Posts in category: News & Updates

Smt. Nirmala Sitharaman, the honorable Finance Minister, presented the Union Budget 2023 in Parliament on 1st February 2023. This is the last full-year budget to be presented by this government before the national elections in 2024. The Budget has been widely welcomed by all sections of society and has been hailed as growth-oriented, forward-looking, and one that will support inclusive growth. In this article, we shall analyze how the 2023 budget would affect the salaried class.

The Budget has several proposals for the benefit of taxpayers in the lowest and highest tax bracket.

The proposals also include several proposals for the benefit of salaried individuals, senior citizens, and pensioners. In her budget speech, the Finance Minister has some important announcements for hardworking middle-class citizens who pay taxes. This tax regime called the new income tax slabs is set to be the default regime in the future.

However, the old tax regime has not been abolished and taxpayers now have the option to choose between these two regimes when paying taxes.

Major changes in Income Tax slabs & rates as proposed in budget 2023.

The first change made in the budget 2023 relates to the rebate on Income tax. Rebate limit of Personal Income Tax to be increased to ₹ 7.0 lakh from the current ₹ 5.0 lakh in the new tax regime.  Thus, persons in the new tax regime with income up to ₹ 7.0 lakh need not pay any tax.

The tax structure in the new personal income tax regime, introduced in 2020 with six income slabs to change by reducing the number of slabs to five and increasing the tax exemption limit to ₹ 3.0 lakh.

The tax rates as per the Old and New regimes are given hereunder.

Old Income tax regime: (Existing & Continuing)

New Income tax regime (Existing and applicable for FY 22-23)

New Income tax regime (Revised in Budget 2023)(For FY 23-24)

The tax payers still have the option to choose between these two regimes when paying taxes.

In addition to the above, there is a reduction in surcharge on the rate of the highest tax rate in the country of 42.74%, which is the highest in the world, from 37% to 25%. With this reduction, the maximum rate would be 39%.

The Finance Minister has also proposed to extend the benefit of standard deductions to the new tax regime. Each salaried person with an income of ₹15.5 lakhs or more will thus benefit by ₹ 50,000.

Under the old tax regime, these are some of the income tax deductions that you can claim:

• Standard deductions
• HRA and Leave Travel Allowance
• Interest on Home loans
• Medical Insurance Premium
• Interest on Education loan

The new tax regime is different in two aspects:

• The government has reduced the income slabs accompanied by lower tax rates.
• All tax exemptions and deductions claimed under the old regime will not be available under the new regime.

The advantage here is that the taxpayer has the liberty to decide where and how to save/invest their money. This means you no longer have to rush to tax-saving schemes or investments that may not be in line with your financial needs.

PAN is to be used as a common identifier!

The Finance Minister has announced that the Permanent Account Number (PAN) will be used as common identifier for all digital systems of specified government agencies. PAN is the 10-digit alphanumeric number allotted by the Income-tax Department to a person, firm, or entity. This move would assist in further promoting ease of doing business in the country.

KYC process to be simplified

The Finance Minister has announced that a system of unified filing process will be set up to enable agencies to get all data from a common portal as per the choice of those filing returns.

For individuals Digilocker and Aadhar will serve as a “foundational identity” and with this facility changes in address or identity will be reflected across other platforms. This means that the government is working to synchronize citizens’ data across multiple portals when just Aadhar is updated. As of now when you update your Aadhar it does not update the changes say in the Income Tax portal. This is now set to change.

The Digital India program by the Government of India has introduced the Digilocker initiative where citizens can get authentic documents/certificates in digital format from the original issuers of these certificates. The aim is to eliminate or minimize the use of physical documents to enhance the effectiveness of service delivery paving the way for hassle-free and friendly service to the citizens.

Conclusion

These announcements made in the Union Budget 2023 will benefit the salaried employees and leave more disposable income in the hands of individuals thus enabling higher investments. We at GetifyHR are fully prepared to handle these changes and support our clients in seamlessly running their statutory compliance requirements and keeping them fully compliant always.

Payroll Processing has always been a very challenging task especially when the workforce is fairly large. When we think of Payroll, we are not just thinking of generating the payslips. The entire gamut of Payroll Processing includes Attendance and Leave Management, Statutory Compliance, and Recruitment. All these aspects have to be perfectly integrated and work seamlessly if you are to run your payroll error-free.

The best option is to outsource this activity to a reputed service provider that could relieve HR from the pressures involved in maintaining the payroll in-house. In this article, we endeavor to familiarize you with the 10 compelling reasons on why you should outsource Payroll Processing.

1.  Allow the HR to focus on core business activities

The HR teams are hard-pressed to handle payroll processing and there is no denying the fact that this activity is taking up too much of their valuable time. HR teams are supposed to focus more on talent management, improving the work culture, evaluating and enhancing performance, training and development, hiring and retaining top talent, etc. On the contrary, they are forced to focus on the mundane activity of payroll processing. By relieving the HR team from this activity, you free them to focus on core business activity.  This will help the business to grow.

2.  Saving on costs

Outsourcing Payroll saves money. When you manage payroll in-house your expenses will soar as you not only need to hire a workforce to specifically handle this task, but you also have to provide the infrastructure, both hardware, and software. When you outsource you can cut costs and reduce errors.

3.  Save time

Payroll processing requires a great deal of time and attention to detail when performed in-house. The process involves generating the payslips and at the same time calculating leaves and benefits and updating the entitlements and deductions. When you outsource this activity you can save time in a process that is routine and very repetitive.

4.  Enhance Productivity

Payroll processing is a mundane activity that is cumbersome and requires a lot of adjustments to frequent changes. Time is of the essence in any organization and payroll processing consumes a lot of time and effort. However, when you outsource this task to a Service Provider, you are improving the working of the employees and thereby enhancing productivity.

5.  Improve Accuracy

Payroll processing is prone to errors and these errors negatively impact the working of the company.  Inaccuracies in Payroll will attract penalties from the government departments and create friction with the employees. Error-free payroll processing is a must and the best option to achieve this is by outsourcing to a qualified service provider. When you outsource your payroll you can generate error-free and highly accurate reports as they use high-end technology supported by a team of highly qualified professionals.

6.  High Level of Data Confidentiality & Security

Payroll involves the vital data of employees. Any leakage of such data would give rise to lawsuits, discontent, and damage to the reputation of the company. The privacy of this data is paramount and a reputed service provider will guarantee high security, strong internal controls, and restricted access to the data.  Moreover, the service provider will guarantee confidentiality and security with contractual rights to damages in case of breach of contract.

7.  High level of Integration

The package offered by service providers comes with a high degree of integration. All the modules namely, Payroll, Attendance & Leave management, and Statutory Compliance are seamlessly integrated so that you can get all your reports in real-time with a great degree of accuracy. This is a great advantage to the company as all information is available to the various departments as and when needed.

8.  Keeping the Company Compliant

This is a very vital factor for any business. Following the Statutory Compliance rules and regulations is a must for all businesses.

Whether it is handling EPF, ESI, Income tax, Professional Tax, or other Labour laws, any errors would have serious ramifications for the company. The statutory rules and regulations are prone to change frequently, but service providers can handle these changes without any delay. This will enable the business to be compliant always and avoid legal issues or paying penalties to the concerned government departments.

9.  Quickens Turnaround time

Outsourcing the Payroll process enables a quicker turnaround time. The outcome of outsourcing is on-time data processing, fewer errors, accurate reporting, and the support of a professional & dedicated team.

Outsourcing makes employee management easier and smoother and thus provides a quick turnaround time.

10.  Work without Pressures

Apart from the cost & time-saving advantages, outsourcing your payroll allows you to work without any pressure. ‘Lesser the headache, better the working’. When you outsource payroll, you can take your mind off paying employees on time, calculating & paying the taxes, or distributing the payslips. When your mind is off these pressures, all other activities of the business work smoothly, thus paving the way for greater growth.

Conclusion

Outsourcing your payroll processing to a qualified service provider can reap a lot of benefits for the business. One important reason is that payroll processing is their core area of expertise. They are manned by professional staff that brings in a wealth of experience that enables accurate processing and full compliance with statutory rules and regulations.

GetifyHR with its high-end cloud-based technology offers the best solution for all your payroll needs. If you are on the lookout for an outsourcer, you don’t have to look any further. Click here for further information or call us to help you make a decision.

Introduction

Income tax is the tax levied by the government on the income earned by an individual or corporate in a particular year. The Act is called Incometax Act, 1961 and this came into force on the 1st of April 1962. Companies are liable to pay their corporate tax dues and also deduct the tax dues from the salaries of those employees who are liable to pay tax in the form of Tax Deducted at Source (TDS) and remit to the government.

What is Income as per the Act?

The word Income is defined under section 2(24) of the IT Act. For a businessman, the profits and gains he makes will constitute income. This is corporate tax.  Corporate tax is a direct tax levied on the net income or profit of a corporate entity from their business, whether domestic or foreign.

For an employee who is liable to pay tax as per the Act, the income constitutes Basic salary and also includes salary advance, Leave Encashment, Commissions Earned, Annuity and Gratuity. The employer deducts the tax liability from the salary of the employee who is liable to pay tax and remits to the government account. This is Tax Deducted at Source (TDS)

For Professionals & Freelancers, the earnings from different sources like professional fees, other incomes, etc form part of the income.

For a landlord, the rental received from part of the income. Similarly, capital gains from the sale of property or shares and buying of assets are also considered income.

However, certain incomes like the interest earned on Public Provident Fund (PPF) are exempt from tax.

The Assessee

The corporate entity or the person who is liable to pay Income tax and who is required to file the Income tax Return (ITR) is known as an Assessee. Accordingly, any business that has reached the threshold for paying tax is an assessee and any employee who is liable to pay tax is also an assessee.

The Assesse has to file the Income tax Return for each Assessment Year. Here we have to familiarize ourselves with two terms Financial Year and Assessment Year. The Financial Year is the period during which you earned the income and the Assessment Year is the succeeding year when you file your return for the previous year.

PAN & TAN

PAN is a ten-digit unique alphanumeric number issued by the Income tax Department. PAN which is the abbreviation for Permanent Account Number is a prerequisite for filing IT Returns. The IT Department can trace all transactions, returns, refunds, and other activities relating to Income tax through PAN.

TAN refers to Tax Deduction Number. This is a 10-digit alphanumeric number allotted to those who are liable to deduct TDS by the IT Department.

The obligation of the Business

Corporate Tax obligations

As a business entity, the employer has to pay corporate tax once they become liable to pay tax as per the IT Act, 1961. One of the basic conditions for paying IT is if your income exceeds Rs:2,50,000/- in a Financial Year. The tax on income for a financial year has to be paid to the IT Department during the succeeding year, which is known as the assessment year.

However, there are provisions to pay tax in advance based on estimated income for that particular year. In case the advance tax paid is more than the actual tax to be paid, then the excess tax paid is refunded to the assessee.

Payroll Tax obligations

Payroll tax is the tax an employee has to pay to the IT department after deducting the amount from the salaries of his employees who are liable to pay tax. Any employee whose income, in this case, the salary, exceeds Rs:2,50,000/- in a Financial Year is liable to pay Income tax. As per sec.192 of the Income tax Act, the employer is required to deduct tax at source from the salaries payable to an employee during the financial year. The tax liability of the employee is determined by the rate as applicable during the particular year. Every month, 1/12 of the net tax liability should be deducted from the employee’s salary along with a 3% Education Cess on Income tax. This has to be remitted to the IT department within the prescribed time as per sec.200 of the IT Act.

Further, the employer or deductor is required to furnish a certificate to the employee giving particulars of the tax deducted. The certificate has to be issued in Form No.16. Similarly, it is mandatory to file a return that certifies the deduction of tax and payment along with the required details. The authorized person has to sign and submit this to the Department. The employer has to quote the TAN and PAN numbers of all employees in all the certificates and returns.

When an employer fails to deduct tax, he is liable to pay interest. In the event of the employer deducting tax but not paying the tax to the department, he is in default and is, therefore, liable for penal action.

Conclusion

The employer has multiple obligations when it comes to paying Income tax. From the business point of view, the employer has to pay corporate tax under the prevailing rates. From the employee’s point of view, he has to efficiently manage the tax liabilities of each employee and calculate the TDS, deduct the amount from the salaries and remit the same to the department.

This is an ongoing process and the employer has to show great efficiency in managing these issues.

The TDS part can be efficiently managed by outsourcing to a third party who can efficiently manage all requirements of payroll that includes generating payslips, managing attendance and leave, and all statutory requirements like EPF, ESI, Incometax, and Professional Tax.

GtifyHR, one of the leading Payroll and HR outsourcing companies in the region offers a technology-driven cloud-based package that handles Payroll and Statutory requirement issues in an efficient and simplistic manner. Outsourcing Payroll operations is the best solution to overcome the problems associated with handling TDS and other tax-related issues.