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.

Ø
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%”.

Ø
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