Managing taxes and deduction settings for a pay group

Introduction

Income tax and professional tax are 2 major tax deductions that happen each pay cycle. Income tax deductions can have a major impact on the take-home salary of your employees. While thoughtful planning of the salary structures can help with reducing the tax burden, investment and other exemptions are crucial in helping employees reduce the income tax they have to pay. 

Manage income tax and professional tax settings 

1. Go to Payroll from the left-hand menu.
2. Click on the Settings tab.
3. Under the Pay Groups tab, locate the pay group you want to configure.
4. Click on the Configure icon for the selected pay group.
   
   

    5. On the Pay Group Configuration page, locate the Taxes and Deductions tab.

    6.Click on the Taxes and Deductions tab to configure the settings related to income tax and professional          tax.

Updating the income tax declaration due date

To update the income tax declaration settings:

1. Click on the three dots on the Income Tax tab.

2. From the drop-down menu, select Update IT Declaration Due Date.

On the Income Tax Declaration Due Dates window, you can make changes to some aspects like the declaration and proof submission due dates as well as the approval requirements for these submissions. 

Updating IT declaration due dates 

To configure the IT declaration cut-off dates for employees on Keka:

1. Set Monthly Cut-off Date:

   • Define a cut-off date for each month after which IT declarations will not be considered for TDS calculations.

2. Set Financial Year Cut-off Date:

   • Set a cut-off date for the financial year after which employees cannot submit any IT declarations.

3. Define Declaration Period for New Employees:

   • Specify the time period within which new employees can make their income tax declarations.

4. Enter Monthly Cut-off Date:

   • In the designated field, enter the cut-off date for each month for existing employees.

5. Enter Financial Year Cut-off Date:

   • Enter the cut-off date for the financial year to stop IT declarations after this date for existing employees.

6. Set New Employee Cut-off Date:

   • Define the number of days after joining within which new employees can make their IT declarations.

   • Set a cut-off date for new employees that may differ from the existing employee cut-off date.

Approval for declaration changes before the cut-off date

Submission of IT declaration after the cut-off date

1. Allow IT Declarations After Cut-off Date:
   • Select the Allow employee to submit IT Declaration after checkbox to enable submissions after the cut-off date.
2. Require Approval for Late Declarations:
   • Select Required Approval of any changes in IT declaration submitted after to enable approval for late submissions.

Reminder emails

The system lets you configure reminder emails to the payroll admin and approval/rejection emails to the employee based on the IT declaration status.

Toggle the "Enable Declaration Reminder Emails" button to enable or disable reminders.

Income tax declaration proof submission

1. Make Proof Submission Mandatory:
   • Select the Employees are required to submit proof of IT declaration checkbox to enforce proof submission.
2. Set Cut-off Date for Proof Submission:
   • Enter the day and month in the fields to set a cut-off date for proof submissions.
3. Best Practice Recommendation:
   • Set the proof submission cut-off date at least 30 days after the income tax declaration cut-off date.
4. Save Settings:
   • Click Save to update the settings after making the necessary choices.

• Updating the Income tax regime
  Choose Tax Regime: Employees can choose between the old and new income tax slabs under Section 11BAC (2020) based on their preferences for tax savings.

• Enable Opt-In/Out: Allow employees to opt in or out of the new tax regime until the cut-off date.

• Update Tax Regime:

  • Click on the three dots under the Income Tax tab on the Taxes & Deductions page in Pay Group configuration.

  • Select Update Tax Regime.

On the New Tax Regime (Section 115BAC) Settings page, you can allow employees to opt-in/out of the new tax regime by checking the Allow Employees to Opt-in/Out checkbox. If unchecked, only the admin can select the tax regime for each employee.

To set the cut-off date for employees to choose the new tax regime:

1. Select the month and day by which existing employees can opt-in.
2. Define the number of days within which new employees can opt-in.
3. Set the final cut-off date for new employees.

Make your selections and click Save.
 

Professional Tax Settings

To update professional tax settings for the pay group:

1. Go to the Taxes and Deductions tab.
2. Select the Professional Tax tab.
3. Click on the three dots in the Professional Tax tab.
4. Choose to Enable or Disable professional tax for the pay group.

1. In the Professional Tax window, use the toggle button to enable or disable Professional Tax.

2. Click Update to save the settings.

That brings us to the end of taxes and deductions configuration options for a pay group. More questions? Write to us and we will be happy to help!