Need help setting up salary structure (income tax)

Frappe HR
1

Currently, we have set Income tax slabs, salary components and all required setups for running payroll. Everything works fine. But we need a small change in account heads for income tax.

Current setting is:

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image1407×690 47.6 KB

Problem:
(imagine below situation)
Salary Gross yearly: 7 Lakh

Taxation rule:

  1. First 5 Lakh is taxed at 1% and booked under “Social Security Tax on Employee Salary” heading by the tax office. (we use 2320 account head as shown in above screenshot)

  2. Next 2 lakh is taxed at 10% and booked under “TDS on Employee Salary”. (we created another account: 2330. It should be used.)

How can I setup the salary component/salary structure such that,

  1. for all employees getting under 5 lakh, tax will be booked under account head 2320 only @ 1%
  2. For all employees getting above 5 lakh, tax will be booked under two account heads such as:
    a. under 2320: 1% of 5 lakh = 5000
    b. under 2330: 10% of 2 lakh (if gross salary yearly is 7 lakh): 10% of 2 lakh = 20,000

Total tax = 25,000.

2

Please use Income Tax slab Doc type to setup income tax calculations.

Given Example for your reference.

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image1439×849 72.9 KB

3

We do have a income tax slab set up as required.

0-500000: 1%
500001 - 700000 : 10%

and so on

This will deduct all income tax under one account head.

We need to break down tax into two account heads.

4

In that Case you can use 1 % as a salary component and you can assign to one account head and for 500000 to 700000 you can use income tax.

In Salary component you need give logical condition based on (Gross Year To Date) value.