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Washing Allowance Exemption in Form 16 under Section 10 using IT 0582

I am going to share one of the business requirements  which I have experienced, I  hope this business scenario is  common for most of the Indian clients.

Business Scenario

Client having  Washing Allowance wage component  in  monthly regular  salary  is  stored in Infotype 0008. The allowance amount is  fixed  @ Rs.1000/- every month , No matter of employee’s  grade and level.  In Form 16 Rs.12000/ -per annum should be exempted under Sec 10.  

Approach:

Create Washing Allowance by copying Wage Type M2SF using T-Code OH11 or SPRO. I have created wage type value 1040 stored in Info type 0008.

Please find  below Wage Type 1040 Processing / Cumulation / Evaluation Classes

NLR 1.JPGNLR 2.JPGNLR 3.JPGNLR 4.JPGNLR 5.JPG

We need to create Tax code for this to get the exemptions under Section 10. There is no standard Tax code in SAP for washing allowance . So either we have to create Z tax code or we can use SEXM Generic tax exemption which is a standard Tax code. Currently I have taken standard Tax code SEXM for Washing Allowance.

Tax codes for Tax exemption :

TAX CODE.JPG

Please find below WT 1020 tax type as Tax exemption is Limit based 12000 per Annual

1020 tax type as Tax exemption is Limit based 12000.JPG

By creating above configuration  steps  we don’t get the exemption amount in Form 16, because of  the Processing/ Cumulation / Evaluation classes

defined for wage type 1040. 

So we need to create another Wage type 9999 with required  of  Processing/ Cumulation / Evaluation classes and PCR to move the Exemption  amount

into /130 wage type.

Create another Wage type 9999 by copying MCAX Cust. Sp. Annual Exempt. Using OH11 and store in 40EX Tech Exemption wage types.

9999 1.JPG9999 2.JPG9999 3.JPG9999 4.JPG9999 5.JPG

Please find below WT 9999 tax type as Tax exemption is rule based  frequency   Annual without any amount in Exmpt  it using same Tax code SEXM.

WT 9999 tax type as Tax exemption is rule based.JPG

Once we have created wage type, then we need to writer PCR and insert the same in Payroll Schema ZN00 sub schema ZNN1 Gross to net calculation.

Rule ZNLR Washing allowance Exemptions rule moving the Value

ZNLR.JPG

Once we have created wage type,& PCR,  insert the same in Payroll Schema ZN00 sub schema ZNN1 Gross to net calculation.

SCHEMA.JPG

SUB SCHEMA.JPG

Maintain IT 0582 using Tax code SEXM

IT0582 NLR.JPG

Please find below exempted amount under sec 10 in Form 16

FORM 16 UNDER 10.JPG

There may be some other ways to map this requirement. But I am sure  this is the better way to map this requirement.

Thank you,
NLR Srinivas

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10 Comments

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  1. Former Member

    Hi Srinivas

    Very Good Post . Keep up the good Work .

    I have one Doubt in Form 16  Part B

    (1) Gross Salary

    (b) Value of Prerequisite Under section 17 (2)

    iam trying to Get the Medical Reimbursement

    how did you get the Exemption amount there

    Thx,…

    (0) 
      1. Former Member

        Hi Srinivas

        Thank Q for the Response

        Cumulation Class 38 Maintained

        V_T7INT9 :15000 Maintained

        V_T7INA9: Wage type Maintained

        Ran the Live Payroll from Jan 2012 to April 2012

        Still Not showing in Form 16

        Plz Suggest

        (0) 
        1. Former Member Post author

          Hi Ahmed,

          Use Evaluation Class 6  showing Medical exemption and 10 for Perks Accomdation of Medical

          Check in V_T7INT9 for Annual exemption or Monthly exemption for Tax code  SMED.

          Thank you,
          Srinivas

          (0) 
  2. Former Member

    everything is working fine and just that the monthly exemption amount under 9999 wagetype is not projecting for the annual value. is there any step i am missing?

    (0) 
  3. Former Member

    This document helped me a lot, but while configuring I came across another way for getting Wage type 9999 cumulated in /130 without the use Of PCR.

    We just have Check the Processing Class 70 to value 1(cumulate). What it does is take the WT in for cumulation in /130. IN70 is nothing but Exemptions u/s 10 function.

    I’ve tried and its working. I just couldn’t digest that a PCR will the only way to get this don, because its a standard requirement.

    Enjoy!

    (0) 

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