Include Outside Annual Salary Components in Tax Computation

Introduction

Some salary components—like certain allowances, reimbursements, or one-time payouts—are paid outside the employee’s annual salary structure. Until now, these weren’t included in income tax calculations, which often led to incorrect deductions and compliance issues.

To fix this, payroll admins can now control whether such components are included in tax calculations. This ensures accurate tax deductions and helps organizations stay compliant with legal requirements.

Enable tax computation for outside-annual components

1. Go to Settings > Paygroup > Configure.

   

2. Edit any component marked as Paid outside the annual salary.

   

3. Click Paid outside the annual salary.

4. A new setting will appear: Include this component in Tax computations.

   

5. By default, this checkbox is selected, meaning the component will be taxed.

6. You can uncheck it only if the component should not be taxed.

View these components on the Income Tax page

• Only components marked Include for tax will appear under the tax computation on the Income Tax page.

• A new section labeled Gross earnings outside annual salary will show these amounts.

Where the change reflects

Once these components are taxed, they’ll be included across various system areas:

Employee-Facing & Documents

Payroll Processing, Filing & Downloads