How to change the setting for the TDS deducted for a Bonus being paid?

When a bonus is paid to an employee, the tax calculation is affected as they are receiving an additional amount than projected for tax calculation. Now the tax deducted can be either deducted at the time of bonus payment or can be distributed evenly in the remaining months of the financial year.

To change the TDS settings on Bonus go to Payroll (1) and move to Settings (2). Here under Paygroup (3) search for the paygroup you would like to change the settings for and under Actions click Configure (4). 

In the paygroup page select Other Settings and navigate to Miscellaneous Settings. Now under Options select Update Settings.

In the new window scroll down to Additional and you will see Do you consider bonuses with future payout dates (Unpaid Bonuses) for Projected Tax Calculation? for which you can select Yes or No radio. When you select Yes, the tax calculation will consider bonus from the point the Bonus is added the salary structure, even before the bonus is paid to the employee. When you select No, the tax calculation will consider the the bonus from the point the bonus is paid. Now when you select No and additional question will appear which reads Do you deduct total payable tax on bonus in the month it is paid out?  for which you will have similar Yes or No radio options. When you select Yes, the increase in TDS because of the addition of the bonus is deducted from the employee in the same month as the bonus payout date. When you select No, the increase in TDS is not deducted in the same month but is distributed in the coming months of the Financial year. Once you have made the necessary edits click Save.

Hope the process to change the TDS on bonus settings is clear. Need more help? You can refer to the other articles available or Contact us!