Getting Started with Payroll

for UAE

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Version: Getting Started with Payroll for UAE/Tally.ERP 9 Series A Release 3.0/February 2011

Contents
Lesson 1: Configuring Payroll in Tally.ERP 9
1.1 Salient Features of Tally.ERP 9s Payroll

..............................................................................................1

1.2 Enabling Payroll in Tally.ERP 9

...............................................................................................................1
Company Setup .......................................................................................................................................2
Step 1: Enable Payroll .............................................................................................................................2
Step 2: Enable Payroll Statutory Features ...............................................................................................3

Lesson 2: Creation of Payroll Masters

2.1 Create Employee Masters

...........................................................................................................................5
Step 1: Create Employee Categories .......................................................................................................5
Step 2: Create Employee Groups ............................................................................................................6
Step 3: Creating Employees ....................................................................................................................6

2.2 Create Payroll Units

.....................................................................................................................................8

2.3 Create Attendance/ Production Types

......................................................................................................8
Step 1: Create Attendance Type - Absent ...............................................................................................8
Step 2: Create Overtime Production Type ..............................................................................................9

2.4 Create Pay Heads

.........................................................................................................................................9
2.4.1 Earnings Pay Heads Creation ................................................................................................................ 9
i. Basic Pay Head Creation ....................................................................................................................10
ii. Food Allowance Pay Head Creation ................................................................................................11
iii. Overtime Pay Head Creation ...........................................................................................................12
iv. Holiday Pay Head Creation ..............................................................................................................14
2.4.2 Creating Payable and Bank Ledgers .................................................................................................... 14
i. Create Salary Payable Ledger ............................................................................................................14
ii. Bank Ledger ......................................................................................................................................15

2.5

Create Salary Details

................................................................................................................................16

Lesson 3: Processing Payroll

3.1 Recording Attendance/Production details

..............................................................................................18
i. Recording Attendance details .............................................................................................................18
ii. Recording Production details ............................................................................................................19

3.2 Processing Payroll

......................................................................................................................................20
Step 1: Processing Salary ......................................................................................................................20

3.3 Making Payments

.......................................................................................................................................22
Step 1: Salary Payment ..........................................................................................................................22

Lesson 4: Payroll Reports

4.0.1 Payslip .................................................................................................................................................. 24
i. Display Single Payslip .......................................................................................................................24
ii. Printing Payslip .................................................................................................................................25
4.0.2 SIF Report

............................................................................................................................................. 26

Lesson 1: Configuring Payroll in Tally.ERP 9

Payroll in Tally.ERP 9 is easy to use and can handle all the functional, accounting and statutory
requirements of the payroll department.

1.1 Salient Features of Tally.ERP 9s Payroll

The key features of the Payroll functionality in Tally.ERP 9 are as follows:

It is fully integrated with accounts to give you the benefits of simplified Payroll processing
and accounting

It has user defined classifications and sub-classifications for comprehensive reporting. This
may be related to the employees, employee groups, pay components, departments etc.

It provides the facility to create user-defined earnings and deductions Pay Heads

It allows flexible and User-definable criteria for simple or complex calculations

It allows unlimited grouping of Payroll Masters

It supports user-defined production units i.e., attendance/ production/ time based remuneration units

It provides a flexible payroll processing period

It provides comprehensive Cost Centre as well as employee-wise costing reports

It ensures an accurate & timely Salary Processing, Employee Statutory Deductions &
Employer Statutory Contributions with the help of predefined processes

It provides auto-fill facility to expedite the Attendance, Payroll & Employer Contributions
processes.

provides the facility to compute the Gratuity

It allows drill-down facility to voucher level for any kind of alteration.

It facilitates computation of arrears pertaining to prior period

1.2 Enabling Payroll in Tally.ERP 9

Enabling Payroll is a two step process in a new Company or in an existing Company:

Enable Payroll

Enable Payroll Statutory Features

Enabling Payroll in Tally.ERP 9

Before Enabling the Payroll, you have to create a Company as per the process shown below:
Company Setup
Go to Gateway of Tally > Company Info. > Create Company
In the Company Creation screen,

Select UAE in the field Statutory compliance for from the List of Countries provided

Type 1-4-2010 as Financial Year from date and press Enter

The completed Company Creation screen is displayed as shown:

Figure 1.1 Completed Company creation screen

Press Enter to save

Step 1: Enable Payroll

Go to Gateway of Tally > Press F11: Company Features > press F1: Accounting Features
In the F11: Accounting Features screen:

Set Maintain Payroll to Yes

Enabling Payroll in Tally.ERP 9

Set More than ONE Payroll / Cost Category to Yes as shown:

Figure 1.2 F11: Accounting Features screen

Press Enter to Accept the F11: Accounting Features screen

The option More than ONE Payroll / Cost Category is set to Yes, when separate
cost categories are created to allocate Employee cost. In cases, where only one
cost category i.e., primary cost category is used to allocate multiple cost centres,
this option may be set to No.

Step 2: Enable Payroll Statutory Features

Go to Gateway of Tally > press F11: Company Features > press F3: Statutory & Taxation
In Statutory & Taxation Features screen:

Enabling Payroll in Tally.ERP 9

Enter the Employer Unique ID code for e.g. as shown:

Figure 1.3 Payroll Statutory &Taxation screen

The Employer Unique ID specified will be used to generate the Salary Information
File (SIF).

Press Enter to Accept the F11: Statutory & Taxation screen.

Once Payroll feature is available, the Payroll info. and Payroll Vouchers options will be
available in Gateway of Tally screen.

Lesson 2: Creation of Payroll Masters

The following masters should be created for successful Payroll implementation in Tally.ERP 9:

Create Employee Masters

Create Payroll Units (for Overtime etc.)

Create Attendance/Production Types

Create Pay Heads

Create Payable Ledgers and Bank Ledger

Create Salary Details

2.1 Create Employee Masters

Step 1: Create Employee Categories
To create an Employee Category:
Go to Gateway of Tally > Payroll Info. > Employee Categories > Create
In the Employee Categories Creation screen,
1. Specify the required name in the Name field
2. Set the option two options to Yes

Figure 2.1 Employee Category Creation screen

3. Press Enter to Accept and save.

Creation of Payroll Masters

The option to create the Employee Categories is available only in Release 1.8
onwards. For earlier releases, you can create the Cost Category from Accounts
Info. menu.
By default Primary Cost Category is provided.

Step 2: Create Employee Groups

To create Sales as an Employee Group:
Go to Gateway of Tally > Payroll Info. > Employee Groups > Create
In the Employee Group Creation screen,
1. Select Primary Cost Category as the Category (You can also create a separate cost category to segregate Employee Cost based on respective categories)
2. Type Sales as the Name of the Employee Group
3. Select the group as Primary

Figure 2.2 Employee Group Creation screen

4. Press Enter to Accept and save.

5. Similarly, other Employee Groups can also be created.
Step 3: Creating Employees
In Tally.ERP 9, you can record all the necessary information of the employees in the Employee
Masters. Tally.ERP 9 also allows to enter the Statutory, Expat and Contract details for employees.
To display the options for entering the Statutory, Expat and Contract details enable these options
from the Company Configuration screen as explained below:
Go to Gateway of Tally > F12:Configure > Payroll Configuration
Set the following options:

Show NI Number to Yes to capture the Employee Unique ID details

Show Passport & Visa Details to Yes

Creation of Payroll Masters

Show Contact Details to Yes

Figure 2.3 F12: Payroll Configuration screen

Press Enter to Accept

To create the Employees,
Go to Gateway of Tally > Payroll Info. > Employees > Create
1. Select the Primary Cost Category as the Category
2. Type the Name of the Employee
3. Specify the Name of the Employee Group as e.g. Administration in the field Under
4. Specify the Date of Joining for the Employee
5. Type the other details for the Employee as shown:

Figure 2.4 Employee Creation screen

Agent ID has been provided in the Employee Master if the Employee does not
have the bank account in the Employers bank. The specified Agent ID will appear in
the SIF report.
When Agent ID is empty the Employer's Bank code will appear in SIF report.

6. Press Enter to Accept the screen

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Creation of Payroll Masters

Similarly, all other Employees can also be created.

2.2 Create Payroll Units

Go to Gateway of Tally > Payroll Info. > Attendance / Production Types > Create
1. Type is defaulted to Simple, select Compound to create a Compound Unit.
2. Specify the Symbol as Hrs
3. Specify Hours as Formal Name
4. Specify 2 as the Number of Decimal Places

5. Press Enter to Accept the Unit creation screen.

2.3 Create Attendance/ Production Types

Step 1: Create Attendance Type - Absent
Go to Gateway of Tally > Payroll Info. > Attendance / Production Types > Create
1. Type Absent as the Name of the Attendance type
2. Specify the group as Primary in the field Under.
3. Select Leave without Pay as the Attendance Type and the Period Type appears as Days,
by default.

Figure 2.5 Attendance/ Production Type Creation screen

4. Press Enter to Accept the Attendance Type Creation screen.

Creation of Payroll Masters

Its necessary to capture the Leave without Pay Days to compute and generate the
SIF file. Hence, the Absent Attendance Type should be created to record the Attendance.

Step 2: Create Overtime Production Type

While creating the Overtime as a Production Type select the required Unit.
The completed Overtime - Production Type Creation screen is displayed as shown below:

Figure 2.6 Overtime - Production Type Creation screen

2.4 Create Pay Heads

Tally.ERP 9 consists of the following preset Pay Head types to create different Pay Heads:
1. Earnings for Employees
2. Deductions from Employees
3. Employees Statutory Deductions
4. Employers Statutory Contributions
5. Gratuity
6. Loans and Advances
7. Reimbursements to Employees

2.4.1 Earnings Pay Heads Creation

Create the following Earnings Pay Heads

Basic

Food Allowance

Overtime

Holiday Pay

Creation of Payroll Masters

i. Basic Pay Head Creation

Go to Gateway of Tally > Payroll Info. > Pay Heads > Create
In the Pay Heads Creation screen,
1. Type Basic as the Name of the Pay Head
2. Select Earnings for Employees in the field Pay Head Type
3. Select Fixed as the Income Type from the list of Income Types available
4. Specify the group as Indirect Expenses in the field Under and press Enter
5. Set Affect Net Salary to Yes
6. Specify Basic in the field Name to appear in Payslip
7. Set Use for Gratuity to No
8. Select On Attendance in the field Calculation Type and press Enter
9. Select Not Applicable in the field Attendance/ Leave with Pay
10.Select Absent in the field Leave without Pay
11.Select Months in Calculation period field and press Enter
12.Specify Months of required number of Days (e.g. 22 days)
13.Select Normal Rounding as the Rounding Method and press Enter.
14.Specify 1 as the rounding Limit (The Rounding limit allows the value to be in multiples of the
limit specified and is based on the Rounding Method selected)
The completed Basic Pay Head Creation screen is displayed as shown:

Figure 2.7 Completed Basic Pay Head Creation screen

10

Creation of Payroll Masters

15.Press Enter to Accept the screen.

If the Attendance Based Pay Heads (e.g. Basic) is created on present (Leave
with Pay) then its necessary to record the Attendance before processing the
Payroll. If the Basic Pay Head is created with Absent (Leave without Pay), then you
have to record the Attendance only when the Employees are absent.

ii. Food Allowance Pay Head Creation

In the Pay Heads Creation screen,
1. Type Food Allowance as the Name of the Pay Head
2. Select Earnings for Employees in the field Pay Head Type
3. Select Fixed as the Income Type from the list of Income Types available
4. Specify the group as Indirect Expenses in the field Under and press Enter
5. Set Affect Net Salary to Yes
6. Specify Food Allowance in the field Name to appear in Payslip
7. Set Use for Gratuity to No
8. Select On Attendance in the field Calculation Type and press Enter
9. Select Not Applicable in the field Attendance/ Leave with Pay
10.Select Absent in the field Leave without Pay
11.Select Months in Calculation period field and press Enter
12.Specify Months of required number of Days (e.g. 22 days)
13.Select Normal Rounding as the Rounding Method and press Enter.
14.Specify 1 as the rounding Limit (The Rounding limit allows the value to be in multiples of the
limit specified and is based on the Rounding Method selected)

11

Creation of Payroll Masters

The completed Food Allowance Pay Head Creation screen is displayed as shown:

Figure 2.8 Completed Food All own ace Pay Head Creation screen

15.Press Enter to Accept the screen

iii. Overtime Pay Head Creation
Similarly, Overtime Pay Head can be created with Income Type as Variable and Calculation
Type as Production.

12

Creation of Payroll Masters

The completed Overtime Pay Head Creation screen is displayed as shown:

Figure 2.9 Overtime Pay Head Creation screen

Press Enter to Accept the screen.

13

Creation of Payroll Masters

iv. Holiday Pay Head Creation

Similarly, create the Holiday Pay Head with Calculation Type as User Defined Value.

Figure 2.10 Holiday Pay Head Creation

2.4.2 Creating Payable and Bank Ledgers

The following Ledgers needs to be created:

Salary Payable

Bank
i. Create Salary Payable Ledger
Go to Gateway of Tally > Payroll Info. > Pay Heads > Create
1. Type Salary Payable in the Name field
2. In the Pay Head Type field select Not Applicable
3. Specify the group as Current Liabilities in the Under field and press Enter

14

Creation of Payroll Masters

Figure 2.11 Salary Payable Ledger Creation

Press Enter to accept

ii. Bank Ledger

Go to Gateway of Tally > Accounts Info. >Ledgers > Create
1. Type Salary Payable in the Name field
2. Specify the group as Bank Accounts in the Under field and press Enter
3. Specify the Effective date of Reconciliation as required e.g. 1.04.2010.
4. Specify the A/c. No. as 02782564786
5. Specify Dubai as Branch Name
6. Specify 302620122 as the Bank Code
The completed Bank Ledger Creation screen is displayed as shown:

15

Creation of Payroll Masters

Figure 2.12 Completed Bank Ledger Creation

7. Press Enter to accept.

2.5 Create Salary Details

Go to Gateway of Tally > Payroll Info. > Salary Details > Create
1. Select the required Employee from the List of Employees and press Enter
In the Salary Details screen,

The Effective date is entered as 01-04-2010 by default based on the Date of Joining
entered in the Employee Master

Select Basic as the Pay Head from the List of Pay Heads

Specify the required amount in the Rate field e.g. 10000

The Attendance units, Pay Head Type and Calculation Type appears by default
2. Select Food Allowance as second Pay Head

Specify Rate as 500 and press Enter

3. Select Overtime as the Pay Head

Specify the required amount in the Rate (e.g. 100) and press Enter
4. Select Holiday Pay as the Pay Head and press Enter

16

Creation of Payroll Masters

The completed Salary Details Creation screen is displayed as shown:

Figure 2.13 Completed Salary Details screen

Similarly, Pay Structure for all other Employees can also be created.

Tally.ERP 9 also provides the flexibility to create the Salary Details for an
Employee Group and copy the same to the individual Employees.

17

Lesson 3: Processing Payroll

A Typical, Payroll Process comprises of the following activities:

Recording of Attendance and Production details (on time / work)

Processing Payroll Vouchers

Process Payroll

Payment of Salaries
Payment of Salaries

3.1 Recording Attendance/Production details

While using the Attendance Auto Fill feature, two separate Attendance Vouchers needs to be
created to record the Attendance details.
i. Recording Attendance details
Go to Gateway of Tally > Payroll Vouchers
1. Press Ctrl+F5 for Attendance Voucher
2. Press Alt+A (Attendance Auto Fill) to prefill employee Attendance details
In the Attendance Auto Fill screen,
Specify the Voucher Date
Select Primary Cost Category as Employee Category
Select All Items as Employee/ Group
Select Absent as Attendance Type in the Attendance/ Production Type field
Specify the required number of days in the Default Value to Fill (this will be prefilled for
all Employees)

Figure 3.1 Attendance Auto Fill with List of Attendance Type

18

Processing Payroll in Tally.ERP 9

Press Enter to accept the screen

By default 0 days will be prefilled for all Employees in the Attendance Voucher.
3. Specify the attendance details for each employee
4. Press Enter
5. Enter the details of the transaction in the Narration field

The completed Attendance Voucher Creation for Present Attendance is displayed as shown:

Figure 3.2 Completed Attendance Voucher Screen

6. Press Enter to accept the completed Attendance Voucher screen.

ii. Recording Production details
Record the Overtime details in the same manner like recording the attendance details by specifying the actual number of hours each Employee has done overtime.

19

Processing Payroll in Tally.ERP 9

The completed Attendance Voucher for Overtime Hours is displayed as shown:

Figure 3.3 Attendance Voucher Screen - Overtime

Press Enter to accept

3.2 Processing Payroll

Processing Payroll involves the following steps:

Processing Salary
Step 1: Processing Salary
Go to Gateway of Tally > Payroll Vouchers
1. Press Ctrl+F4 for Payroll Voucher
2. Press F2, specify the date as 30-4-2010 and press Enter
3. Press Alt+A (Payroll Auto Fill) to prefill employee payroll details
In the Payroll Auto Fill screen,
Specify 1-4-2010 in the From field
Specify 30-4-2010 in the To field
Select All Items as Employee/Group

20

Processing Payroll in Tally.ERP 9

Select

Salary Payable in the Payroll Ledger field

Figure 3.4

Payroll Auto Fill

Press

Enter to prefill the pay values for all the Pay Heads except the User Defined
(Holiday Pay).
4. Press Enter and specify the pay values for the pay heads defined as user-definable values
against each employee (in this case, define the Holiday Pay)
e.g. specify 1000 as Holiday Pay for Ali Al Rubaye and 1500 for Irfan Ulhaq Chaudhry and press Enter

Figure 3.5 Completed Payroll Voucher

5. Press Enter to accept.

21

Processing Payroll in Tally.ERP 9

3.3 Making Payments

After successfully processing the payroll, the following Payments needs to be made:

Payment of Salary
Step 1: Salary Payment
Go to Gateway of Tally > Accounting Vouchers
1. Press F5 for Payment Voucher
2. Press Alt+A (Payroll Auto Fill) to prefill employee payroll details
In the Payment Auto Fill screen,
Specify 01-04-2010 as From period
Specify 31-04-2010 as To period
Specify 30-4-2010 as Voucher Date
Select Primary Cost Category in the Employee Category field
Select All Items in the Employee/Group field
Select HDFC Bank in the Bank / Cash Ledger field as shown.
Select Salary Payable in the Payroll Ledger field

Figure 3.6 Payment Auto Fill screen

3. Press Enter and the employee payroll details will appear by default.
4. Enter the details of the transactions in the Narration field

22

Processing Payroll in Tally.ERP 9

The completed Payroll Payment Entry screen is displayed as shown:

Figure 3.7 Payment Voucher

5. Press Enter to accept.

23

Lesson 4: Payroll Reports

The following Payroll reports are provided in Tally.ERP 9:

Statements of Payroll
Pay Slip
PaySheet
Payroll Statement
Payment Advice
Payroll Register
Employee Profile
Employee Pay Head Breakup
Attendance Sheet
Attendance Register
Expat Reports
Gratuity
SIF Report

The process to generate some of the important reports is explained in the coming sections.

4.0.1 Payslip
i. Display Single Payslip
Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Payslip >
Single Pay Slip

Select the required Employee and press Enter

24

Payroll Reports

The Payslip for the selected employee is displayed as shown:

Figure 4.1 Payslip

ii. Printing Payslip

Press Alt+P from the Payslip screen, the Printing Payslip screen is displayed as shown:

Figure 4.2 Payslip Print Configuration screen

25

Payroll Reports

In the Printing Payslip screen, press backspace and enable the required option as
required and press Enter to print

Figure 4.3 Printed Payslip

4.0.2 SIF Report

Go to Gateway of Tally > Display > Payroll Reports > SIF
1. Language is set to Restricted (ASCII Only) by default
2. Format field is prefilled with SDF (Fixed Width)
3. Specify the required Location for exporting the file in the Export Location field (by default it will
be exported to Tally.ERP 9 folder)
4. Output file Name is prefilled with the required details so that the file can be uploaded to the
required web site. This should not be changed.
5. Specify the Payment Voucher period in the From and To fields (e.g. 1.4.2010 to 30.4.2010)
6. Select the required Employee Category and Employee/Group as required.
7. In Bank Ledger field select required Bank (e.g. EMI-NDB)
8. Specify the Payroll Voucher Period (e.g. 1.4.2010 to 30.4.2010) in the Date range to Print
field
9. Enter the required text in the Employee Reference field
10.Enter the required date in the Date of Printing field

26

Payroll Reports

Figure 4.4 SIF Exporting screen

11.Press Enter to export.

The SIF file will be exported to the Export Location specified in the export configuration screen
shown above.

27

Payroll Reports

Navigate the Export Location to view the exported file as shown below:

Figure 4.5 Default Tally.ERP 9 folder

28

Payroll Reports

The exported file can be opened in a Notepad or an Excel as shown:

Figure 4.6 SIF File opened in Notepad

For all other Payroll reports, refer Tally.ERP 9 Reference Manual (Help file) available with the
Product.

29