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Pakistan country pack — this guide covers Pakistan-specific statutory rules. Octal HR is configurable for other regions too.
What are salary components?
A salary component is any individual earning or deduction that makes up an employee's payslip. In Octal HR, components are defined at the company level under Settings → Payroll → Salary Components and then applied when building each employee's salary structure.
Components fall into three categories:
- Earning — amounts added to an employee's pay (basic, HRA, medical, conveyance, overtime)
- Deduction — amounts subtracted from pay (loan EMI, advance recovery, fine/penalty)
- Statutory — government-mandated amounts (EOBI, PESSI, income tax WHT) — these are auto-configured; see the dedicated articles
Pre-configured components
Octal HR ships with the following components ready to use. You can activate, rename, or adjust them without creating from scratch:
| Component | Type | Default calculation |
|---|---|---|
| Basic Salary | Earning | Fixed amount (defined per employee) |
| House Rent Allowance (HRA) | Earning | Fixed or % of basic |
| Medical Allowance | Earning | Fixed (FBR-exempt up to PKR 10,000/month) |
| Conveyance Allowance | Earning | Fixed (FBR-exempt up to PKR 8,000/month) |
| Utility Allowance | Earning | Fixed amount |
| Fuel Allowance | Earning | Fixed amount |
| Overtime | Earning | Auto: (Basic/26) × 2 × OT hours |
| Loan EMI Recovery | Deduction | Auto: from active loan schedule |
| Advance Recovery | Deduction | Manual entry per payroll period |
| Income Tax (WHT) | Statutory | Auto: annualised slab calculation |
| EOBI (Employee share) | Statutory | Auto: 1% of minimum wage |
| PESSI / SESSI | Statutory | Auto: as configured per province |
Creating a custom earning component
1
Go to Settings → Payroll → Salary Components → Add Component.
2
Enter the component name (e.g. "Special Allowance") and select type Earning.
3
Set the calculation type:
- Fixed — a flat PKR value
- Percentage — a percentage of another component, typically basic salary
- Formula — a custom expression that references other components
4
Set the Taxable flag: when off, the amount is excluded from WHT calculations. Statutory components are additionally flagged as Statutory.
5
Click Save. The component is now available to add to employee salary structures.
Creating a custom deduction component
The process is the same as earnings, but select type Deduction. Common custom deductions include:
- Staff canteen recovery
- Uniform or PPE cost recovery
- Club membership deduction
- Overpayment recovery
Statutory deductions are managed separately. Do not create manual components for EOBI, PESSI, or income tax — these are managed via Settings → Payroll → Statutory Deductions to ensure correct challan reporting.
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