How to enable/disable the impact on special allowance due to PF proration

In the Keka system, components like 'Basic' and 'HRA' have a fixed calculation that is determined by the values in the employee's salary breakup, even when proration is applied. However, when it comes to PF shares, the calculation is based on the formula defined in the employee's assigned salary structure, which can change with proration. Since the PF value is taken from the Gross salary, any change in the PF value due to proration can also affect the Special Allowance amount. To address this, Keka allows you to choose whether or not to enable this impact on Special Allowance, based on your specific needs.

For doing this, navigate to Payroll (1) and then, to Settings (2). Find Pay Groups (3). If you have multiple pay groups, select the one you want to work on. Under Actions, click on the Configure icon (4) against the pay group.

On the next window that opens, click on Contributions (1). Click on the three dots and choose Update PF Settings (2) form among the options.

The Provident Fund (PF) Settings window will open up and scroll down to find Additional Settings. Under this, enable/disable the check box that says 'Do not adjust (reduce) Special Allowance value, in case PF contribution is impacted by LOP'. Now, click on Update. 

If the PF (Employer's Contribution) is hidden and the admin chooses to not adjust the PF difference from special allowance, then the special allowance value will not be affected. But this means, the admin is paying more than promised CTC to the employee.

In the absence of a special allownace component, the adjustment due to PF proration will Happen the next available taxable component in the salary structure.

And you are done! If you want anything else to be clarified, please read the other articles or talk to us!