How to Create DA Earning Pay Heads in Tally Prime?

Step: GOT > Create > Pay Heads > Enter

Ø After reaching by follow above step, fill all details to create DA Pay Heads like,

· Name–Enter the name of Earning Pay Heads. like I Enter “Dearness 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 DA is fixed in every month then use this income type. Like DA of employee is fixed for a particular period.

§ Variable – If your employee’s DA is vary or changes in every month then use this income type

v I select “Fixed” from both of them income type because DA is fix.

· Under – Select Indirect Expense because DA is indirect expense for Employer.

· Affect Net Salary – Set to this option “Yes” because DA Affect net Salary.

· Name to be displayed in payslip – Type name “DA” to print in Pay slip

· Use for Calculation of Gratuity – Set to this option “Yes” because Gratuity calculated 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 DA

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 “Dearness Allowance (Considered for Retirement Benefits)” for DA form list.

§ Tax Calculation Basis – in this section two option are available

o On Projected Value – If DA of employee will not change according to months or Year then select this option.

o On Actual Value – If DA 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 DA is taxable.

Ø
Fill details in Income tax details like following screenshot:

· Calculation Type – Select “As Computed Value” from list for DA because it is calculated Percentage on Basic Salary value in One Months.

· Calculation Period –select “Months”. Because DA Paid according to Month wise as a flat value.

· Rounding Method – Select any rounding method to round off Decimal portion of DA

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 DA Percentage basis on Basic Salary.

Ø
After Selecting “On Specified formula” a new screen appear like that screenshot:

§ Add Pay Head – Select Basic Salary to calculate DA value on basis of percentage of basic salary.

· Effective from – Type Date from which you apply DA rate for employee in Tally prime.

Like I type “1/Jan/2021”.

· Slab Type – Select Percentage to Calculate DA

· Value – Type Value of Percentage to calculate DA amount. Like I type “10%”.

Ø
Fill all Above details in Pay heads screen to create DA Earning Pay heads like following screenshot:

Ø Press Enter or Ctrl+A to save this screen.

a) House Rent Allowance (HRA) Earning Pay Heads