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A payroll system is a software to automate the payroll process. These systems can be integrated with leave and attendance tracking systems and employee self-service portal and are used to keep track of employee’s working hours, calculate salaries, calculate taxes and deductions, print payslip, etc.

 

Now, talking about an all round payroll system, here are the 9 features that an efficient payroll must have:

1.Quick and Accurate Calculation

 

If it was not obvious, a good Payroll system must be efficient, quick and accurate in providing calculations. The primary function of a payroll is to make accurate calculation of salaries and wages easier for the accounts department and quick disbursement of the same for the HR Department.

2.Arrear Calculation

 

Another important factor to keep in mind while calculating salaries and wages is to consider outstanding and/or advance payments or commitment of the same. An efficient payroll solution shall help you with arrear calculations which would work in favour of both you as an employer and your employee.

3.Integration With Time and Attendance

 

Integration with Time and Attendance is another basic necessity of a payroll. To function efficiently, a payroll requires a report of employees’ attendance, leaves and shifts. This is required in order to calculate the employee’s salary based on the days filled in by them.

4.Employee Master Database

 

An efficient payroll system must be enabled by a strong employee master database. Employee master consists of all the necessary information about the employee like bank details, contact number and much more. An Employee Master is a crucial element of a payroll and the user must be able to easily create, edit and retract employee master databases.

 

5.CAGR (Compound Annual Growth Rate)

 

A feature that not many payroll systems offer is calculation of CAGR or Compound Annual Growth Rate. It refers to the growth a particular employee has made over the course of the year. This feature is necessary as it helps track employee progress and also helps in deciding whether the employee should be incentivised or not depending on his work.

6.Component Setup

 

A good payroll system must allow the user to create their own sets of CTC structure and breakdowns which vary greatly from industry to industry and company to company. This also helps in quick salary calculation as employees can be grouped under a CTC Structure designed specifically for them.

 

7.User Defined MIS

 

MIS reports are essential for the employer as well as the employee. Payslips, Reports, Letters and other important documents are available in just a few clicks given that the payroll system is efficient. This makes the employee self sufficient and HR Empowered as well.

 

8.Analytical and Graphical Reports

 

Can we all collectively agree that reports are crucial to an organisation? Be it employee performance reports, annual expense reports, annual growth reports or salary reports and breakdowns of employees a good payroll system should generate these in a matter of seconds. Even better if the system allows you to filter through the reports and drill down to a particular designation in a particular department.

 

9.Daily Aggregate and PLB

 

One more not-so-common feature in a payroll is Daily Calculation of wages. There are numerous organisations which provide employment on a daily wage basis. Calculation of such wages can be hectic and sometimes even more complicated than the traditional method if done by a non-efficient payroll. But a dynamic payroll solution will help you pacing up this process.

 

On an ending note, one should look out for a Payroll which allows flexibility to the user. A dynamic payroll is the one which allows user personalisation in every aspect while being standardised enough to be segment agnostic. Spine HR Suite offers you a payroll which checks all the 9 boxes and ensures the best in class payroll processing experience.

 

“Old Regime or New Regime? Which one should I choose?”

Now that is the kind of panic we are going to tackle in this blog. After you are done reading this blog, you will know the differences between the two regimes and which one should you opt for to save your taxes!

 

The Differentiation:

Let us go through the difference between the two regimes and the tax slabs, deductions and exemptions under them.

• Old Regime –
• Many Deductions and Exemptions
• Higher Tax Slabs

 

• New Regime –
• No Deductions and Exemptions
• Lower Tax Slabs

 

Now that we have the difference out of the way, let us now talk about the regimes as a whole;

 

• Old Regime

 

The Old Tax regime provides that, for the annual income up to Rs. 2.5 lakhs there is a total exemption, 5% for personnel with annual income between Rs. 2.5 lakhs to Rs. 5 lakhs. 20% for income group between Rs. 5 lakh and Rs. 10 lakh and 30% for taxpayers belonging to the income group of Rs. 10 lakhs and above

 

Synopsis-

Nil for up to 2.5 Lakhs
5% for 2.5 to 5 Lakhs
20% for 5 to 10 Lakhs and,
30% for 10 Lakhs and above.

 

• New Regime

 

The new tax regime is different in two ways from the old one. Firstly, it has more slabs with lower tax rates. And secondly, all the major exemptions and deductions available to taxpayers in the existing (old) tax regime are not allowed if the new tax regime is chosen.

 

Following is a table which shows the new tax slabs as well as the difference between Older and Newer tax slabs according to the respective regimes.

 

 

Annual Income (Rs.)	Old Tax Rate	New Tax Rate
Up to Rs. 2.5 lakhs	Nil	Nil
Rs. 2.5 lakhs to Rs. 5 lakhs	5%	5%
Rs. 5 lakhs to Rs. 7.5 lakhs	20%	10%
Rs. 7.5 lakhs to Rs. 10 lakhs	20%	15%
Rs. 10 lakhs to Rs. 12.5 lakhs	30%	20%
Rs. 12.5 lakhs to Rs. 15 lakhs	30%	25%
Rs. 15 lakhs and above	30%	30%

 

 

How to choose a regime such that I can save taxes?

 

To make things simpler, we have broken down the process into five simple steps which go as follows:

 

• Know the income group you belong to.
• Know your investments and deductions applicable.
• Calculate the tax payable according to the Old Regime and apply for all applicable deductions and exemptions.
• Calculate the tax payable according to the New Regime (be careful and aware of your income group you fall into, refer to the table above for more information).
• Compare both the amounts and select the one with lower tax payable.

 

And just like that you have countered the hassle of selecting the best Tax Regime for you in just five simple steps!

 

But you know what? Instead of going through the five steps, what if there was a tool which calculated and compared your taxes payable according to both regimes at just one click? That is exactly what Spine HR Suite’s Tax Calculator Offers you! You can learn more about Spine HR Suite here!

Form 26AS is a statement that provides details of any amount deducted as TDS or TCS from various sources of income of a taxpayer. It also reflects details of advance tax/self-assessment tax paid, and high-value transactions entered into by the taxpayer.

Form 26AS is a statement that shows the below information:

1. Tax deducted on your income by all the tax deductors
2. Details of tax collected by collectors
3. Advance tax paid by the taxpayer
4. Self-assessment tax payments
5. Regular assessment tax deposited by the taxpayers (PAN holders)
6. Details of income tax refund received by you during the financial year
7. Details of the high-value transactions regarding shares, mutual funds, etc.
8. Additional details like mutual fund purchase and dividend, interest on income tax refunds, off-market transactions, foreign remittances, salary break-up details, etc.

 

Following are the Components of Form 26:

 

Part A:

(Details of Tax Deducted at Source)

 

Part A of Form 26AS contains TDS details deducted on your salary, interest income, pension income, prize winnings, etc. It also includes the TAN of the deductor, the amount of TDS deducted and deposited to the government. This information is provided every quarter.

 

Part A1:

(Details of Tax Deducted at Source for 15G/15H)

 

Details of income where no TDS has been deducted is given here since the taxpayer has submitted Form 15G or Form 15H. You can verify the status of TDS deduction if you have submitted Form 15G or Form 15H. If you have not submitted Form 15G or Form 15H, this section will display ‘No transactions present’.

 

Part A2:

(Details of the entries are mentioned here:)

 

• TDS on sale of immovable property u/s194(IA) (for the seller of property)
• TDS on rent of property u/s 194IB (for the landlord of property)
• TDS on payment to resident contractors and professionals u/s 194M (for a payee of resident contractors and professionals)

That is, it will show entries if you have sold the property/rented the property, received payments for contractual or professional service during the year, and TDS was deducted on the same.

 

Part B:

(Details of Tax Collected at Source)

 

Part B shows the Tax Collected at Source (TCS) by the seller of goods. Entries in Form 26AS will show seller details who has collected tax from you.

 

Part C:

[Details of Tax Paid (Other than TDS or TCS)]

 

If you have deposited any tax yourself, that information will appear here. Details of advance tax as well as self-assessment tax are present here. It also contains details of the challan through which the tax was deposited.

 

Part D:

(Details of Paid Refund)

 

If any, information regarding your refund will be present in this section. Assessment year to which the refund pertains, along with the mode of payment, the amount paid and interest paid, and the date of payment are mentioned.

 

Aside from these, there are 4 more parts, namely E, F, G and H. But as an employee, parts A through D are necessary for you as they reflect your Taxes paid, payable, refunded and refundable. You can then, having a certain vision and clarity, plan your investments and file your returns.

 

If you are an employer and you are looking to make things like tracking and filing of TCS and TDS easier, in fact automated, Spine HR Suite is the tool you are looking for! With intelligent Payroll, Tax Calculator, Performance Manager, Regulatory Compliance tracker and many more useful features, Spine HR Suite is the one stop solution for all your needs!

It is the tax paying season again. But this time, we ensure that you as an employee are aware about the Form 16 and how it affects you.

 

Starting off, let us understand what exactly is Form 16 and how it aids you as a salaried employee. Form 16 is an income tax form used by companies to provide their salaried employees the information about the tax deducted. It can also be considered as the TDS certificate. When Form 16 is provided to an employee by their employer, it is considered as a source of proof of filing their Income Tax Returns. And if your income does not fit the basic exemption limit which is Rs. 2,50,000, the employer does not deduct any TDS in that case.

 

Component of Form 16

 

• Refunds in any to the employee, or balance of taxes payable by the employee.
• Details of the employer like collection Account Number (TAN), name, PAN, Tax deduction etc.
• All details of the Tax Payment, like amount, Challan number, cheque number, Demand Draft number etc.
• Personal details of the employee, like name, Permanent Account Number (PAN) etc.
• Acknowledgement of the number of the taxes paid by the employer.
• Taxes deducted as per sections 191A.
• Total income and tax deductions.
• Details like salary, net salary, Gross salary, perks, deductions, etc.
• TDS receipt paid.
• Declaration of tax payments from the employer.

 

Form 16A

 

Also known as part A of Form 16, Form 16A can be generated and downloaded from the TRACES (TDS Reconciliation Analysis and Correction Enabling System) Portal. Before issuing this certificate, the employer must ensure the authenticity and correctness of the it’s contents. It is vital for you to get a separate Part A of Form 16 for the period of employment if you have changed your job. Following are the components of Part A of Form 16:

 

• PAN details of the employee.
• PAN & TAN of the employer.
• Employer Name and address.
• Summary of tax deposited and deducted quarterly, certified by the employer.

 

Form 16B

 

Form 16B is an annexure to Part A. In case you happen to change your job in one financial year, you will have to decide if you need Part B of the form from the last employer or from both the employers. Following are the components of part B of Form 16:

 

• Relief under section 89 (recalculating tax for the year in which arrears are received and the year to which the arrears pertain; and the taxes are adjusted in the year in which they were due)
• Detailed breakup of salary.
• Deductions that are allowed under the income tax act (under chapter VIA)

 

Required Details for Form 16

 

• Tax Payable or Refund Due
• Taxable Salary
• Aggregate of Section 80C Deductions (Gross & Deductible Amount)
• Breakup of Section 80C Deductions
• TDS (Tax Deducted at Source)

 

In conclusion, The Form 16 acts as a proof of tax payment for the employee and also provides the employee a much better view and breakdown of their salary and taxes deducted. Where organisations struggle to generate and disburse such forms if they even issue them in the first place, Spine HR Suite helps the employer automate the issuing of Form 16 and help enhance many other HR and Payroll Processes! You can learn more about Spine HR Suite here!

Income Tax is a crucial source of revenue for the government of India. Thus, it is highly essential for citizens to pay their taxes on time. While most people are aware of the significance of paying taxes, few understand the steps to produce our taxes on time. Many are yet to be mindful of their rights and how they can claim exemptions. The jargon like VAT, GST, stamp duty, and self-assessment tax bewilders most of us. You can easily calculate essential information from online tools such as VAT, GST, Stamp duty calculators that are available online. 

 

Are you also confused about the different declarations you are asked to make by your employers at the beginning of every financial year? How is it related to your TDS? Also, what is the difference between the investment made and investment declarations? Well, we are here to clear all your doubts with this article. 

As per income tax department regulations, you need to make your investment declarations at the beginning of every financial year. So HR will ask you to make your declarations at the start of the financial year. And it is indeed important for capital gains tax deduction on your monthly salary. It is a good thing as it allows you to get more in-hand compensation every month if done wisely. So you need to be as serious about investment declarations as you are about investing.

 

The core difference between a declaration of investment and actually making it is that all you need to do is mention the assets you intend to make in declarations. Here, your actual investment may be more or less than this. In addition, you don’t need to present any proof until the end of the financial year. 

 

Deduction

Let’s start with what investment deduction comprise of:

 

• House Rent Allowance- If you pay any rent for your home, you can claim HRA. 
• Leave Travel Allowance- It is available to employees and their salary package and is applicable for domestic travel only. 
• Home Loan- You can claim a tax deduction on the interest of your paid or payable home loan by filling in details of interest and other documentation in form 12B. It can be a very significant deduction during income tax e filing as we generally have to pay a lump sum interest on home loans. 
• Deduction under Section 80C, 80CCC, 80CCD, 80D- This Section consists of the different deductions allowed to citizens, such as the premium paid on life insurance, medical insurance, education loans, annuity plans. You can also display your donations, contributions to NPS, and even interest on savings accounts in your incometaxindiaefiling. You can plan the deductions you would like to claim using an income tax calculator. 

 

Form 12

When an employee wants to claim deductions, they need to fill out the form, which will act as a statement of claim by an employee for deduction of income tax. For example, a salaried employee must submit form 12 BB to claim tax benefits or rebates on investments and expenses. It applies to all taxpayers and must be submitted at the end of each financial year. Along with this, the employees also need to submit documents and proof to back their claims. 

 

The employees need to submit the exemptions and deductions they wish to claim. The employer can deduct TDS on the salary based on these deductions. If done correctly, employees can enjoy more cash in hand. The form must be submitted to your employers and not directly to the Income Tax Department. Thus, form 12BB is helpful in the TDS calculation for the entire year. It is also possible to claim excess TDS deducted by filing your income tax return. Most of the deductions come under Section 80C of the Income Tax Act, which has an annual limit of Rs 1.5 lakh. Other deductions under 80D and section 124 can also be claimed. 

Thus, investment declarations are vital for meeting your financial goals and saving more money as it leads to lower taxes and higher salaries every month. 

 

Here comes that time of year that both employees and employers dread. Yes, you guessed it right! The end of the financial year. It is probably the most stressful time that sends many employees into a frenzy. It is when employees need to calculate year-long taxes, they need to shell out. In India, you may have to pay a considerable proportion of your income as tax. The end of the financial year is around the corner, and it is time to assess our income for tax calculation. But fret no more! The saying goes, “a penny saved is a penny earned.” We have brought you some highly effective methods to save your tax on your capital gains tax or even tax-free income to make the most of your salary. 

The beginning of the assessment year for income tax e filing will commence shortly. However, several employees are clueless about finance and IT e-filling. In this blog, we will answer common questions such as: What are the particulars in form 16? What are TDS, GST and VAT? Why does HR ask for several declarations at the beginning of the year? We aim to familiarize you with most of these concepts in the blog.

 

Paying close attention to save your tax might help you keep a good deal of money for yourself. Income Tax Department requires you to display your income every year. Before we talk about the different ways to save your tax, let us know more about the components that our salaries consist of:

 

• Basic Income
• House Rental Allowance
• Special Allowance
• Leave Travel Allowance

 

These components sum up your gross salary. Then comes deduction, which is essential to plan well to save your tax on your income. Since we have our foundation cleared, let’s come to the point. Here are some ways to save your taxes on income:

House Rental Allowance:

Basic income generally amounts to 30-35% of our total income. There are three formulas for HRA, such as:

 

1. The house rent allowance is the basic amount
2. 40% (for non-metro city residents) or 50% (for metro city residents) of your basic salary.
3. The actual house rent without 10% of your basic income.

 

The least out of the three is considered a deduction from the HRA amount. You don’t need to worry about these calculations as you can easily do them with a tax calculator. In addition, under Section 80 GG, you can claim your housing rent even if it is not mentioned on your salary slip.

 

Provident Fund:

Section 80 of the Income Tax Act gives you multiple deductions to reduce your taxable income as much as possible. Under Section 80 C, you can deduct up to Rs 1.5 lakh every year from taxable income. A salaried employee income plan has the component of a provident fund. The contribution of your Provident Fund can be added to this deduction. 

 

Equity Linked Saving Scheme:

If you have invested in an ELSS or Equity Linked Saving Scheme, you can invest in a mutual fund for three years. Their investment is locked for three years so that you can avail of tax benefits from the government. It is a way of government to encourage citizens to invest in mutual funds. 

 

Tax Saving Fixed Deposit:

It is one of the most popular savings options, as it can allow your money to work for you in several ways. Such kinds of FDs have a lock-in period of 5 years. Here, you can claim tax deductions on your tax-saving FD under Section 80 C. 

 

Home Loan:

If you have availed of any home loan, it can also help you with the tax deduction on your income. The principal amount you have paid on your home loan in that year can also be claimed for deduction. 

 

Life Insurance Premium:

Getting life insurance has become inevitable in uncertain times. According to Section 80 CCC, your life insurance premium can also be deducted from your total tax payable income. 

 

Saving Interest Income:

This applies to the interest that you earn from your savings account. You can claim up to 10,000/- for your tax deduction. Thus, it is interesting that your simple savings account investment can also contribute to your tax deduction. 

 

Education Loan:

Section 80 E relates to the deduction for the repayment of Interest on Education Loans up to 8 years. It is a long period to pay off your loan. So, it can be beneficial to you in several ways. 

 

Medical Insurance:

The sedentary lifestyle, unhealthy choices and irregular cycles, and other environmental factors have resulted in a rise in several health conditions. Health insurance has been a necessity in modern times. However, it is possible to claim deductions for premiums paid under Section 80 D deduction. Up to Rs 25,00 can be deducted if the insurance is for your spouse, children, and yourself. Another 25,000/- limit can be added to the deduction if you include your parents under 60 years of age in the scheme. A further 50,000 is added if your parents are over 60 years old. In addition to providing you with insurance, it also allows you to save on taxes simultaneously. 

 

It is vital to save your tax with the same discipline as your investment. Make sure that you claim your deductions extremely diligently in order to avoid unnecessary stress and hassles at the end of the financial year. 

 

Wondering what is the “TDS” row in your salary slip? Or want to know more about what is TDS? If yes, then this is the blog you’re looking for! So without further discussion, let’s start by know what exactly is TDS?

• What is TDS?

 

TDS is an abbreviation for Tax Deducted at Source. The concept of TDS was introduced to streamline the tax collection process by collecting the taxes at the source itself. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.

 

• How TDS Works?

 

TDS works on the concept that every person making specified type of payments to any person shall deduct tax at the rates prescribed in the Income Tax Act at source and deposit the same into the government’s account.

The Deductee can, thus, view or check the TDS from incomes paid to him by viewing the Form 26AS. Each deductor is also duty bound to issue a TDS certificate certifying how much amount is deducted in the deductee’s name and deposited with the government.

 

• How to pay Tax Deducted/Collected at source?

 

Tax deducted or collected at source shall be deposited to the credit of the Central Government by following modes:

 

1. Electronic mode: E-Payment is mandatory for
2. a) All corporate assesses; and
3. b) All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.

 

2. Physical Mode: By furnishing the Challan 281 in the authorized bank branch

 

• How to avoid/save TDS?

 

There is no absolute way by which you can avoid TDS. It is the duty of a professional to pay Tax Deducted at Source. The only way one can dodge Tax Deducted at Source is if his/her income is below the prescribed level of income that is rupees 2.5 laks for citizens under 60 years of age residing in India.

In Conclusion, a professional who is eligible for, is obligated to pay Tax Deducted at Source (TDS). There is no need for the employee (deductee) to stress about TDS payment as that is the the duty of the employer (deductor). If you are eligible to pay TDS, you should ask for your TDS certificate right now if you haven’t received it yet!

 

Are you an employer and are confused and stressed out about the year end hassles? Well then, Spine HR Suite is the pain killer you’re looking for! Not only you can calculate payroll, regulate attendance and automate all the HR Processes while cutting down the costs, you can also stay in lone with the government guidelines, compare the old regime and new regime and then alculate your taxes accordingly! And the best lart about it, everything is at just one place! You can learn more about Spine HR Suite here.

It has been almost two years since the pandemic has struck the world and everyone has been forced to sit at their houses. While the world is recovering quickly from the damage the pandemic has done, it has also brought many new and improved things to the corporate world. Remote working being one of them! The simple answer to “Is remote working going to stick around even after the pandemic?” is Yes! Of Course it is here to stay as it is a step towards digitisation and it holds no major caveats as of now!

 

The two major factors that make “Work From Home” as special as it is, are listed below:

 

• Allows employees to work at their convenience

This might seem counter intuitive but employees  tend to deliver better quality and quantity of work while they are working from home. This is because the employees can now have a flexible schedule and more hours for rest as they do not have to travel to the office. Now having the “office environment” can be a bit dicey but organisations have not seen a fall in the level of productivity after adopting the digital mode of working, yet.

 

• Cuts travelling and electricity costs

Now coming to the benefits that the digital mode brings to the table for the organisations, it helps you cut down your employee costs. As the employee does not have to come to the office everyday, their travelling allowance is saved. Since the office premises aren’t functional seven days a week, the electricity consumption is greatly reduced, cutting down the expenditure on electricity as well.

 

“Yeah Work from home sounds great and all but how do we manage employees when they don’t even come to the office? How does this digital mode affect us?” Well, the answer to all your queries is, Implementation of an HRMS! How? Continue reading to find out how!

 

How HRMS will boost work from home efficiency?

 

• Improved Recruitment Efficacy

Everyone knows how important recruitment is for an organisation. But there are many caveats relating to the traditional method. Be it resume parsing or document collection, the manual process was inefficient and tiresome. An HRMS will help you tackle all these limitations. Being automated, an HR Software is way quicker than manual efforts and accurate as well. You can read more about how an HRMS improves the recruitment process here.

 

• Quicker Onboarding

Onboarding an employee has always been a task for the HR. Collection of documents, arrangements for training, conducting training, tracking the progress of the joinee. All these processes become hectic as there are a number of joinees and only limited resources. All these factors make the onboarding process obtuse. Implementation of HRMS automates all these processes and your human resource can focus on managing the workforce more efficiently. That’s a win-win!

 

• Workflow Setup

While comparing the digital mode of working to the traditional way, people often put forth the point of hierarchy. “Work from home misses the personal touch” is what they say. Spine HR Suite allows you to create various levels of control and approval. This ensures the hierarchy that makes the traditional method great and adds to the greatness by being digital! If you wish to know more about how HRMS improvises workflow, you can read this blog.

 

• Improved Communication

Another debatable factor about the remote working is that it does not allow employees to communicate directly and freely. Well that is debatable for sure because as far as communication is concerned, it is subjective and varies from employee to employee. What an HRMS does is that it lets the employees know the whole workflow and approver levels so that they can contact the concerned person directly. This ensures that there are no gaps in communication, prevents miscommunication and saves time in the process.

 

• Better Employee Management

Now coming to the primary function of an HR Software. One might guess that the primary function of an HRMS is simply making the job of an HR less tedious. But that’s just scratching the surface. Implementation of an HRM System liberates the HR from tasks like register maintenance, payroll calculation and creation of excel sheets and reports and enables them to focus more on productivity of the employees and how it can be raised. You can learn more about how HRMS helps in managing the employees better here.

 

In Conclusion, pandemic or not, Remote working is here to stay! While many big names in the industry are opting WFH as their primary mode of working, one cannot deny that WFH is the future of offices and how they will be operated.

 

An all in one solution for your HR and WFH needs is Spine HR Suite! Being modular it is scalable and flexible. This makes Spine HR Suite the perfect match for any organisation. Having over two decades of experience and clients in more than thirty segments, Spine Technologies is one of the most trusted HR Solution providers in India and Abroad!

It is almost the end of the Financial Year 2021-2022. Which means, it’s the time to file your IT returns. So here are we, to your aid! Read to know how can salaried employees save taxes this year end?

 

First off, let us understand why paying income tax is important to you as a salaried individual. Below listed are the benefits you derieve from filing your IT returns:

• Better Loan Eligibility
• Easy Tax Refunds
• Easy Claim of Tax Deductions
• Avoid Tax Penalties
• Better Visa Application Processing

 

These are just some benefits of filing Income Tax Returns. But you know what else is important? Saving Taxes! Because who doesn’t like Tax Saving and investments?

 

Here are some ways in which you can save taxes as an employee-

• Professional Tax

 

As Professional Tax is levied by the state government and is deducted from your gross salary, you do not need to pay it again from your net income. Professional Tax is usually rupees 2500 and is deducted by the employer at the time of disbursement of salary.

 

• Exemption under section 89(1)

 

As per section 89(1) of the Income Tax Act, Salary received in arrears or advance is allowed for relief in taxes.

 

• Exemption from the Receipt Upon Opting for Voluntary Retirement

 

As per Section 10(10C), any compensation on voluntary retirement or separation is exempted from tax. The exemption is subjected to the pre-requisite that the receipts comply with rule 2BA. Also, the maximum compensation received should not exceed Rs. 5,00,000.

 

• Employee Contribution to Provident Fund (PF)

 

The PF is usually is 12% of the basic salary. The government decides the interest rate which is about 8.65%. Therefore, upon maturity, the returns are exempted from tax. Also, EPF contributions can be claimed for tax exemption under Section 80C of the Income Tax Act.

 

• Home and Education Loans

 

You can claim a tax deduction for interest on a home loan of up to Rs 2,00,000 in a financial year under section 24. Moreover, you can claim the tax deduction of principal amount repayment under section 80C of up to Rs 1.5 lakhs.

You can claim a tax deduction against the interest on education. Such interest must be paid out of your income chargeable to tax for the financial year.

 

• Medical Insurance

A salaried employee can claim a deduction against the medical insurance under section 80D. Such medical or health insurance must be taken to cover their spouse, dependent children, or parents. You can claim Rs 25,000 against insurance premium paid towards to cover their spouse, dependent children.

 

• Deductions

Every month, the employer deduct a part of your total income tax as Tax Deducted at Source (TDS).  This is a significant portion for a salaried employee. Furthermore, the employer provides details of the tax deducted in Form 16 (TDS certificate). You can learn more about Form 16 here.

 

You know what else can help an organisation save and calculate taxes? Implementation of an HRMS! If you are looking for an HRMS, Spine HR Suite is the one stop solution for you!

As the year end is nearing, people are rushing towards tax payments and savings. But what do you have to keep in mind as an employee? Know what is Form 16 and how is it beneficial for you as an employee.

 

What is Form 16?

Form 16/ 16A is the certificate of deduction of tax at source and issued on deduction of tax by the employer on behalf of the employees. These certificates provide details of TDS / TCS for various transactions between deductor and deductee. It is mandatory to issue these certificates to Taxpayers.

 

Am I eligible for Form 16?

You are eligible for it if your salary is more than 2.5 lakhs per annum.

 

Contents of Form 16

The Form 16 contains all the details of tax payment like amount, Challan number, cheque number, Demand Draft number etc. Personal details of the employee, like name, Permanent Account Number (PAN) etc. Acknowledgement of the number of the taxes paid by the employer. Taxes deducted as per sections 191A and much more.

 

Why is it beneficial for you as an employee?

 

• TDS Verification

Form 16 can only be issued when your employer has deposited your TDS in the central government account. This ensures that your employer has actually paid the TDS which was promised to be paid from your salary. It not only acts as a proof that you have paid the TDS but also is a surety that the TDS amount deducted from your salary and TDS amount deposited is the same.

 

• Compute Tax Liability

Form 16 also helps you calculate your tax liability. This enables you to pay your remaining taxes in time or seek refunds by filing your returns on time. While the responsibility of TDS falls upon the employer, the employee has to make sure that his/her taxes are paid on time and he/she is not overdue.

 

• Loans

When applying for a loan, be it home, vehicle or personal, one is asked for their income tax returns. it acts as a handy tool to provide your salary breakdown and tax liabilities which helps in the better assessment of your loan application. Form 16A and 16B combined also reflects your tax saving investments and any other investments schemes that may be leeching your money. Meanwhile it provides a good idea of your loan repayment ability to the lender as well.

 

• Visa Processing

Along with income proof, many foreign embassies and consulates also demand for Form 16 of the past two years to get an idea of the financial stability of the particular salaried individual. This helps them assess if the individual can manage the finances of staying abroad.

 

• Credit Card

Presenting the Form 16 of the past two years is crucial for an employee while applying for a credit card. Form 16 acts as an income proof which gives the financial institutions assess the applicant’s financial stability. These financial institutions also use it as a certificate to determine the credit limit of the applicant. Higher the income, higher the credit limit!

 

So, here’s how it helps you as an employee! The employer is bound by law to issue The Form 16 if your salary is more than 2.5 lakhs per annum. If you don’t receive it by mid-May, you should remind them to issue it at the earliest! While people usually struggle with the issuing of such forms and calculations of taxes, using Spine HR Suite will enable you to quickly access the form and calculate tax and salary swiftly. You can learn more about Spine HR Suite Here.