 3: Press Enter to Accept.
Step 2: Create Payroll Masters
The second step is creating payroll masters. Under payroll masters, there are 2 categories, payroll units and attendance or production types. (A)ttendance or production type records attendance and production details.
Payroll units can be further classified into Simple Payroll Units or individual units such as Day, Week, Month, Hours, Pieces, Box, Numbers, etc., and Compound Payroll Unitswhich are combination of two simple units, i.e., an Hour of 60 Minutes, Month of 28 days, Day of 8 Hrs. Generally, the Pay components are computed based on single or compound payroll units.
Step 3: Create Pay Heads
The components of structured salary are created under Pay Head. This is the third step to payroll. Pay heads takes into consideration the following elements; Earnings, Deductions, Employees’ Statutory Deductions and Employer’s Statutory Contributions.
(P)ay Heads may be broadly considered as Earnings and Deductions from an employee’s point of view. However, from employer’s point of view, these pay heads would still be looked upon as Expense and Liability.
Some examples of Earnings Pay Heads are Basic Salary, Dearness Allowance, City Compensatory Allowance, House Rent Allowance, Night Shift Allowance, Uniform Allowance, and Sales Commission and so on.
Some examples of Deductions pay heads are Employees’ Provident Fund (EPF), Employees’ State Insurance (ESI), Professional Tax, Income Tax, Tax Deducted at Source (TDS), Advances (if any).
The present Pay Head types in Tally.ERP9 are;
- Earnings for Employees
- Deductions from Employees
- Employees’ Statutory Deductions
- Employer’s Statutory Contributions
- Employer’s Other Charges
- Loans and Advances
- Reimbursements to Employees
Step 4: Create Salary Details
(S)alary details constitute the fourth step for the generation of pay slip. The salary detail is further classified into (G)roup (P)ay Structure and Individual Pay Structure.
The (S)alary or compensation Details masters contain information on the (E)mployee (G)roup or individual employee pay structure, comprising of both earnings and deductions pay components for the applicable period.
To define Salary Details for employees;
Go to Gateway of Tally (GOT) à Payroll Info. à Salary Details à Create
Step 5: Process Payroll and Generate Pay slip
Process Payroll is the final step where the pay slip gets generated. This process is further divided into 3 heads; Attendance Process or Vouchers, Payroll Processor Vouchers and Payroll Reports.
Attendance Process or Vouchers
(A)ttendance Voucher is used to record attendance data, based on theProduction typesor Attendance includes present or absent days, overtime hours and so on.
An Attendance Voucher allows the user to record the attendance or production (U)nits for employees. In Tally.ERP 9, the auto-fill facility (Alt + A) is used to pre-fill the required Attendance or Production type data for the selected employee group or employee for the specified period.
Step 1: Go to Gateway of Tally(GOT) àPayroll Vouchers
Step 2: Press Ctrl + F5 for Attendance Voucher
Payroll Processor Vouchers
A payroll voucher is used to record all employee related transactions. It enables the user to compute all the values for the respective Pay Heads i.e. Earnings and Deductions.
To access, Payroll Process or Vouchers;
Step 1: Go to Gateway of Tally (GOT) à Payroll Vouchers
Step 2: Press Ctrl + F4 for Payroll Voucher
In Tally.ERP 9, users can generate the following Payroll related reports.