Incorrect HRA Calculation For Employees Having Retro Salary Change
Last updated on MARCH 08, 2017
Applies to:Oracle HRMS (India) - Version 12.1.2 and later
Information in this document applies to any platform.
When there is Retro HRA elements and the total HRA value in a given Payroll period differ from the previous periods due to this, the HRA projection and exemptions change for that period alone.
The Taxable HRA Pay & Annual Value is being calculated incorrectly when there is a
1) Retrospective Salary Change for the employee
2) Retrospective Address Change in addition to the Retro Salary Change
Here is the scenario:
1. There is an employee having Basic Salary: 38087 & HRA: 19044 effective 01-Apr-2010. The Payroll was executed for the employee till June with the above salary details. The address of the employee is a Non-metro.
-- The Taxable HRA Pay Value and Taxable HRA Annual Value : 3809.2 & 45710.4 were computed during payroll processing.
2. During the month of July --> effective 01-Apr-2010, there was a retrospective change for the employee in Basic Salary and HRA
Basic was increased from 38087 to 39991 & HRA was increased from 19044 to 19996.
--> The Enhanced Retropay was executed from 01-Apr-2010 and then Payroll. The Enhanced Retropay created 3 new entries for each Basic & HRA arrears in the month of July.
The payroll was executed and the following values were computed for Taxable HRA:
Pay Value: 4570.8
Annual Value: 47995.2
Issue: The Taxable HRA values are incorrect, there needs to be retrospective computation for taxable HRA as well. Currently for taxable HRA, the system has calculated based on [Basic + Total Retro Basic] & [HRA + Total Retro HRA] but expect the system to calculate the Taxable HRA retrospectively effective 01-Apr-2010.
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