Processing Allowances

This chapter provides overviews of allowances and allowance earnings and discusses how to:

Process leave travel allowances.
Process medical allowances.

Understanding Allowances

There are certain types of allowances that are exempted from taxes, such as Leave Travel Allowance, Medical Allowance, Hill Area Council Allowance, and Border Area allowances. However, the most common are Leave Travel Allowances and Medical Allowances. Global Payroll for India enables you to set up leave allowances and medical allowances with the payee’s option of special claims processing or claim reimbursement.

These allowances are paid based on a defined frequency, monthly, quarterly, half yearly or annually. This is a company policy and there are no statutory obligations as to the periodicity of the payment. Rules governing the taxation of these allowances are guided by the Finance Act. Employees are able to be paid these allowances by producing bills (medical/ travel bills) and have the allowance exempted from tax. If the employee does not want to use this facility, then the allowance is paid off as a monthly allowance, with the full amount being taxable.

Companies might provide payees certain types of allowances. Global Payroll for India enables you to set up leave travel allowances and medical allowances with the payee’s option of special claims processing or waiving of the claim reimbursement and receiving a flat taxable amount for the fiscal period.

Note. Global Payroll for India also delivers earnings elements for other allowances including dearness allowance, house rent allowance, lunch allowance, conveyance allowance, shift allowance, and special allowance.

Leave Travel Allowance

If the company provides leave travel allowance, you can pay a payee this allowance amount as part of their salary. If a payee is provided a leave travel allowance, they can waive having claims reimbursed or opt for nontaxable reimbursement of valid claims up to the Income Tax Act published limit each fiscal year. The payee submits the appropriate travel claim information, along with any required supporting documentation for the travel, and the claim is then processed during the normal payroll processing cycle. Leave travel allowance can be paid out monthly, quarterly, semi-annually, or annually.

Medical Allowance

If the company provides medical allowance, you can pay a payee this allowance amount as part of their salary. If a payee is provided a medical allowance, they can waive having claims reimbursed or opt for nontaxable reimbursement of valid claims up to the Income Tax Act published limit each fiscal year. The payee submits the appropriate medical claim information, along with any required supporting documentation for the medical claim, and the claim is then processed during the normal payroll processing cycle. Medical allowance can be paid out monthly, quarterly, semi-annually, or annually.

With Global Payroll for India, you can:

Define the leave travel allowance program, including who can be covered for reimbursements.
Capture the leave travel allowance amount, per payee, for the fiscal year.
Track leave travel allowance claim details of payees and whether the minimum days of leave have been taken.
Track the balance of leave travel allowance that is available for each payee.
Define the medical allowance program, clearly defining the exemption amount that a payee can claim.
Track medical allowance claim details of payees while ensuring that the claims in excess of the exemption limit are added to the taxable earnings of the payee.
Track the medical allowance balance amount that is available to each payee.

Note. PeopleSoft delivers several queries that enable you to retrieve allowance information.

Understanding Allowance Earnings

This section discusses:

Delivered allowance earnings.
Viewing delivered elements.

Delivered Allowance Earnings

Global Payroll for India delivers the following earnings to process allowances:

LTA NON TAX

Use the LTA NON TAX earning to calculate the non-taxable earning portion of the employee's leave travel allowance.
LTA TAX

Use the LTA TAX earning to calculate the taxable earning portion of the employee's leave travel allowance.
LTA PAYOUT

Leave Travel Allowance Payout

Use the LTA PAYOUT earning to calculate the employee's leave travel allowance payout.
LTA WAIVE

Leave Travel Allowance Waive

Use the LTA WAIVE earning to calculate the employee's waived leave travel allowance.
MA NON TAX

Use the MA NON TAX earning to calculate the non-taxable earning portion of the employee's medical allowance.
MA TAX

Use the MA TAX earning to calculate the taxable earning portion of the employee's medical allowance.
MA PAYOUT

Use the MA PAYOUT earning to calculate the employee's medical allowance payout.
MA WAIVE

Use the MA WAIVE earning to calculate the employee's waived medical allowance.

Viewing Delivered Elements

PeopleSoft delivers a query that you can run to view the names of all delivered elements designed for India. Instructions for running the query are provided in PeopleSoft Enterprise Global Payroll 8.9 PeopleBook.

Processing Leave Travel Allowances

This section provides an overview of leave travel allowances and discusses how to:

Enroll payees for leave travel allowance.
Enter leave travel allowance claims.

Understanding Leave Travel Allowances

To process leave travel allowance for a payee:

Define the leave travel allowance reimbursement payout frequency as a variable.

You can define how often the company reimburses leave travel allowance. You can decide to reimburse payee claims monthly, quarterly, semi-annually, or annually. To define the reimbursement frequency, you define a variable at the pay entity level with an override option at the pay group and payee levels.

The variable that you define for payout frequency is LT VR PAY CLAIMS. The delivered default is 0 (False) and you can change this at any level, if desired. The other option is 1 (True). If it is 1 (True), then the claims are processed in the payroll. If it is 0 (False), then the claims are not processed.
Enroll the payee for leave travel allowance.

See Enrolling Payees for Leave Travel Allowance.
If applicable, enter leave travel allowance claim information.

See Entering Leave Travel Allowance Claims.

Pages Used to Process Leave Travel Allowances

Page Name	Object Name	Navigation	Usage
LTA Enrollment (leave travel allowance enrollment)	GPIN_LTA_ENROLL	Global Payroll & Absence Mgmt, Payee Data, Define LTA Enrollment IND, LTA Enrollment	Enroll a payee for leave travel allowance.
LTA Claims (leave travel allowance claims)	GPIN_LTA_CLAIMS	Global Payroll & Absence Mgmt, Payee Data, Define LTA Claims IND, LTA Claims	Enter details for a payee’s leave travel allowance claim.

Enrolling Payees for Leave Travel Allowance

Access the LTA Enrollment page.

Enrollment Information

Coverage Election

Select Elect if the payee wants to submit claims for leave travel allowance during the year. Select Waive if the payee wants to waive the ability to submit claims for leave travel allowance during the year. If you select Waive, the allowance is still paid, but is fully taxable to the extent of the limit amount

Allowance Amount

Enter the allowance amount that the payee is entitled to for the year.

Dependent Information

ID	Select the identification number for the payee’s dependents who are eligible for reimbursement of claims. The corresponding name and relationship appears.

Note. To terminate a payee from leave travel allowance, add a row and change the status to Inactive.

Entering Leave Travel Allowance Claims

Access the LTA Claims page.

Claim Details

Claim Number	Enter the claim number.
Claim Date	Enter the date on which the payee made the claim.
Claim Amount	Enter the amount of the claim.
Taxable	Select if the claim amount is taxable.
Reimbursed	Selected when payroll is run for the month and the claim is fully reimbursed.

Travel Information

Date From and Date To	Enter the date on which the travel began and the date on which it ended.
Origin	Enter the location where the employee's travel originated.
Destination	Enter the employee's travel destination.
Mode of Travel	Enter the mode of travel. This is for information only. Ensuring that the mode of travel adheres to applicable rules is a manual process.
Class of Travel	Enter the class of travel. This is for information only. Ensuring that the class of travel adheres to applicable rules is a manual process.

Note. You can use the delivered GPIN_LTA_CLAIMS_REIMBURSE query to verify reimbursed claims.

Processing Medical Allowances

This section provides an overview of medical allowances and discusses how to:

Enroll payees for medical allowance.
Enter medical allowance claims.

Understanding Medical Allowances

To process medical allowance for a payee:

Define medical allowance variables.

You must define two variables. One variable defines how often you want to reimburse a payee's medical allowance claims. You can define this variable as monthly, quarterly, semi-annually, or annually. A second variable defines the exempt amount, which is the amount specified for medical reimbursement that is exempt from tax.

The variable that you define for reimbursement frequency is MA VR PAY CLAIMS. The delivered default is 1 (True) and you can change this at any level, if desired. The other option is 0 (False). If it is 1 (True), then the claims are processed in the payroll. If it is 0 (False), then the claims are not processed. The exempt from tax limit variable is MA VR LIMIT NTAX. If the limit changes, you can modify this variable to reflect the new limit.
Enroll the payee for medical allowance.

See Enrolling Payees for Medical Allowance.
If applicable, enter medical allowance claim information.

See Entering Medical Allowance Claims.

Pages Used to Process Medical Allowances

Page Name	Object Name	Navigation	Usage
Medical Enrollment	GPIN_MDA_ENROLL	Global Payroll & Absence Mgmt, Payee Data, Define MDA Enrollment IND, Medical Enrollment	Enroll a payee for medical allowance.
Medical Claims	GPIN_MDA_CLAIMS	Global Payroll & Absence Mgmt, Payee Data, Define MDA Claims IND, Medical Claims	Enter medical allowance claim information.

Enrolling Payees for Medical Allowance

Access the Medical Enrollment page.

Medical Allowance Enrollment Information

Coverage Election	Select Elect if the payee wants to submit claims for medical allowance during the year. Select Waive if the payee wants to waive the ability to submit claims for medical allowance during the year. If you select Waive, the payee is still eligible for the medical allowance, which is fully taxable.
Allowance Amount	Enter the allowance amount that the payee is entitled to for the year.

Dependent Information

Dependent/Beneficiary ID

Select the identification number for the payee’s dependents who are eligible for claim processing. The corresponding name and relationship appears.

Note. To terminate a payee from medical allowance, add a row and change the status to Inactive.

Entering Medical Allowance Claims

Access the Medical Claims page.

Claim Number

Enter the claim number.

Claim Date

Enter the date on which the payee made the claim.

Claim Amount

Enter the amount of the claim.

Submitted for Reimbursement

A writable array selects this check box automatically after you select the claim for processing.

Note. You can use the delivered GPIN_MA_CLAIMS_REIMBURSE query to verify reimbursed claims.