Tutorial 7 of 8

Tutorial 7: Process a Full F&F Settlement - CrmLeaf HRMS

Outcome: F&F settlement processed with pending salary, gratuity, TDS reconciliation, and Form 16 Part B generated

7 steps28–40 minCrmLeaf HRMS Admin
Your progress0/7 steps complete
1

Confirm resignation and last working day

Action

Record the exit details in the employee profile.

Why this matters: The last working day is the anchor date for all F&F calculations - pending salary pro-ration, notice period, and gratuity (if applicable). Recording it accurately before initiating F&F prevents recalculation disputes.
  1. Go to HRMS › Employees › [Employee Name]
  2. Click Initiate Exit
  3. Select exit type: Resignation / Termination / Mutual Separation
  4. Enter: resignation date, last working day, notice period served (days)
  5. If notice period not fully served: system calculates notice recovery amount
  6. Click Save Exit Details
Employee › Exit Status: Initiated ✓ | LWD: May 31, 2025 | Notice served: 30 days (full)
Done when: Exit details saved. Employee status shows “Exit Initiated.” F&F calculation screen becomes available.
2

Calculate pending salary

Action

Compute the pro-rated salary for the partial month of exit.

Why this matters: If the employee’s last working day falls in the middle of a month, salary is paid pro-rata for the days worked. The formula: (Monthly Gross ÷ Payable days in month) × Days worked.
  1. Go to Payroll › F&F Settlement › [Employee]
  2. CrmLeaf pre-fills pending salary from attendance data for the partial month
  3. Review: days present, LOP (if any), pending salary amount
  4. If exit is at full month-end: full month salary is included
  5. Confirm the pending salary figure
F&F › Pending Salary: ₹48,500 (31 days full month) ✓
Done when: Pending salary amount confirmed. Calculation shows days worked, daily rate, and total pending salary.
3

Calculate leave encashment

Action

Compute the payment for unused earned leave balance.

Why this matters: Earned leave that has not been availed can typically be encashed at the time of exit, subject to the company’s leave policy. The encashment value = daily rate × unused earned leave days. This is taxable income and TDS applies.
  1. Go to F&F Settlement › Leave Encashment section
  2. CrmLeaf pulls the employee’s current earned leave balance from the Leave module
  3. Encashment amount = (Monthly gross ÷ 26 days) × Earned leave balance
  4. Review and confirm encashment days and amount
  5. Note: leave encashment up to ₹25 lakh is exempt from tax for private sector employees under Section 10(10AA) - CrmLeaf applies this automatically
F&F › Leave Encashment: 12 days × ₹1,923/day = ₹23,077 ✓
Done when: Leave encashment days and amount confirmed. Tax treatment (exempt or taxable) shown in F&F breakdown.
4

Calculate gratuity (if eligible)

Action

Compute gratuity payment for employees with 5+ years of continuous service.

Why this matters: Gratuity under the Payment of Gratuity Act, 1972 is payable to employees who have completed 5 or more years of continuous service. Formula: (Basic + DA) × 15 ÷ 26 × completed years of service. Gratuity up to ₹20 lakh is exempt from tax.
  1. CrmLeaf automatically checks if the employee has 5+ years of service
  2. If eligible: go to F&F › Gratuity section
  3. Verify the last drawn Basic + DA amount and years of service
  4. CrmLeaf calculates: (Basic + DA × 15 ÷ 26 × years)
  5. Tax exemption: up to ₹20 lakh exempt under Section 10(10) of the Income Tax Act
  6. Confirm the gratuity amount
F&F › Gratuity: 7 years × (60,000 × 15 ÷ 26) = ₹2,42,308 (tax exempt up to ₹20L) ✓
Done when: Gratuity amount calculated. Tax exemption applied. If employee has less than 5 years, gratuity shows ₹0 with explanation.
5

Apply notice recovery or bonus (if applicable)

Action

Deduct notice period shortfall or add any pending bonus/incentives.

Why this matters: If the employee served a shorter notice period than contractually required, the notice recovery is deducted from the F&F. If there is a pending incentive or bonus due (e.g. pro-rated annual bonus), it is added.
  1. F&F › Deductions section: CrmLeaf auto-calculates notice recovery if notice period served is less than required
  2. Notice recovery = Daily rate × Days short of required notice
  3. F&F › Additions: add any pending bonus, incentive, or reimbursement not yet paid
  4. Confirm all deductions and additions
F&F › Notice Recovery: ₹0 (full notice served) | Pending Incentive: ₹18,000 ✓
Done when: Notice recovery (if any) and pending additions confirmed. F&F total reflects all components.
6

Compute TDS reconciliation for the financial year

Action

Reconcile total TDS deducted vs total tax liability for the financial year.

Why this matters: At exit, the employee’s TDS must be reconciled for the financial year. If the employee exits mid-year, the TDS for the remaining months is no longer applicable. The F&F run checks for under-deduction or over-deduction and adjusts the final salary accordingly. This forms the basis for Form 16 Part B.
  1. F&F › TDS Reconciliation section
  2. CrmLeaf calculates: total income to date (actual months worked) + F&F amount
  3. Applicable tax on total income = Annual tax liability
  4. TDS already deducted to date
  5. Shortfall or excess: CrmLeaf deducts any shortfall from F&F or refunds any excess in the F&F payment
  6. Confirm TDS reconciliation amount
F&F › TDS Reconciliation: Total tax: ₹34,500 | Already deducted: ₹31,200 | Shortfall: ₹3,300 deducted in F&F ✓
Done when: TDS reconciliation complete. Net TDS deduction for the financial year shown. Shortfall deducted or excess shown as refund in the F&F breakdown.
7

Approve F&F and generate Form 16 Part B

Action

Finalise and approve the F&F settlement, then generate Form 16 Part B for the employee.

Why this matters: F&F approval triggers salary disbursement and Form 16 Part B generation. Form 16 Part B is the employee’s TDS certificate for their period of employment with you this financial year - they need it to file their income tax return.
  1. Review the complete F&F summary: pending salary + leave encashment + gratuity + additions – deductions – TDS reconciliation = Net F&F payable
  2. Click Approve F&F
  3. F&F amount is queued for disbursement in the next payroll run (or a special off-cycle payment)
  4. Click Generate Form 16 Part B
  5. Form 16 Part B PDF is generated and published to the employee’s ESS portal
  6. Send F&F statement to employee via email
F&F › Status: Approved ✓ | Net payable: ₹1,28,577 | Form 16 Part B: Generated ✓ | ESS: Published
Done when: F&F approved. Net F&F amount queued for payment. Form 16 Part B generated and available in employee ESS portal.

Tutorial 7 complete!

You have completed this tutorial. Your next step: Tutorial 8: Connect Tally ERP to CrmLeaf HRMS

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