Professional Tax Deduction During Employee Resettlement

Introduction

Keka now supports Professional Tax (PT) calculation and deduction during employee resettlement. PT is automatically calculated based on the applicable resettlement earnings and PT frequency, reducing manual calculations and ensuring that the deduction is reflected correctly in payroll and tax documents.

You can also override the automatically calculated PT amount when required.

Tax Overrides

1. Go to the employee's Resettlement screen.
2. Under Tax Overrides, locate Professional Tax.
3. Review the automatically calculated Projected Amount.
   • For monthly PT, the amount is calculated based on the resettlement earnings only.
   • Previous F&F earnings are not considered.
   • For half-yearly PT, cumulative earnings for the applicable deduction period are considered.
4. If required, enter an Overridden Amount.
   • The overridden amount is blank by default.
   • If you do not enter an override, Keka uses the automatically calculated amount.

Note: Professional Tax is hidden or disabled under Tax Overrides if PT is not applicable to the employee's pay group.

Monthly PT Frequency

For employees with a monthly PT frequency:

• PT is calculated based on the resettlement earnings.
• Previous F&F earnings are not considered.
• The PT deduction is included in the payroll month in which the resettlement is processed.
• You can manually override the calculated PT amount.

Half-Yearly PT Frequency

For employees with a half-yearly PT frequency:

• Keka considers cumulative earnings for the applicable deduction period:
  • April to September, or
  • October to March.
• If PT has already been deducted for the period, Keka calculates the differential PT amount payable during resettlement.
• The amount is calculated automatically.
• You can manually override the calculated PT amount.

Income Tax Calculation

For employees under the Old Tax Regime, the Professional Tax deducted during resettlement is considered under Tax on Employment u/s 16(iii).

For employees under the New Tax Regime, Professional Tax is deducted in payroll but is not considered as a tax deduction under Section 16(iii).

Resettlement Payslip

Professional Tax is displayed separately under Deductions in the payroll month in which the resettlement is processed.

The deductions summary includes:

• Income Tax
• Professional Tax
• Other applicable deductions

Professional Tax is displayed below Income Tax in the deductions summary.

Note: If there is no PT applicable to the resettlement earnings, the Professional Tax line item follows the existing payroll behaviour and may either display 0 or remain hidden.

Important Notes

• No additional configuration is required if Professional Tax is already applicable to the employee's pay group.
• The PT calculation follows the frequency configured for the employee's pay group.
• You can override the automatically calculated PT amount during resettlement.
• The Professional Tax deducted during resettlement is reflected in the applicable payroll and tax records.

We hope you now have a good understanding of how Professional Tax is calculated and deducted during employee resettlement.