How to Create HRA Earning Pay Heads in Tally Prime?
Step: GOT > Create > Pay Heads > Enter
Ø After reaching by follow above step, fill all details to create HRA Pay Heads like,
· Name–Enter the name of Earning Pay Heads. like I Enter “House Rent Allowance”
· Pay head type – In this section different type of Pay heads are listed. Select “Earnings for Employees” from list to create Earning Pay heads.
· Income type – These are two type of Income gain by employee first fixed and second Variable.
§ Fixed – If your employee’s HRA is fixed in every month then use this income type. Like HRA of employee is fixed for a particular period.
§ Variable – – If your employee’s HRA is vary or changes in every month then use this income type
v I select “Fixed” from both of them income type because HRA is fix.
· Under – Select Indirect Expense because HRA is indirect expense for Employer.
· Affect Net Salary – Set to this option “Yes” because HRA Affect net Salary.
· Name to be displayed in payslip – Type name “HRA” to print in Pay slip
· Use for Calculation of Gratuity – Set to this option “No” because Gratuity calculated
only on the basis of (Basic Salary + Dearness allowance).
Ø Set/Alter Income tax details – Set to this option “Yes” for income tax deduction from employee’s HRA
Ø After income tax details set to “Yes” a new window appear in front of you.
Ø In this window select the appropriate option like,
§ Income tax Component – Select the required tax component for your Pay
heads like I select “House Rent Allowance” for HRA form list.
§ Tax Calculation Basis – in this section two option are available
o On Projected Value – If HRA of employee will not change according to months or Year then select this option.
o On Actual Value – If HRA of Employee will change according to months or year then select this option.
Ø I select “On Projected value”
§ Deduct TDS across periods – Set to this option “Yes” because HRA is taxable.
Ø Fill details in Income tax details like following screenshot:
· Calculation Type – Select “As Computed Value” from list for HRA because it is calculated Percentage on Basic Salary value in One Months.
· Calculation Period –select “Months”. Because Conveyance Paid according to Month
wise as a flat value.
· Rounding Method – Select any rounding method to round off Decimal portion of HRA
amount. Like I select “Normal Rounding”.
· Limit – Type Limit amount of rounding to round off according to limit. Like I type “1”.
· Compute – Select “On Specified Formula” Because we Calculate HRA Percentage basis
on Basic Salary.
After Selecting “On Specified formula” a new screen appear like that screenshot:
§ Add Pay Head – Select Basic Salary to calculate HRA value on basis of percentage of basic salary.
· Effective from – Type Date from which you apply HRA rate for employee in Tally prime.
Like I type “1/Jan/2021”.
· Slab Type – Select Percentage to Calculate HRA
· Value – Type Value of Percentage to calculate HRA amount. Like I type “40%”.
Fill all Above details in Pay heads screen to create HRA Earning Pay heads like following screenshot:
Ø Press Enter or Ctrl+A to save this screen.
Note: – HRA Calculated “On Specific Formula” That is On Basic Salary, 50%- for in Metro city and 40% – for in Non-Metro city of Basic Salary
Overtime (OT) Earning Pay Heads