Journal entry for payroll processing

Posted on February 21, 2010 by Mahendra • 40 Comments

Tally.erp 9 offers free payroll processing software with its erp series release. However If you are not using tally’s payroll processing, then you might interested how to pass journal entry for payroll processing.

Though tally.erp 9′s payroll processing feature is working excellent and serves a complete payroll processing software for totally free. All you need is to be familiar with the entire system.but even in case you are not familiar with this, then you should understand journal entry for payroll processing.

I have posted some articles about payroll processing in tally for employee creation and attendance creation and creating Payhead

However there are many users who do not use the tally’s automated payroll module also users of earlier version i.e. tally 7.2, 6.3 etc have no access to this facility. So, today, I am writing for them how to process payroll manually and how to pass necessary journal entry with practical example

Suppose total gross salary payable for the month of January 2010 is Rs. 3,00,000

Out of above, basic salary which is eligible for Provident Fund contribution is Rs. 2,00,000

Hence, the Employee Provident Fund contribution will be calculated @12% of basic salary i.e. Rs. 24,000.00

Net salary payable to Employee is Rs. 3,00,000 – Rs.24,000 = Rs. 2,76,000.00

The entry for above transaction will be made accordingly

31.1.2010 Dr. Staff salary Expenses Rs. 3,00,000 (This is the cost which the company has to bear )

Cr. Staff Salary payable Account Rs. 2,76,000.00

Cr. Provident Fund payable account Rs. 24,000.00 (it is your liability to pay to govt.)

Now, make one another entry for employer’s contributions for the above salary

An employer is also required to pay a sum @12% from the basic salary before the same is disbursed to employee. Apart of this, Employer is also require to pay @1.61% (of basic pay )additional amount as per below

@1.10% towards PF administration fees

@0.50% towards Employees Deposit linked insurance scheme

@0.1% towards EDLI administration charges

Dr. Employer PF Contribution Rs.24,000

Dr. PF administration Fees Rs. 2200

Dr. Employee EDLI Rs. 1,000

Cr. PF payable Rs. 27,200

Now total PF payable will be Rs. 24,000+ Rs. 27,200 =Rs, 51,200 which you should pay to PF department through its challan

I will throw more light regarding allocation of this amount to different account and base of calculation so, don’t forget to come back

Meanwhile, Do browse my other site to know more about provident fund and other Indian Commercial laws

Please post your queries on support Forum only

Mahendra (192 Posts)

Mahendra is founder and CEO of the I Vision Infotech, Authorised Tally Sales and Service Partner and helping Tally users to learn Tally and accounting free through this site

SAREETAM BUDHOLIYA

Sir,

Pls guide me how to nulify the amount of Leave deduction from salary.

suppose my sal- 15 K
3K is leave dedusiton then it shows

pls guide me journal entry for nulify it.

Sareetam

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suzan

Hello Mr Mahendra, kindly assist me with the correct accounting entries of this trasaction: when directors are being paid their allowances, wat would be the account entries

deepak

sir pls tell me how can pass entry esi pf ,fbt ,
how can bill wasi entry new ref. agn ref , on account . advance
how can file tds return in 4th qoter setp last anx II pls sir

Harsh

Dear Sir,

Plese mail me exact detail of payroll process of erp9

Kindly do the needfull.

Rgds,
Harsh

shilpa

we were using payroll in tally but now we want to switch on to manual entries am not able to delete the entries which i have already made for april & may in payroll please help me

ajit

hello sir
when entry of provident fund and ESI in which head debtor, creditor or security.

ANAND

HELLO SIR ,

HOW MANY ENTRIES COMING IN PAYROLL. TEL ME THE ENTRIES PLZ SIR IF U DONT MIND.

IN LEDGER CREATION ,,SALARY PAYBLE UNDER WHICH HEAD

shiju

What you are saying about normal salary entry.But in Payroll(In tally ERP 9) If we are passing one JV that -Salaries and Wages -Dr and Salary Payble -Cr,to make the salary due and then how we will pass the Payroll entry in Payroll,means how we will close the salary payable account,because,Payroll will accept only credit side entries,ie either bank or Salary Payable....then how we will close the Salary Payable account in asper double entry principle...Hope u understood

Mahendra

Shiji,
The correct procedure is first credit the Salary to Salary payable Ledger (current liability) and than pass a payment voucher for salary disbursement.
This feature is available in Tally.erp 9 in automated environment and working fine. and i am using this system from the first day, the payroll feature in Tally was introduced

sameer

hello...mr.mahendra ....
am simply come to point....
pls give what are the entry i will take in tally at end of month and when i pay salary .
following salary details
jan 2011 salary
x salary :3500.00 dhs / month
y salary :4500.00 dhs / month
z salary :2500.00 dhs / month
on jan 15 .x advances 500.00 dhs
jan 25 .x advances 500.00 dhs
jan 10 .y advances 250.00 dhs
jan 5 .z advances 1500.00 dhs
what kind of jounel entry i take at end of month and i pay salary time to complete the salary processing

Sameer,
Thanks for your query but I am sorry as currently we help only to our clients due to the busiest schedule. Not able to devote time to help other Tally users.

but mr .mahendra.... actually my senior purchase tally ...i have serial no also ....can u help me ...for my query....

Sameer,
When your seniors had purchased than they must be able to guide you.
Else arrange yourself for some training. I am really sorry Very busy with my own client's support issues.

Bharat Patel

there is transaction amount received from Samkitbhai in cash for Electricity bill to be paid.

My entry is correct or not just check

cash A/c Dr (receipt)
to Electrity Expense

Electricy Expense Dr (journal)
to Samkitbhai

help co-operate me in some entries

Hello Bharat Patel,
Thanks for contacting us.
However we do provide free support only to our clients.

kindly give me your support it was nice

Lalitha

Hello Mr.Mahendra,
This is my serial number : 7XXXXXX (Please don't publish it.Thanks)Tally release ERP 9 Version 1.2.
I am sending you my query provident fund issue to your mail ID as I don't want to publish it on a public plateform.
Please solve it on my personal/business email ID only

Please help,
Thanks for your time.

Prabhu

We have purchased a new truck from s.c motors by taking loan from Gajanan multipurpose co op society and that truck is given for body building to B.M. Lohar and Co. and we pay some time cash and some time cheque.
And also that truck is Insured in Oriental Insurance Company by giving syndicate bank cheque. Kindly tell me what are the entries for all these transctions.

Regards

Prabhu M Gaddi
9620336948

Hello Lalitha,
As per our discussion, I have sent you the solution on your personal mail ID. Hope it will help you to resolve it. In case of any problem, you may revert at any time

Hello Mr.Mahendra,
Thanks for the information.

Hi,
I have a query regarding handling directos remuneration and PF
Currently we are doing a manual PF challan entry combining PF for Employees and directors in a single challan (The rates of PF applied to directors are different from employees in our company)
Now we want to automate this PF challan creation in tally.
Should i created PF Payable ledger seperately for Directors? In that case the PF challan seems to give me wrong calculations.

Please advice on how to create a single challan
for employees and directors PF payables.
Thanks.

Hello Lalitha,

No need to create different PF or PF payable ledger. you can use one single ledger for all different rates of PF
but I am sorry as I do not provide any support without knowing the user's Tally.erp 9 Serial number. So if you want me to help you how to prepare the challan than you must mention your Tally serial number to us. It will not be published in public.
Else, post your query in favor of I Vision Info tech from Tally.erp 9 support center and you will get the procedure how to generate one single PF challan

Naresh Guttula

Sir, I am Naresh Guttula, and I have been working in a Branch Office at Hyderabad.
This is first time We get the Provident Fund Benifit. Our Head Office has been deducted PF from April 2010 to August 2010 for Rs.2700/-remidtted in my account. My Head Office has advised to treat as Advance and deduct in Six equal instalments apart from current month Provident fund. Please tell me how to pass entries in my branch and as well as Head office.

Naresh,
I am not able to understand what you meant to say ?
Could you specify it with more details ? what is your basic monthly salary and how much pf calculated on the same ? and what does it meant by Rs. 2700 remitted to your account ? Do you meant that your Company had deposited Rs. 2700 in your PF account and advising you to treat that as loans and Advances ? That is horrible !!!! because a company can't recover past dues of PF from its employees!

Susanta Mondal

Sir I want to know the entry, that if we could not pay to the creditor.

Thanks & Regards

S.Mondal

Golakh

i want to know about what is the entry of salary
if a person have salary details as follow
basic-2450
DA-2000
CONVEANCE-1000
ENT. ALLOOWANCE-1000
MEDICAL-500
TOTAL-6950
PF-534
ESI-122
SALARY DUE-6294

Golakh,
Have you articles under category of Payroll ?

Siiba

How do I configure my Tally payroll to compute progressive income tax for employees?

Sliba,
At the moment there is no facility to configure Employee TDS in tally.erp 9 in an automated environment. This facility is expected to be effective by launching of Series B of tally.erp 9.
Till that time, you have to put employee TDS manually and for this purpose

pragati bansal

how can we make the entry for expenes of a company paid by a director in behalf of a company in tally 9.0

Pragati,
Pass entry through Journal voucher.
Debit the expenses and credit the director's account

vivek mishra

Yes U pass entry

entry is
Exp A/c...........Dr
Director`s A/c ............Cr

A K Karn

Hi,

Entry is almost correct but from your entry we can never calculate the Staff wise deduction of PF.

Bcoz, if u ll pass an entry of on of my debtor-1 has paid to my creditor-1 & Creditor-2 an amount of 500 & 600 respectively.
The entry will be :
Dr.Creditor-1 500/-
Dr.Creditor-2 600/-
Cr.Debtor-1 1100/-

In above entry there is no relation between Creditor-1 & Creditor-2.

As well if we pass the entry of PF
Dr.Staff Salary
Cr.Staff Salary(Payable)
Cr.Provident fund Payable A/c

Dear A K Karn,
Sorry, for my inability to understand your point. but I am really unable to understand exact what you want to tell.
Will appreciate your could send me your query to my gmail Address. you may find my id from Google buzz at follow me on buzz
Trust me, I will remove all your doubts and solve it.

Prakash Das

Sir, will u please tell me that how can I pass the entry. If.

Shyam's salary is Rs.1000/- at the end of the month He received Rs. 900/- Cash as salary and Rs.100/- deducted from his salary and Rs. 200/- diposited to Govt. against EPF through bank.

my e-mail id is :XXXXXx

anjana

I WANT TO KNOW THAT IF A COMPANY MAINTAINED TALLY (THAN WHEN EVER I GO TO THE INTERVIEW THEY ASK ME THAT HAVE YOU DRAW COMPANY BALANCE SHEET) I AM UNABLE TO UNDERSTAND THAT TALLY AUTOMATICALLY MAKE B/S THAN WHAT IS THE REQUIREMENT TO DRAW BALANCE SHEET.

SIR PLZ ANSWER ME ON MY EMAIL ID

THANKS
ANJANA

Good Question Anjana,
All computerized Accounting software including Tally prepares Balance sheet automatically but again a software needs human touch.
First you should understand how a software works? A software is nothing but it requires some input based on that input it will give you output.
So, if you do not feed your input properly you will not a perfect output (here say balance sheet) and that is why people ask you if you know the balance sheet.
So, the balance sheet is a matter of expertise knowledge.

And yes, we do not respond to any personal mail ID

shadab

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