# Deduction on Expense
Deduction on Expense records an amount the company paid on an employee's behalf that must be recovered through payroll — traffic fines, damaged goods, or other recoverable costs. When the voucher is approved, the expense is reclassified as an employee receivable (account 14). Approved vouchers with an open balance auto-pull into Pay Run as deduction category 2, deducting the full remaining balance from net pay.
Overview & List View
Go to Payroll → Deduction on Expense. The list shows every recovery voucher with employee, expense account, amount, outstanding balance, and status.
List columns
| **Column** | **Shows** |
|------------|-----------|
| Id | System reference number. |
| Number # | Voucher or bill number. |
| Date | Date and time of the entry. |
| Employee | Employee from whom the amount is recovered. |
| Expense Account | GL expense account originally charged (e.g. Traffic Fine Expense). |
| Amount | Total recoverable amount. |
| Balance | Remaining amount still to be recovered. |
| Status | Draft, Approved, Closed, or Cancelled. |
Quick filter tabs
| **Tab** | **Shows** |
|---------|-----------|
| Default | All except cancelled. |
| Approved | Approved vouchers with open or zero balance. |
| Draft | Saved but not yet approved. |
| Closed | Fully recovered (balance = 0). |
| Cancelled | Cancelled vouchers. |
Advanced Filters
Id, Employee, Expense Account, Branch, Brand, Status, Date, and Created date.
List row actions
| **Action** | **Available when status is** |
|------------|------------------------------|
| Edit | Draft |
| Delete | Draft |
| View | All statuses |
Quick Start — Create a Deduction on Expense
1. Navigate
Go to Payroll → Deduction on Expense and click New.
2. Fill in details
- Set the Date and select the Employee *.
- Choose the Expense Account * — the account where the company originally booked the cost (e.g. Traffic Fine Expense).
- Enter the Amount * to recover from the employee.
- Optionally add Voucher Number, Notes, Branch, and Brand.
3. Save or approve
- Save — keeps status Draft. Balance is set equal to Amount.
- Save And Approve — approves in one step and posts the reclassification journal.
- Reset / Cancel — clears or closes the form without saving.
4. Recover through pay run
When you create a Pay Run for the same employee, the open balance auto-pulls as a deduction line (category 2 — Deduction on Expense). Approve the pay run to deduct from net pay and reduce the voucher balance.
| **Field** | **Description** |
|-----------|-----------------|
| Date * | Date and time of the deduction entry. |
| Employee * | Employee responsible for the expense. Active HRMS employees only. |
| Voucher Number | Bill reference. Auto-generated when bill-number series is configured. |
| Expense Account * | Leaf expense account where the company cost was originally posted. Use the info button to open account enquiry. |
| Amount * | Total amount to recover from the employee. On save, Balance is set to this value. |
| Notes | Reason or incident details (e.g. overspeed camera fine reference). |
| Branch | Branch associated with the employee or expense. Defaults from context when branch access is enabled. |
| Brand | Optional brand tagging. |
> On create, Balance always equals Amount. Balance decreases when recovered through pay run or a linked Receipt Voucher. When balance reaches zero the voucher moves to Closed.
Actions & Status
View toolbar actions
| **Action** | **Description** | **Available when status is** |
|------------|-----------------|------------------------------|
| Approve | Posts the reclassification journal (DR 14 / CR expense account). | Draft |
| Edit | Opens the voucher for editing. | Draft |
| Delete | Permanently removes the voucher. | Draft |
| Clone | Creates a copy of the voucher. | All (if permitted) |
| Print | Prints the voucher. | All |
More menu (⋮) actions
| **Action** | **Description** | **Available when status is** |
|------------|-----------------|------------------------------|
| Cancel | Cancels the voucher and reverses its journal. | Approved, Closed |
| Master Update | Updates selected header fields without reopening the full form. | Approved, Closed |
| Add/Update Note | Adds or edits a note on the voucher. | All |
Statuses
| **Status** | **Description** |
|------------|-----------------|
| Draft | Saved but not approved. Editable. No journal posted. |
| Approved | Journal posted. Balance tracks amount still owed. |
| Closed | Fully recovered — balance is zero. |
| Cancelled | Cancelled and journal reversed. |
Connection with Pay Run
Approved Deduction on Expense vouchers with balance > 0 auto-pull into the employee's Pay Run Deductions section.
| **Setting** | **Value** |
|-------------|-----------|
| Deduction category | Deduction on Expense (2) |
| Auto-pulled amount | Full remaining Balance |
| When settled | Pay run approve reduces balance; voucher closes when balance = 0 |
Installments via balance
Each pay run pulls the entire open balance. To recover in instalments, reduce the deduction line amount on the pay run before approving (for example deduct ₹500 of a ₹2,000 balance). The voucher balance decreases by the amount actually deducted. Repeat on subsequent pay runs until balance reaches zero.
Alternatively, create a Receipt Voucher linked to the deduction-on-expense record for direct cash recovery outside payroll — this also reduces balance.
Accounting Postings
On voucher approve
Reclassifies the company-paid expense as an employee receivable:
- DR account 14 — Short-Term Loans / Employee Receivable (deduction category 2 credit account)
- CR expense account — the selected Expense Account (e.g. Traffic Fine Expense)
The employee is now shown as owing the company. The original expense account is cleared.
On pay run approve (deduction line)
When the recovery is deducted from salary:
- DR account 57 — Salary Payable (employee sub-ledger)
- CR account 14 — Short-Term Loans / Employee Receivable
Cancel on either document reverses its journal. Cancelling an approved pay run reopens the deduction-on-expense balance.
Worked Example — Traffic Fine Recovery
Scenario: Driver Raj ran an overspeed camera fine of ₹2,000. The company paid the fine and booked it to Traffic Fine Expense. The amount must be recovered from Raj's salary.
Step 1 — Create Deduction on Expense
- Employee: Raj
- Expense Account: Traffic Fine Expense
- Amount: ₹2,000
- Notes: Overspeed camera fine — NH-44, 15 Mar
Step 2 — Approve the voucher
Journal: DR 14 ₹2,000 / CR Traffic Fine Expense ₹2,000. Balance = ₹2,000.
Step 3 — March Pay Run
Deduction line auto-pulls: Deduction on Expense ₹2,000 (full balance). Net pay reduced by ₹2,000.
Step 4 — Approve pay run
Journal: DR 57 ₹2,000 / CR 14 ₹2,000. Voucher balance → ₹0, status → Closed.
Instalment variant: If Raj agrees to ₹500 per month, edit the pay run deduction line to ₹500 before approving. Balance becomes ₹1,500. Repeat for four months until closed.
Best Practices
- Create the Deduction on Expense as soon as the company pays the cost — do not leave recoverable expenses only in the expense account.
- Use a dedicated expense account (e.g. Traffic Fine Expense) so reports clearly separate recoverable costs from general expenses.
- Add Notes with fine reference numbers, dates, or incident details for audit trails.
- Review auto-pulled deduction lines on each pay run before approving — adjust the amount when recovering in instalments.
- Approve the deduction voucher before running payroll so the reclassification journal is posted and the balance is available for recovery.
FAQ
When does the expense account get cleared?
On voucher approve — the CR entry moves the cost from the expense account to account 14 (employee receivable).
How much is deducted in each pay run?
The system auto-pulls the full remaining balance. Reduce the line manually on the pay run for instalment recovery.
Can an employee repay outside payroll?
Yes. Use a linked Receipt Voucher to record direct repayment. Balance decreases accordingly.
What happens if I cancel an approved pay run that deducted this expense?
The pay run journal is reversed and the deduction-on-expense balance is restored.
Can I edit an approved deduction on expense?
No. Use Master Update for allowed header fields, or Cancel and recreate.
Which deduction category is used on pay run?
Category 2 (Deduction on Expense) — links pay-run deduction line referenceId to this voucher for balance tracking.
Can I recover in instalments?
Yes. Reduce the deduction line amount on the draft pay run before approve — remaining balance carries to future pay runs.
What expense account is debited on approve?
The expense account on the voucher line is credited and employee receivable (account 14) is debited — moving cost to employee recovery.
Does receipt voucher recovery skip pay run?
Direct employee repayment via receipt voucher reduces balance without pay-run deduction — useful for one-off settlements outside payroll.