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Distinction amongst
different approaches on calculation of Arrears
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Article
No |
Q0004 |
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Version Applicability |
PERKS
2.45
and later |
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Last Reviewed On |
April
27, 2000 |
SYMPTOM: I have a Head of Pay (HOP) called ‘PTAX’. It calculates the amount of
Professional Tax depending upon the gross income (i.e., Total Allowance) received in a
Period. The HOP called ‘TOTALLOW’ returns the Gross Income. I used the formula
"TABLE(PTX,TOTALLOW)" to define ‘PTAX’, where ‘PTX’ is the
name of a First-Fit Table representing the Income Slabs and the corresponding applicable
values of Professional Tax.
Since the Recalculate after arrear
calculation option gets enabled only for a calculated HOP, I decided to select this as
my arrear calculation option for ‘PTAX’.
An employee receives an increment such
that his Gross Monthly Income (i.e., TOTALLOW) has been raised from 5000.00 to 8000.00.
This increase in his Gross Monthly Income was applied to his salary for the month of April
2000 but came into effect from January 2000. In other words, a second attachment of the
same Pay Structure was made with the From Date as ‘01.01.2000’ and the Applied
Date as ‘01.04.2000’. (The related Attendance Class is ‘monthly’
with Periods starting on the first day of the month).
This is how I observe that the
System is not calculating arrears as per my expectations:
Table PTX
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RANGE (OF TOTALLOW) |
VALUE OF PTAX |
0.00 TO 2000.99 |
0.00 |
2001.00 TO
2500.99 |
30.00 |
2501.00 TO
3500.99 |
60.00 |
3501.00 TO
5000.99 |
90.00 |
5001.00 TO
10000.99 |
150.00 |
10001.00 TO
15000.99 |
175.00 |
15001 AND MORE |
200.00 |
Arrear
amount on ‘TOTALLOW’ for each of the Periods, viz., January 2000, February 2000
and March 2000 is (8000.00-5000.00) = 3000.00.
Hence, payable ‘TOTALLOW’ for
April 2000 is {8000+(3000x3)}=17000.00. But the System is computing ‘PTAX’ as
‘200.00’, considering that the amount (‘17000.00’) belongs to the last
slab in the Table above.
However, the value should be computed as
follows.
The rise being ‘3000.00’,
‘PTAX’ for January 2000 should have been calculated on ‘8000’ (i.e.,
5000+3000). In other words, the ‘PTAX’ should have been ‘150’.
Hence, the difference in the value of
‘PTAX’ actually deducted and the value of ‘PTAX’ that should have been
deducted is (150-90) = 60. This is the Arrear amount of PTAX for January.
Similarly, an amount of ‘60.00’
should be deducted for February and March. The sum total of these amounts comes to
(60+60+60) or ‘180’. This is added with the amount of ‘PTAX’ to be
deducted in April 2000. Since ‘150.00’ is ought to be deducted in April 2000,
therefore you get the desired ‘PTAX’ amount of (180+150) = 330.00.
Thus, in the month of April 2000, instead
of deducting ‘330.00’, an amount of ‘200.00’ is being deducted.
RESOLUTION:
Mark the basis of calculation of
Arrear (i.e., Effect on Arrear) for ‘PTAX’ as Yes.
If the setting is Recalculate after
arrear calculation, then the System does not consider the Arrear amounts individually
for each Period, and summing them up to determine the Net Arrear Amount applicable for the
current Period.
If the Yes option is selected
vis-à-vis Recalculate after arrear calculation, then the System evaluates the
difference between the amount paid and payable (or, between the amount that was deducted
and the amount that should have been deducted) for each Period over which the Arrear is
being issued. PERKS, then, sums it up to derive the Arrear amount for the current Period.
The option Recalculate after arrear
calculation applies for a calculated HOP if the calculation is to be made solely with
respect to the generated value of the constituent HOP(s) for the current Period only. This
considers their respective Arrear amounts (calculated in whatever manner for the current
Period).
MORE INFORMATION:
You may refer to the topic ‘Aspects of heads
of pay definition’ in the Online Help.
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