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Wrong computation Income Tax Slab

I am trying to implement the following monthly bands of taxable income in erpnext but I can’t seem to get correct computations of Taxable Income.
562Z

Personal Relief: 2,400.00 per month
Minimum Taxable Income: 24,001.00 per month

Could someone kindly direct me to correct pointers for more insights, please?
I have gone through erpnext official documentation as well as the forum and I can’t seem to have it working.

Hi,

Welcome to ERPNext and to the community. Here’s hoping you have a great experience with ERPNext and over here.

Taxes in all parts of the world is complex, so while we understand what you posted, there are already some conflicts in your post. For instance:

Your table says 0-24K - 10%
Another place it says Minimum Taxable Income: 24K.

If you prepare a spreadsheet and post the tax computation and the formulas for different income levels, someone here would be able to help you better.

Hope this helps.

Thanks

Jay

Hello, @JayRam for your quick response. I have attached a sample computation and the right tax bands that might put things in clear perspective for members. Though I will still prepare a spreadsheet as well later in the day as advised.


Hope this makes things clear.

Hi @silicon755,

If income tax is calculated monthly and your pay period is also monthly, you probably don’t want to be setting up tax slabs and payroll periods. The easiest thing would be to just define all this as components in the salary structure. Have you tried that? Can you show what you’re doing and the erroneous results you are getting?

(Also, there are still contradictions in this data. For example, you say “Income below 24,000 is not subject to PAYE”, but then in the table you show a 10% tax rate for 1-24,000.)

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Hi @peterg ,

The (1 - 24,000) band is interpreted as income below 24,000 is not subjected to PAYE but if the income exceeds the 24,000 figure then it’s subject to a 10% deduction. Kindly note that these deductions are cumulative.

(See attached erroneous results of my current work)


Hi @silicon755,

Like I said in my last post, if income tax is being assessed monthly and you’re also doing payroll monthly, you probably don’t want to be using income tax slabs. Tax slabs are meant to track multiple pay slips (usually monthly, weekly, etc.) across a larger tax period (usually annual). If your brackets are defined on monthly terms, the results might be weird. It will be far easier to try to define this all in the salary structure directly.

Hi, @peterg I have tried configuring Income Tax Slabs on an annual basis and I can’t seem to pull through. I have attached an excel worksheet with a sample calculation, could you kindly have a look and advise. Thank you.

https://docs.google.com/spreadsheets/d/1yncioGfUzSnAvP1KHRAMy-z0NUFF3svxyjzpHJU_2_U/edit?usp=sharing

access denied?

Try this one PAYE calculations - Google Sheets

No formula added right? can you add formula to understand how values get calculated

Formulas had been striped off but this particular one has the working formula
PAYE calculations.xlsx - Google Sheets

Greate, now 60 000 is annual income or monthly?

60,000 is a monthly income

I am stuck there also, I hope get help from other community members.

Can you show us your settings for Salary Structure, Income Tax Slabs, Payroll Period, and Salary Structure Assignment?

1 Like

Hi Silicon your problem is my problem did you find a solution? if not side chat me for an altenative.

@johnmwandege it’s much easier to define all these formulas in the salary structure directly.

That’s what i exactly did and previously was working just fine,Now i upgraded to V13 and i have a problem ,those components that depend on others to compute their values are not showing in salary slips.
i.e the Paye to be specific(it depends on( Paye before relief ). Can you kindly share your solution.your problem seems kenyan just like mine