How to Create Variable Pay Earning Pay Heads in Tally Prime?

Step: GOT > Create > Pay Heads > Enter

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

· Name–Enter the name of Earning Pay Heads. like I Enter “Variable Pay”

· Pay head type – In this section different type of Pay heads are listed. Select “Variable Pay” 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 overtime is fixed in every month then use this income type. Like overtime of employee is fixed for a particular period.

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

v I select “variable” from both of them income type because Variable Pay is

variable.

· Under – Select “Indirect Expense” because Variable Pay is indirect expense for

Employer.

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

· Name to be displayed in payslip – Left it by Default name “Bonus” 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).

· Set/Alter Income tax details – Set to this option “Yes” for income tax deduction from employee’s Variable Pay.

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 required tax component for Deduct tax

from Variable Pay. Like I select “other Earning/Allowance (Fully Taxable)”.

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

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

On Actual Value – If Variable Pay of Employee will change according to months or year then select this option.

Ø I select “On Actual Value”

§ Deduct TDS across periods – Set to this option “Yes” because Variable Pay is

taxable.

Ø Fill details in Income tax details like following screenshot:

· Calculation Type – Select “As User Defined Value” from list for Variable Pay because it is

decided Employer that how much he Paid Variable Pay Amount to Employee.

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

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

Part 2: Create Deduction Pay heads

Deduction Pay Heads – All amount given by Employer to his employees as Loan or Advance for them. Like Advance Salary, Canteen Expense, etc.

a) Advance Salary Deduction Pay Heads