This is the challenge I was trying to avoid by using tax slabs and not nested formulas.
I wanted to make it easier to update tax rates whenever these are amended by Govt.
My scenario is such that different employees have different salary structures and therefore I had to create for than one structure.
E.g.
Employee 1(group of employees): basic salary=10,000 housing = 3,000 car = 2500
Employee 2: basic = 12500, housing 4500 car = 1500
Employee 3: 15000, housing=2500, car = 3000
Not sure if I can use one salary structure and assign different values on salary structure assignment.
Tax is on the gross amount above. My solution was to create different salary structures. Wanted to use tax slabs to make it easier to update tax rates (I know they don’t change a lot, but doing this on multiple salary structures is prone to errors in my opition).
If there are any components which should fall outside the purview of taxes (tax should not be calculated on these) you can uncheck Is Tax Applicable in the Salary Component.
Right, like @kennethsequeira has said, for your circumstances, you don’t need to calculate nested formulas. @Stella had a different situation than yours, where income tax was calculated on a monthly- rather than yearly-basis. For yearly basis, tax slabs are the way to go.
For me, putting the Income Tax in the Salary Structure/Components won’t work, because this is how the tax is supposed to be calculated:
Determine gross income for the day/week/month/year.
Deduct exempt income, for instance bonus: You get => Income
Deduct allowable deductions, e.g. pension: You get => Taxable Income.
Please refer to tax table(s) as shown in the linked topic. You get => Tax on Taxable Income.
Deduct tax credits e.g. elderly, blind or disabled persons ($750.00) and medical credit $1.00 of every $2.00 paid: You get => Tax after credits.
Calculate 3% Aids Levy and add to tax after credits: You get actual tax payable.
So as I stated in the new thread, this can be solved if there is a way to add a formula to the Tax Slab items, then additional deductions like Aids Levy above, can be added in the child table after the tax slabs.
NOTE: For my case this tax will need to be applied monthly whenever payslips are created
Hi @redgren. I’ve answered in the other thread. You indicate that salary structure components won’t work, but I don’t really see why not. Happy to discuss here or there.
please , I am falling in the same problem and the missed thing to me to complete my understanding is that where 200 and 830 comes from . And what you mean by monthly brackets
Hi there,
I was responding to a person for whom income taxes were assessed monthly, so the different brackets that were listed were calculated for monthly income (not yearly income, as is usually the case).
200 and 830 are the totals of the previous marginal brackets. The first tax bracket (25%) applies to the $800 between $4000 and $4800. The second bracket (30%) applies on the $2100 between $4800 and $6900.
25% of 800 = 200 (maximum amount paid for first marginal bracket)
30% of 2100 is 630 (maximum amount paid for second marginal bracket)
630 + 200 = 830 (sum of first and second marginal brackets)
