Assign Earning Section to Salary Components for Tax Reporting

Introduction

Keka now allows you to classify eligible salary components under income tax earning sections — Section 17(1) and Section 17(3) — as per Indian tax rules. This classification helps ensure accurate tax reporting across all statutory forms and reports.

This configuration applies to both global components and pay group-specific components, depending on your organization’s payroll setup.

Table of Contents

• Understand Which Components Support Earning Section Selection
• Configure Earning Section for Components
• Component Behavior with Pay Groups

Steps

Understand Which Components Support Earning Section Selection

The Earning Section dropdown is available only for the following component types:

• Recurring Allowance

• Ad-hoc Allowance

• Recurring Reimbursable Component

For these components, you will see an option to select the relevant earning section during setup or editing.

Note: Components of types like Deduction, Reimbursement, or Earned Bonus will not show the earning section option.

Configure Earning Section for Components

1. Go to Payroll Settings > Components.

2. Add or edit an eligible component (refer to list above).

   

3. In the component settings, locate the Earning Section dropdown.

4. Choose one of the following:

   • Section 17(1) – Salary (Default for all components)

   • Section 17(3) – Profits in lieu of salary

   

This field ensures that each allowance or reimbursable amount is reported under the correct section in tax forms.

Component Behavior with Pay Groups

If your organization uses pay groups, the earning section behaves differently:

• The option is visible at the global component level when configuring components before assigning to pay groups.

• When a component is moved from global to a pay group, the earning section value is retained and shown accordingly in the pay group-specific configuration.

• Employees will see the mapped earning section in their tax-related documentation.