Was curious as to how Indian Payroll Users configure Employer’s contribution towards Employee Provident Fund. As we understand it, its neither an Earning of Employee(not part of Salary) nor a deduction(its not being deducted from Employee’s Salary). Its an additional Expense which a company books.
Some companies show it on Salary Slip separately. Some others issue a separate slip indication what amount was contributed by Employer. Note that Employee’s share of contribution towards the fund is actually a deduction and is mentioned on Salary Slip.
Can anyone share their implementation methods or workarounds used?
its neither an Earning of Employee(not part of Salary) nor a deduction(its not being deducted from Employee’s Salary). Its an additional Expense which a company books.
But company do prefer to show it in Salary Slip to inform the employees their indirect earnings.
According to me “Employer PF Contribution” Salary Component would be with flag “Do not include in total”.
The Salary Slip would look like below , assumption 12% is Employer Contribution and 11% is Employee Contribution of the basic salary.
All goes right, until the Journal Entry for Payroll Payable is created on click of “Submit Salary Slip” via Payroll Entry.
The expected JV Should look like below.
Chart of Accounts
PF Payable ( will be group account) & parent of Employer , Employee PF Payable Account
JV for Payroll Payable on Salary Slip Submit
Account Head
Dr
Cr
Salary (Expense)
20000
Employer PF Payable
2400
Employee PF Payable
2200
Payroll Payable
17800
Employer PF Contribution (Expense)
2400
Total
22400
22400
Actual Payment/Bank Entry for Salary
Account Head
Dr
Cr
Payroll Payable
17800
Bank
17800
Total
17800
17800
Actual Payment/Bank Entry for PF to Govt
Account Head
Dr
Cr
Employer PF Payable
2400
Employee PF Payable
2200
Bank
4600
Total
4600
4600
Whereas the actual Payroll Payable JV looks as below, here Employer PF Payable is treated as expense account as there is only provision to define expense account in salary component.
I think there should be provision as below in the Salary Component doctype for each components which are excluded from total to define
if it is Payable > then Payable Account and Expense Account.
At present for all components Expense is booked against the account defined in the account child table (first row) of the Salary Component Doctype . whereas for all components the final payroll payable set in Company Default Payroll Payable Account. is treated as payable account.
I’m sorry to write about an old post, but you have described exactly what I’m trying to solve.
So far my solution (without any custom modification, or additional scripts over a vanilla installation) is to create additional Salary Components (each with the Payable account and a negative value amount) for every original Salary component that represents Employer Contributions. I have tested it, and it works. However it feels quite not elegant (as the amount in the Ledger is negative for the payable account) and I think your propose was the reasonable way to go.
Did you manage to implement it? Or did you come with another solution?
Hi Jignesh,
Would like your help in this matter.
I have a similar issue
Have created components for PEE and PFD as discussed above the only problem is my Bank entry doesn’t show this payable amount. It only contains payroll payable and bank amount debit and credit.
Could you tell what is exactly missing in this case?
