Tally Accounting
Posted by Asok K Nadhani on

Payroll System Set up in Tally

Payroll System Activation in Tally

To maintain Payroll System, first you should activate Payroll Features for the respective Company. You may maintain Payroll for any type of Company (Accounts Only Company  or Accounts with Inventory).

At Gateway of Tally , Click F11: Features >Accounting Features to get Accounting Features  screen. Under the Cost / Profit Centres Management section, set Yes at Maintain Payroll Features activate Payroll Features.

Payroll Activation in Tally

Consequently, several options related to Payroll get activated at Menus and other relevant places. Now you may start creating Masters &Transaction data, compute Pay & related figures for Payroll, and generate Reports relating to Payroll.

Payroll Statutory Features set up in Tally

If any of the following Statutory features are applicable to the Company, at Statutory Info Company Features, set Yes at Enable Payroll Statutory to activate Statutory Features. Consequently, at Pay Head creation, you get the field Statutory Pay Head Type to select the from the list.

Payroll Statutory Features Set Up in Tally

Payroll Statutory Details set Up in Tally

Having set Yes at Enable Payroll Statutory, you may further set Yes at Set / Alter Payroll Statutory Features to get Payroll Statutory Details screen to set the respective details applicable for the following Statutory Features.

  • Provident Fund
  • Employees State Insurance
  • National Pension Scheme
  • Income Tax

The set up options are discussed in the respective Chapters

Payroll Key Features in Tally

Payroll module is directly linked with Financial Accounting module. The Financial Data created in Payroll Module is instantly reflected in respective Accounting areas. The salient features of Payroll System are listed below :

User definable Earnings & Deductions heads : You may create any number of Pay Heads for Earnings & Deductions appearing  in Payslip, in your own way. Apart from that, you may also create Pay Heads for accounts that are not part of Payslip but are affected with employee payments, like Employer’s Contribution, Administration charges payable for PF, DLI, ESI etc, Gratuity or any other deferred payments, other employee benefits etc .

Pay Heads Linked with Ledger Accounts : Each Pay Head is linked with a distinct Accounts Ledger .

User definable Pay Head Names : You may specify alternate Pay Head names to appear in Payslip and other Pay reports, which may be different from the respective ledger heads. This way, you may customize Pay reports in your own way .

Employee Groups : Employees belonging to similar computation rules may be grouped so that similar rules may be applied to them, offering operational ease and organised reports. Pay slips/ pay reports, pay processing etc may be done for a specific employee or employee group, or can be done for all employees at a stroke. Such flexibility allows to process payroll for small organization of a few employees to large organization with multi level divisions, departments & sections, with equal ease .

Employee Category : Apart from Employee Groups, employees may be classified into independent Categories. In this way, you may get multi level multi directional filtering facility for reporting and pay processing

Employee Specific Computation rules : All rates & applicability rules for each pay head can be distinctly defined for each employee, or group of employees, providing enormous flexibility to define specific rules for any employee / employee group

Pay Computation rules : You get enormous flexible pay computation rules to set up independently for each employee and each pay head like :

  • Attendance based direct computation : Pay may be computed on attendance on Daily / Hourly rates, for any period  
  • Absenteeism based indirect computation : Pay may be indirectly computed after deducting for absenteeism / without pay days, from the monthly rates
  • Slab based based computation : Uniform or multi staged slab based rates may be coupled with any computation rule, to adapt to more complex rules. The rates may be discreet specific amount or percentage based, or even a mix of them within same slab   
  • Inter head dependency rules : You may set up rules to compute pay from the result of other pay heads. For example, PF may be computed on Basic & DA as per specific rules, while Basic & DA gets computed through other independent data, parameters & rules
  • Fixed Rate based computation : You may specify monthly fixed rates to be applied uniformly without any regard to attendance, leave or absenteeism
  • Variable amount figures : For pay heads where the amount varies each month, it may be entered in each pay slip for each employee, on post processing of pay

User definable Time & Production heads : Any number of heads for time recording (like  Attendance, Leave, OT, Absenteeism etc) or production units, may be created & organized into multi level groups

Time  & Production entry Form : For  quick & easy data entry, the Time & Production entry Form may be set for One Employee, Group of Employees or All Employees at a time with employee names carried from Employee Master, in a tabular format with free navigation among Employee Names / Heads for fast entry .

Time & Production based Pay computation : Any head may be computed based on time unit (Month, Day, Hour etc) or production units .

Overtime Computation : You may set several types of Overtime (like Normal, Holiday etc) & applicable rates .

User defined simple & compound Time units : You may create simple time units (like days, Hours) or compound units (like month of 30 days, Day of 7.5 hours etc) for computation involving dual time units .

User defined simple & compound Production units : You may create simple Production Units (like Pcs, Kg) or compound units (like Box of 24 Pcs) for computation involving dual Production units .

Complete Pay Rate History : On Pay revision, the revised Rates are appended (old rates are NOT overwritten) keeping all past history records. So, the lifetime pay rate history is available at any point of time .

Attendance Sheet & Production Register : Provides all sorts of attendance & production reports for a specified period and for specified employee .

Loan & Salary Advance : Multiple Loans may be disbursed and recovered simultaneously, maintaining separate account and loan balances for each employee .

Loan Interest recovery : Loan interest also may be recovered for each loan account from each employee, on total loan amount or reducing balance, in instalments .

Pay Advise through Bank Account Transfers : Bank advise may be printed to disburse Pay through bank transfers .

Manual & Automated Pay voucher : Pay is auto computed and Pay voucher created However,  Pay vouchers may also be manually created, if needed .

Pay Slips : Pay slips may be printed in Vertical & Horizontal formats with YTD figures for each Head . The contents of Payslip and Pay Reports may be configured as desired.

Employee Ledger  : Employee Ledger may be printed with Headwise & Employeewise details breakup .

Columnar Employee Pay Sheet : Employee Pay sheet may be printed in columnar format with separate columns for each pay head  and space for Revenue Stamp so that pay sheet itself may be used for Pay disbursement .

Provident Fund : The reports for Employees contribution (Statutory & Voluntary), DLI, Administration Charges etc, including all Statutory Forms as per P F Rules may be printed .

ESI : The reports for Employees & Employer’s contribution etc., including all Statutory Forms as per ESI Rules may be printed .

Deposit of PF & ESI Contribution : Simple Auto Fill voucher entry for Deposit of all sorts of Employer’s & Employees Contribution to Bank .

Gratuity : You may specify the Gratuity computation rules, get Gratuity provision figures at any point of time and create vouchers for Gratuity provision and payment. Print Gratuity Reports .

Bonus : You may specify the Bonus computation rules, get Bonus provision figures at any point of time and create vouchers for Bonus provision and payment. Print Bonus Reports .

Production wages : Specify Production Wages Rates for each Product and Employee, enter Production data and get Production Wages computed in Pay voucher. Print Production Wages Report .

Pay Revision : You may create Pay Structure to give effect of Pay Revision, even with retrospective effect. In same way, you may record prospective pay revision as per scale and effective date

Arrears Pay : In case of Pay Revision with retrospective effect, you may process and create Arrears Pay voucher auto computed . Alternatively, you may include headwise Arrear Pay in the current period voucher . A great time saving feature, extremely useful in Government departments and PSU organizations, where Pay revision often take place with retrospective effect.

Employee Joining & Leaving : The First Pay voucher (on Joining) and Last Pay voucher (on Leaving) is computed as per Date of Joining & Leaving .

Expatriate Reports : Various reports containing info in respect of Expatriates (like VISA, Contract Details) are available.

Payroll System Components in Tally

The Payroll Masters System of Tally  may be divided into following major Components

  • Employee Masters
  • Payroll Masters
  • Pay Head Masters
  • Salary Particulars
  • Payroll Processing
  • Payroll Reports
  • Statutory Reports
  • Attendance & Production

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