How do I update the Income Tax related information?#

  1. Income Tax is available under the Total Deductions component.
  2. To ensure that the Income Tax of the employee is calculated accurately, you need to provide the following inputs:
    1. House Rent paid by the employee
    2. Income from previous employer (In case the employee has worked in another organization in this financial year and they have paid him a salary)
    3. Investments done or Investment declarations (proposed investments which can be done until end of the year) under various instruments like ULIP, Infrastructure Bonds, Life Insurance premiums, etc.
    4. Other Income received during the year or Deductions - like Loss on House Property, Interest paid on Housing Loan, etc.
  3. Once the above information is updated, the application will automatically consider current and proposed income, Perquisites, exemptions and compute the taxable income and the income tax on this income.
  4. To Edit or update income tax information, click on the Edit icon of the Income Tax (see box 1) or right click on Income Tax and click on the Edit menu option (see box 2).
  5. The Income Tax screen will open up.
  6. The Income page displays all the amounts till date and the amounts that are assumed to be paid / deducted till the end of the year. The orange column indicates the current month. All data beyond this column is income that is projected based on current month's values.
  7. The Income from Previous employer page enables you to update any income paid and tax deducted in the previous organizations worked by the employee in this financial year.
  8. The Perquisites / Exemptions page contains information on all the Perquisites that are added to the taxable income and the exemptions of income.
    1. The Perquisite values are automatically picked up based on the information available in Salary Information.
  9. For exemptions:
    1. Housing Exemption - To ensure that this is calculated, you need to enter the annual value of the house rent that will be paid by the employee.
    2. Conveyance Exemption - This will be automatically calculated based on the amount of conveyance paid to the employee.
    3. The other exemptions like Medical exemption, LTA exemption and Education Exemption are picked up based on the amounts updated by you in the Salary Information page for each employee.
  10. The Deductions page contains information on all Chapter VI deductions that can be claimed by the employee.
    1. Update each item separately by clicking the Add Record button.
    2. Select the item from the dropdown in the Narration column and the corresponding Section and Maximum Limit allowed under that section are displayed.
    3. You will then need to enter the Gross amount i.e. the total amount invested / spent.
    4. The Qualifying and Deductible amounts are calculated when the Income Tax of the employee is calculated.
    5. If you have received the proof from the employee that the investment is made or the amount is spent, you can check-on the Proof check box. This feature is particularly useful at the end of the year, then you need to ensure that only items that have a proof are considered for tax calculation.
    6. Items like PF and LIC_SSS which are deducted from the salary of the employee are automatically considered as Chapter VI deductions. You cannot delete these items (as they are added automaticall). Also, no proof is required for these items. To differentiate these items from regular items, they are shown in Red.
    7. If the employee has a deduction of Profession Tax, then the total Profession Tax deducted and expected to be deducted is also displayed on this page.
  11. The Other Income page enables you to update any other income declared by the employee.
    1. A typical entry here is the Loss on House Property which is considered as a negative income declared by the employee. This amount has an upper limit and on selection on the relevant section, this amount is displayed.
  12. The Result page displays the result of the income tax calculations.
    1. Data displayed here includes taxable income and the tax that is to be paid for this income.
    2. Apart from this, the tax deducted till date - through payroll, directly outside the payroll and updated and deducted through previous employment are also displayed here.
    3. Based on tax to be paid and paid till date, the balance tax to be deducted is calculated.
    4. This amount is divided by the number of remaining months in the financial year and the tax deduction for the month is computed.

Note#

  1. You can enter the amounts paid to employees outside the regular payroll and include it in the Income Tax computation. Update these amounts in the components available under Calculation Fields.
  2. You can update the tax deducted on these kinds of payments. Locate the item TDS Raw Tax and TDS Cess under Income Tax Related Items and update the tax deducted there. The amounts entered here will be considered as tax already paid in the Income Tax calculations.
  3. In case you have opted for Employee Self Service, then the Income Tax savings and House Rent can be updated by the employee and you can consider this for payroll processing. This can totally eliminate the data entry work that you need to do.

See also:#

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This page (revision-) was last changed on 02-Jul-2010 18:51 by Girish Rowjee