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Basically Indirect Valuation of wage types means calculation of amounts of wage types indirectly.
We had recently come across an issue as follows:
Band and grades were given as per below screen shot:
And requirements were as below:
We had done this complete configuration through Indirect Valuation.
For the purpose, bands were named as Employee Subgroups in SAP as below:
Grade was named as Payscale Groups in IT0008.
Customising step is:
SPRO
> Personnel Management > Personnel Administration > Payroll
Data > Basic Pay > Define EE Subgroup Grouping for PCR and
Coll.Agrmt.Prov.
Check Pay Scale Type
Check Pay Scale Area
Check Assignment of Pay Scale Structure to Enterprise Structure
Determine default for pay scale data
These Steps can be customised as per requirements.
Revise Pay Scale Groups and Levels
For the purpose /TPA wage type was used for entering manual amount for monthly ctc.
1. Conveyance Allowance is fixed Rs. 800. So this can be added in the same table in amount field as shown:

2. Similary Amounts fixed are for:
LTA - Rs. 5,000.00 pm
Medical Rembursement - Rs. 1250 pm.
Gift Card - Rs. 416 pm
these
three are for selected catagories only. So, according to catagories
(Payscale group), values will be defaulted in the table V_T510.
The wage type characteristics for these wage type will be entered as INVAL A (Table - V_T511)
Now, next step is creating Allowance Grouping. Customising step is as below:
Payroll > Payroll India > Pay Scale Groupings > Define Pay Scale Groupings for Allowances
Assign Pay Scale Groupings for Allowances
Now in Reimbursements, Allowances and Perks
1. Assign Wage Type Model for Pay Scale Grouping for Allowances
Here, 20 depicts the number of wage types that will be allowed in IT0008. The same is defaulted in feature LGMST as below:
and so on.
2.
Maintain Default Wage Types for Basic Pay - In this step we default all
the wage types that needs to populate in IT0008 (Basic Pay Infotype),
example can be as below:
3. Maintain Wage Type Characteristics -
This
is table V_T511. Here we will determine how the wage type will be
calculated based on the matrix provided. This depends on the calculation
rules.
4. Maintain Valuation of Base Wage Types
Under
this table we determine the percentage of the base wage type to
calculate the other wage type. For example, in the matrix provided,
Basic is 8.33% of basic pay. The same is maintained as below:

Also,
it is given that for a particular allowance grouping, Basic pay is 25%
of total ctc. So this has been achieved by adding a multiplying factor
in feature 40ECS, as shown below:
And then in valuation table, the same is maintained as:
So, for this purpose in table V_T511 (WT Characteristics), the values for basic pay wage type will be as follows:
Which module variant to be used will depend on the calculation rule:
> In INVAL A the value of a wage type is fixed for an allowance grouping.
>
In INVAL B, the value of a wage type is determined as a % of other
wage type. You can also have a fixed component which can be different
for different allowance grouping.
> In INVAL C also the value
of a wage type is determined as a % of other wage types, which can be
restricted to a maximum value which can be different for different
allowance grouping.
> In INVAL D, the value of a wage type can
depend on basic salary. It has three variants which corresponds to INVAL
A, B and C.
For
maintaining Special Allowance, SUMME is used. The calculation for
Special Allowance was sum of all wage types minus monthly ctc.
So for obtaining this purpose, in Special Allowance wage type, characterstics were maintained as below:
And in valuation base wage type table, the same was maintained as below:
This
way, in PA30, in IT 0008, we only need to maintained the amount for
/TPA (Monthly CTC), as according to Employee Subgroup and Payscale Group
and according to allowance grouping, all other wage type amounts will
populate automatically.
Thanks and Regards,