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  • Getting Started with Payroll for UAE

  • The information contained in this document is current as of the date of publication and subject to change. Because Tally must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Tally, and Tally cannot guarantee the accuracy of any information presented after the date of publication. The information provided herein is general, not according to individual circumstances, and is not intended to substitute for informed professional advice.

    This document is for informational purposes only. TALLY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT AND SHALL NOT BE LIABLE FOR LOSS OR DAMAGE OF WHATEVER NATURE, ARISING OUT OF, OR IN CONNECTION WITH THE USE OF OR INABILITY TO USE THE CONTENT OF THIS PUBLICATION, AND/OR ANY CONDUCT UNDERTAKEN BY PLACING RELIANCE ON THE CONTENTS OF THIS PUBLICATION.

    Complying with all applicable copyright and other intellectual property laws is the responsibility of the user. All rights including copyrights, rights of translation, etc., are vested exclusively with TALLY SOLUTIONS PRIVATE LIMITED. No part of this document may be reproduced, translated, revised, stored in, or introduced into a retrieval system, or transmitted in any form, by any means (electronic, mechanical, photocopying, recording, or otherwise), or for any purpose, without the express written permission of Tally Solutions Pvt. Ltd.

    Tally may have patents, patent applications, trademarks, copyrights, or other intellectual property rights covering subject matter in this document. Except as expressly provided in any written licence agreement from Tally, the furnishing of this document does not give you any licence to these patents, trademarks, copyrights, or other intellectual property.

    2011 Tally Solutions Pvt. Ltd. All rights reserved.

    Tally, Tally 9, Tally9, Tally.ERP, Tally.ERP 9, Shoper, Shoper 9, Shoper POS, Shoper HO, Shoper 9 POS, Shoper 9 HO, TallyDeveloper, Tally Developer, Tally.Developer 9, Tally.NET, Tally Development Environment, Tally Extender, Tally Integrator, Tally Integrated Network, Tally Service Partner, TallyAcademy & Power of Simplicity are either registered trademarks or trademarks of Tally Solutions Pvt. Ltd. in India and/or other countries. All other trademarks are properties of their respective owners.

    Version: Getting Started with Payroll for UAE/Tally.ERP 9 Series A Release 3.0/February 2011

  • i

    ContentsLesson 1: Configuring Payroll in Tally.ERP 9

    1.1 Salient Features of Tally.ERP 9s Payroll ..............................................................................................11.2 Enabling Payroll in Tally.ERP 9 ...............................................................................................................1

    Company Setup .......................................................................................................................................2Step 1: Enable Payroll .............................................................................................................................2Step 2: Enable Payroll Statutory Features ...............................................................................................3

    Lesson 2: Creation of Payroll Masters 2.1 Create Employee Masters ...........................................................................................................................5

    Step 1: Create Employee Categories .......................................................................................................5Step 2: Create Employee Groups ............................................................................................................6Step 3: Creating Employees ....................................................................................................................6

    2.2 Create Payroll Units .....................................................................................................................................82.3 Create Attendance/ Production Types ......................................................................................................8

    Step 1: Create Attendance Type - Absent ...............................................................................................8Step 2: Create Overtime Production Type ..............................................................................................9

    2.4 Create Pay Heads .........................................................................................................................................92.4.1 Earnings Pay Heads Creation ................................................................................................................ 9

    i. Basic Pay Head Creation ....................................................................................................................10 ii. Food Allowance Pay Head Creation ................................................................................................11iii. Overtime Pay Head Creation ...........................................................................................................12iv. Holiday Pay Head Creation ..............................................................................................................14

    2.4.2 Creating Payable and Bank Ledgers .................................................................................................... 14i. Create Salary Payable Ledger ............................................................................................................14ii. Bank Ledger ......................................................................................................................................15

    2.5 Create Salary Details ................................................................................................................................16

    Lesson 3: Processing Payroll3.1 Recording Attendance/Production details ..............................................................................................18

    i. Recording Attendance details .............................................................................................................18ii. Recording Production details ............................................................................................................19

    3.2 Processing Payroll ......................................................................................................................................20Step 1: Processing Salary ......................................................................................................................20

    3.3 Making Payments .......................................................................................................................................22Step 1: Salary Payment ..........................................................................................................................22

    Lesson 4: Payroll Reports4.0.1 Payslip .................................................................................................................................................. 24

    i. Display Single Payslip .......................................................................................................................24ii. Printing Payslip .................................................................................................................................25

    4.0.2 SIF Report ............................................................................................................................................. 26

  • processes. provides the facility to compute the Gratuity

    It allows drill-down facility to voucher level for any kind of alteration. It facilitates computation of arrears pertaining to prior period

    1.2 Enabling Payroll in Tally.ERP 9Enabling Payroll is a two step process in a new Company or in an existing Company:

    Enable PayrollLesson 1: Configuring Payroll in Tally.ERP 9

    Payroll in Tally.ERP 9 is easy to use and can handle all the functional, accounting and statutory requirements of the payroll department.

    1.1 Salient Features of Tally.ERP 9s Payroll The key features of the Payroll functionality in Tally.ERP 9 are as follows:

    It is fully integrated with accounts to give you the benefits of simplified Payroll processing and accounting

    It has user defined classifications and sub-classifications for comprehensive reporting. This may be related to the employees, employee groups, pay components, departments etc.

    It provides the facility to create user-defined earnings and deductions Pay Heads It allows flexible and User-definable criteria for simple or complex calculations It allows unlimited grouping of Payroll Masters It supports user-defined production units i.e., attendance/ production/ time based remuner-

    ation units It provides a flexible payroll processing period It provides comprehensive Cost Centre as well as employee-wise costing reports It ensures an accurate & timely Salary Processing, Employee Statutory Deductions &

    Employer Statutory Contributions with the help of predefined processes It provides auto-fill facility to expedite the Attendance, Payroll & Employer Contributions 1

    Enable Payroll Statutory Features

  • Enabling Payroll in Tally.ERP 9

    Before Enabling the Payroll, you have to create a Company as per the process shown below:Company SetupGo to Gateway of Tally > Company Info. > Create CompanyIn the Company Creation screen,

    Select UAE in the field Statutory compliance for from the List of Countries provided Type 1-4-2010 as Financial Year from date and press Enter

    The completed Company Creation screen is displayed as shown:

    Figure 1.1 Completed Company creation screen

    Press Enter to save

    Step 1: Enable PayrollGo to Gateway of Tally > Press F11: Company Features > press F1: Accounting Features In the F11: Accounting Features screen:

    Set Maintain Payroll to Yes 2

  • Enabling Payroll in Tally.ERP 9

    Set More than ONE Payroll / Cost Category to Yes as shown:

    Figure 1.2 F11: Accounting Features screen

    Press Enter to Accept the F11: Accounting Features screen

    Step 2: Enable Payroll Statutory Features Go to Gateway of Tally > press F11: Company Features > press F3: Statutory & Taxation In Statutory & Taxation Features screen:

    The option More than ONE Payroll / Cost Category is set to Yes, when separate cost categories are created to allocate Employee cost. In cases, where only one cost category i.e., primary cost category is used to allocate multiple cost centres, this option may be set to No. 3

  • Enabling Payroll in Tally.ERP 9

    Enter the Employer Unique ID code for e.g. as shown:

    Figure 1.3 Payroll Statutory &Taxation screen

    Press Enter to Accept the F11: Statutory & Taxation screen.

    Once Payroll feature is available, the Payroll info. and Payroll Vouchers options will be available in Gateway of Tally screen.

    The Employer Unique ID specified will be used to generate the Salary Information File (SIF). 4

  • Figure 2.1 Employee Category Creation screen

    3. Press Enter to Accept and save.Lesson 2: Creation of Payroll Masters

    The following masters should be created for successful Payroll implementation in Tally.ERP 9: Create Employee Masters Create Payroll Units (for Overtime etc.) Create Attendance/Production Types Create Pay Heads Create Payable Ledgers and Bank Ledger Create Salary Details

    2.1 Create Employee MastersStep 1: Create Employee CategoriesTo create an Employee Category:Go to Gateway of Tally > Payroll Info. > Employee Categories > CreateIn the Employee Categories Creation screen,1. Specify the required name in the Name field2. Set the option two options to Yes 5

  • Creation of Payroll Masters

    Step 2: Create Employee GroupsTo create Sales as an Employee Group:Go to Gateway of Tally > Payroll Info. > Employee Groups > CreateIn the Employee Group Creation screen,1. Select Primary Cost Category as the Category (You can also create a separate cost cate-

    gory to segregate Employee Cost based on respective categories)2. Type Sales as the Name of the Employee Group 3. Select the group as Primary

    Figure 2.2 Employee Group Creation screen

    4. Press Enter to Accept and save.5. Similarly, other Employee Groups can also be created.

    Step 3: Creating EmployeesIn Tally.ERP 9, you can record all the necessary information of the employees in the Employee Masters. Tally.ERP 9 also allows to enter the Statutory, Expat and Contract details for employees. To display the options for entering the Statutory, Expat and Contract details enable these options from the Company Configuration screen as explained below:Go to Gateway of Tally > F12:Configure > Payroll ConfigurationSet the following options:

    Show NI Number to Yes to capture the Employee Unique ID details Show Passport & Visa Details to Yes

    The option to create the Employee Categories is available only in Release 1.8 onwards. For earlier releases, you can create the Cost Category from Accounts Info. menu.

    By default Primary Cost Category is provided. 6

  • Creation of Payroll Masters

    Show Contact Details to Yes

    Figure 2.3 F12: Payroll Configuration screen

    Press Enter to AcceptTo create the Employees,Go to Gateway of Tally > Payroll Info. > Employees > Create1. Select the Primary Cost Category as the Category2. Type the Name of the Employee3. Specify the Name of the Employee Group as e.g. Administration in the field Under 4. Specify the Date of Joining for the Employee5. Type the other details for the Employee as shown:

    Figure 2.4 Employee Creation screen

    Agent ID has been provided in the Employee Master if the Employee does not have the bank account in the Employers bank. The specified Agent ID will appear in the SIF report. 7

    6. Press Enter to Accept the screenWhen Agent ID is empty the Employer's Bank code will appear in SIF report.

  • Creation of Payroll Masters

    Similarly, all other Employees can also be created.

    2.2 Create Payroll UnitsGo to Gateway of Tally > Payroll Info. > Attendance / Production Types > Create1. Type is defaulted to Simple, select Compound to create a Compound Unit.2. Specify the Symbol as Hrs3. Specify Hours as Formal Name4. Specify 2 as the Number of Decimal Places

    5. Press Enter to Accept the Unit creation screen.

    2.3 Create Attendance/ Production TypesStep 1: Create Attendance Type - AbsentGo to Gateway of Tally > Payroll Info. > Attendance / Production Types > Create1. Type Absent as the Name of the Attendance type2. Specify the group as Primary in the field Under.3. Select Leave without Pay as the Attendance Type and the Period Type appears as Days,

    by default. 8

    Figure 2.5 Attendance/ Production Type Creation screen

    4. Press Enter to Accept the Attendance Type Creation screen.

  • Creation of Payroll Masters

    Step 2: Create Overtime Production Type While creating the Overtime as a Production Type select the required Unit.The completed Overtime - Production Type Creation screen is displayed as shown below:

    Figure 2.6 Overtime - Production Type Creation screen

    2.4 Create Pay HeadsTally.ERP 9 consists of the following preset Pay Head types to create different Pay Heads:

    1. Earnings for Employees2. Deductions from Employees3. Employees Statutory Deductions4. Employers Statutory Contributions5. Gratuity6. Loans and Advances7. Reimbursements to Employees

    2.4.1 Earnings Pay Heads CreationCreate the following Earnings Pay Heads

    Basic Food Allowance Overtime

    Its necessary to capture the Leave without Pay Days to compute and generate the SIF file. Hence, the Absent Attendance Type should be created to record the Attend-ance. 9

    Holiday Pay

  • Creation of Payroll Masters

    i. Basic Pay Head CreationGo to Gateway of Tally > Payroll Info. > Pay Heads > CreateIn the Pay Heads Creation screen,1. Type Basic as the Name of the Pay Head2. Select Earnings for Employees in the field Pay Head Type3. Select Fixed as the Income Type from the list of Income Types available4. Specify the group as Indirect Expenses in the field Under and press Enter5. Set Affect Net Salary to Yes 6. Specify Basic in the field Name to appear in Payslip 7. Set Use for Gratuity to No8. Select On Attendance in the field Calculation Type and press Enter9. Select Not Applicable in the field Attendance/ Leave with Pay10.Select Absent in the field Leave without Pay11.Select Months in Calculation period field and press Enter12.Specify Months of required number of Days (e.g. 22 days)13.Select Normal Rounding as the Rounding Method and press Enter.14.Specify 1 as the rounding Limit (The Rounding limit allows the value to be in multiples of the

    limit specified and is based on the Rounding Method selected)

    The completed Basic Pay Head Creation screen is displayed as shown: 10

    Figure 2.7 Completed Basic Pay Head Creation screen

  • Creation of Payroll Masters

    15.Press Enter to Accept the screen.

    ii. Food Allowance Pay Head CreationIn the Pay Heads Creation screen,1. Type Food Allowance as the Name of the Pay Head2. Select Earnings for Employees in the field Pay Head Type3. Select Fixed as the Income Type from the list of Income Types available4. Specify the group as Indirect Expenses in the field Under and press Enter5. Set Affect Net Salary to Yes 6. Specify Food Allowance in the field Name to appear in Payslip 7. Set Use for Gratuity to No8. Select On Attendance in the field Calculation Type and press Enter9. Select Not Applicable in the field Attendance/ Leave with Pay10.Select Absent in the field Leave without Pay11.Select Months in Calculation period field and press Enter12.Specify Months of required number of Days (e.g. 22 days)13.Select Normal Rounding as the Rounding Method and press Enter.14.Specify 1 as the rounding Limit (The Rounding limit allows the value to be in multiples of the

    limit specified and is based on the Rounding Method selected)

    If the Attendance Based Pay Heads (e.g. Basic) is created on present (Leave with Pay) then its necessary to record the Attendance before processing the Payroll. If the Basic Pay Head is created with Absent (Leave without Pay), then you have to record the Attendance only when the Employees are absent. 11

  • Creation of Payroll Masters

    The completed Food Allowance Pay Head Creation screen is displayed as shown:

    Figure 2.8 Completed Food All own ace Pay Head Creation screen

    15.Press Enter to Accept the screen

    iii. Overtime Pay Head CreationSimilarly, Overtime Pay Head can be created with Income Type as Variable and Calculation Type as Production. 12

  • Creation of Payroll Masters

    The completed Overtime Pay Head Creation screen is displayed as shown:

    Figure 2.9 Overtime Pay Head Creation screen

    Press Enter to Accept the screen. 13

  • Creation of Payroll Masters

    iv. Holiday Pay Head CreationSimilarly, create the Holiday Pay Head with Calculation Type as User Defined Value.

    Figure 2.10 Holiday Pay Head Creation

    2.4.2 Creating Payable and Bank LedgersThe following Ledgers needs to be created:

    Salary Payable Bank

    i. Create Salary Payable LedgerGo to Gateway of Tally > Payroll Info. > Pay Heads > Create1. Type Salary Payable in the Name field2. In the Pay Head Type field select Not Applicable3. Specify the group as Current Liabilities in the Under field and press Enter 14

  • Creation of Payroll Masters

    Figure 2.11 Salary Payable Ledger Creation

    Press Enter to accept

    ii. Bank LedgerGo to Gateway of Tally > Accounts Info. >Ledgers > Create1. Type Salary Payable in the Name field2. Specify the group as Bank Accounts in the Under field and press Enter3. Specify the Effective date of Reconciliation as required e.g. 1.04.2010.4. Specify the A/c. No. as 027825647865. Specify Dubai as Branch Name 6. Specify 302620122 as the Bank Code

    The completed Bank Ledger Creation screen is displayed as shown: 15

  • Creation of Payroll Masters

    Figure 2.12 Completed Bank Ledger Creation

    7. Press Enter to accept.

    2.5 Create Salary DetailsGo to Gateway of Tally > Payroll Info. > Salary Details > Create1. Select the required Employee from the List of Employees and press Enter

    In the Salary Details screen, The Effective date is entered as 01-04-2010 by default based on the Date of Joining

    entered in the Employee Master Select Basic as the Pay Head from the List of Pay Heads Specify the required amount in the Rate field e.g. 10000 The Attendance units, Pay Head Type and Calculation Type appears by default

    2. Select Food Allowance as second Pay Head Specify Rate as 500 and press Enter

    3. Select Overtime as the Pay Head Specify the required amount in the Rate (e.g. 100) and press Enter 16

    4. Select Holiday Pay as the Pay Head and press Enter

  • Creation of Payroll Masters

    The completed Salary Details Creation screen is displayed as shown:

    Figure 2.13 Completed Salary Details screen

    Similarly, Pay Structure for all other Employees can also be created.

    Tally.ERP 9 also provides the flexibility to create the Salary Details for an Employee Group and copy the same to the individual Employees. 17

  • Select Absent as Attendance Type in the Attendance/ Production Type field

    Specify the required number of days in the Default Value to Fill (this will be prefilled for

    all Employees)Lesson 3: Processing Payroll

    A Typical, Payroll Process comprises of the following activities: Recording of Attendance and Production details (on time / work) Processing Payroll Vouchers

    Process Payroll Payment of Salaries

    Payment of Salaries

    3.1 Recording Attendance/Production detailsWhile using the Attendance Auto Fill feature, two separate Attendance Vouchers needs to be created to record the Attendance details.i. Recording Attendance detailsGo to Gateway of Tally > Payroll Vouchers1. Press Ctrl+F5 for Attendance Voucher2. Press Alt+A (Attendance Auto Fill) to prefill employee Attendance details

    In the Attendance Auto Fill screen,Specify the Voucher DateSelect Primary Cost Category as Employee CategorySelect All Items as Employee/ Group 18

    Figure 3.1 Attendance Auto Fill with List of Attendance Type

  • Processing Payroll in Tally.ERP 9

    Press Enter to accept the screenBy default 0 days will be prefilled for all Employees in the Attendance Voucher.3. Specify the attendance details for each employee4. Press Enter 5. Enter the details of the transaction in the Narration field

    The completed Attendance Voucher Creation for Present Attendance is displayed as shown:

    Figure 3.2 Completed Attendance Voucher Screen

    6. Press Enter to accept the completed Attendance Voucher screen.

    ii. Recording Production detailsRecord the Overtime details in the same manner like recording the attendance details by specify-ing the actual number of hours each Employee has done overtime. 19

  • Processing Payroll in Tally.ERP 9

    The completed Attendance Voucher for Overtime Hours is displayed as shown:

    Figure 3.3 Attendance Voucher Screen - Overtime

    Press Enter to accept

    3.2 Processing PayrollProcessing Payroll involves the following steps:

    Processing Salary

    Step 1: Processing SalaryGo to Gateway of Tally > Payroll Vouchers1. Press Ctrl+F4 for Payroll Voucher2. Press F2, specify the date as 30-4-2010 and press Enter3. Press Alt+A (Payroll Auto Fill) to prefill employee payroll details

    In the Payroll Auto Fill screen,Specify 1-4-2010 in the From fieldSpecify 30-4-2010 in the To field Select All Items as Employee/Group 20

  • Processing Payroll in Tally.ERP 9

    Select Salary Payable in the Payroll Ledger field

    Figure 3.4 Payroll Auto Fill

    Press Enter to prefill the pay values for all the Pay Heads except the User Defined (Holiday Pay).

    4. Press Enter and specify the pay values for the pay heads defined as user-definable values against each employee (in this case, define the Holiday Pay)

    e.g. specify 1000 as Holiday Pay for Ali Al Rubaye and 1500 for Irfan Ulhaq Chaud-hry and press Enter

    Figure 3.5 Completed Payroll Voucher

    5. Press Enter to accept. 21

  • Processing Payroll in Tally.ERP 9

    3.3 Making PaymentsAfter successfully processing the payroll, the following Payments needs to be made:

    Payment of Salary

    Step 1: Salary PaymentGo to Gateway of Tally > Accounting Vouchers 1. Press F5 for Payment Voucher2. Press Alt+A (Payroll Auto Fill) to prefill employee payroll details

    In the Payment Auto Fill screen,Specify 01-04-2010 as From periodSpecify 31-04-2010 as To periodSpecify 30-4-2010 as Voucher DateSelect Primary Cost Category in the Employee Category fieldSelect All Items in the Employee/Group field Select HDFC Bank in the Bank / Cash Ledger field as shown.Select Salary Payable in the Payroll Ledger field

    Figure 3.6 Payment Auto Fill screen

    3. Press Enter and the employee payroll details will appear by default.4. Enter the details of the transactions in the Narration field 22

  • Processing Payroll in Tally.ERP 9

    The completed Payroll Payment Entry screen is displayed as shown:

    Figure 3.7 Payment Voucher

    5. Press Enter to accept. 23

  • 4.0.1 Payslip

    i. Display Single PayslipGo to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payslip > Single Pay Slip

    Select the required Employee and press EnterLesson 4: Payroll Reports

    The following Payroll reports are provided in Tally.ERP 9:

    Statements of PayrollPay SlipPaySheetPayroll StatementPayment AdvicePayroll RegisterEmployee ProfileEmployee Pay Head Breakup

    Attendance Sheet Attendance Register Expat Reports Gratuity SIF Report

    The process to generate some of the important reports is explained in the coming sections. 24

  • Payroll Reports

    The Payslip for the selected employee is displayed as shown:

    Figure 4.1 Payslip

    ii. Printing Payslip Press Alt+P from the Payslip screen, the Printing Payslip screen is displayed as shown: 25

    Figure 4.2 Payslip Print Configuration screen

  • Payroll Reports

    In the Printing Payslip screen, press backspace and enable the required option as required and press Enter to print

    Figure 4.3 Printed Payslip

    4.0.2 SIF Report

    Go to Gateway of Tally > Display > Payroll Reports > SIF1. Language is set to Restricted (ASCII Only) by default2. Format field is prefilled with SDF (Fixed Width)3. Specify the required Location for exporting the file in the Export Location field (by default it will

    be exported to Tally.ERP 9 folder)4. Output file Name is prefilled with the required details so that the file can be uploaded to the

    required web site. This should not be changed.5. Specify the Payment Voucher period in the From and To fields (e.g. 1.4.2010 to 30.4.2010)6. Select the required Employee Category and Employee/Group as required.7. In Bank Ledger field select required Bank (e.g. EMI-NDB)8. Specify the Payroll Voucher Period (e.g. 1.4.2010 to 30.4.2010) in the Date range to Print

    field9. Enter the required text in the Employee Reference field 26

    10.Enter the required date in the Date of Printing field

  • Payroll Reports

    Figure 4.4 SIF Exporting screen

    11.Press Enter to export.

    The SIF file will be exported to the Export Location specified in the export configuration screen shown above. 27

  • Payroll Reports

    Navigate the Export Location to view the exported file as shown below:

    Figure 4.5 Default Tally.ERP 9 folder 28

  • Payroll Reports

    The exported file can be opened in a Notepad or an Excel as shown:

    Figure 4.6 SIF File opened in Notepad

    For all other Payroll reports, refer Tally.ERP 9 Reference Manual (Help file) available with the Product. 29

    Lesson 1: Configuring Payroll in Tally.ERP 91.1 Salient Features of Tally.ERP 9s Payroll1.2 Enabling Payroll in Tally.ERP 9

    Lesson 2: Creation of Payroll Masters2.1 Create Employee Masters2.2 Create Payroll Units2.3 Create Attendance/ Production Types2.4 Create Pay Heads2.4.1 Earnings Pay Heads Creation2.4.2 Creating Payable and Bank Ledgers

    2.5 Create Salary Details

    Lesson 3: Processing Payroll3.1 Recording Attendance/Production details3.2 Processing Payroll3.3 Making Payments

    Lesson 4: Payroll Reports4.0.1 Payslip4.0.2 SIF Report