Income Tax (TDS) applies to the salary earnings of employees based on their annual income slab. Based on the CTC structure, the tax is calculated every month and deducted as TDS and paid to the PAN account of that employee. At the beginning of every financial year, we will calculate the entire year’s income tax based on the employee’s declaration and apply various tax exemptions and deductions. The system will deduct the calculated income tax amount as TDS on each month’s payroll.
The income tax section has two subsections in this module,
- IT declaration
- Proof of investment.
We will discuss them one by one how to manage in this section.
IT declaration #
IT declaration or Income Tax declaration is the employee’s self-declaration by which the employee enters all his tax-saving investments and expenses for the fiscal year at the beginning of the year. This investment or tax declaration is taken into consideration as prior tax planning. After applying the tax declaration, the Income-tax (TDS) is calculated for the remaining income based on the tax slab. The total tax for the year is divided by 12 months. The monthly deduction of TDS is deducted from the employee’s every month salary.
Please note that if an employee invests more than their IT declaration at the year-end, the difference of excess TDS deducted will be refunded after they file the IT return for the year at the income tax site.
You can submit your IT declaration only when your employer unlocks the Income-tax declaration window. We will send an email to you and push notification in your office portal.
To configure IT declaration
- Navigate to Employees
- Click on EDIT
- Tap on “Income tax” and click on “IT declaration”.
- Click on “EDIT” to enter the IT Declaration details.
- Tax regime selection
By default, the old tax regime is chosen here. If you would like to change the tax regime, click on the tax regime option and choose the new tax regime.
If you select a new tax regime, all the tax exemptions are excluded.
Only the values entered in the rental income details, other sources of income will be considered. You will be paying tax with a new reduced tax slab compared to the old regime as per the IT Act.
- House rent details
If you wish to submit your house rent, then enable the “Do you want to declare house rent?” option
- Enter the current financial year’s rental start date.
- Enter the current financial year’s rental end date.
- Enter the total rent amount paid during the above start and end period in “Total rent paid”.
- Enter the rental house address in the “Address” textbox.
- If the total rent paid exceeds 1 lakh, you must enter the house owner’s name and PAN card number in the “Landlord name” and “Landlord pan number” fields.
- In the “property resides in” drop-down menu, choose “Metro” or “Non-metro” as the location of the rental house. For example, metro cities are Bangalore, Chennai, Delhi, and Mumbai.
Note: If you lived in more than one rental house during the current financial year, then click on the “Add another property” button to add the details.
- Rental income details
If you wish to declare your rental income, then enable the “Do you want to declare rental income?” option
- Enter the total amount received from your house property for the current financial year in the “Annual rent received” field.
- Enter the total municipal taxes paid for your house property for the current financial year at the “Municipal taxes paid during the year”.
- Enter the total unrealized/irrecoverable rent from the tenant for your house property at the “Unrealized rent” for the current financial year.
- The “net annual value” will be calculated automatically based on the above values.
- 30% of the net annual value is auto-calculated as a standard deduction.
- If you are repaying the loan for this rented property, then enable the “Repaying home loan for this property?” toggle button and enter the lender details such as
- Enter the name of the home loan provider at “Lender’s name”.
- Enter the Lender’s PAN number.
- Enter the interest amount for the current financial year.
- Enter the principal repaid for the current financial year.
- Based on the above values, “Income/loss from let out property” ” will be calculated automatically.
Note: You can add new rental income property details by clicking the “Add another property” button.
- Home loan for self-occupied house
If you are repaying the self-occupied house loan, enable the “Repaying home loan for a self-occupied house?” toggle button and enter the lender details.
- 80C Investments
If you contributed to the Employee Provident Fund in the current financial year, the amount of your annual contribution would be automatically considered an investment under section 80C.
If you want to add any other investments under section 80C,
- Click the “Add another investment” button, choose the investment name from the drop-down menu, and enter the invested amount or the amount you want to invest.
- Likewise, you can add multiple investments.
The maximum tax exemption for this section is 1.5 Lakhs (Rs 150000), including the employee provident fund.
- 80D Investments
The maximum tax exemption for this section is 1 Lakh (Rs 100000), but each section has a separate maximum tax exemption.
If you want to add your investments under section 80D,
- Click the “Add another investment” button, choose the investment name from the drop-down menu, and enter the invested amount or the amount you want to invest.
- Likewise, you can add multiple investments.
- Other Investments
The rest of the Income-tax exemptions are available under the other investments section, and each section has its exemption limit. Interest paid on education loan, exemptions u/s 80G donations with 100% & 50% exemption category does not have a maximum limit.
If you want to add your investments under section other investments,
- Click the “Add another investment” button, choose the investment name from the drop-down menu, and enter the invested amount or the amount you want to invest.
- Likewise, you can add multiple investments.
- Previous employment
If you wish to add your previous employment details, click on it to enter the details. Please note that this is only applicable to a newly joined employee who has worked part of the period in the current financial year from a different company.
- Enter the total salary received after the tax exemption at “Income after exemption.”
- Enter the PT amount paid so far in your previous organization at “Professional tax”.
- Enter the PF amount paid so far in your previous organization at “Employee provident fund”.
- Enter the TDS amount paid so far in your previous organization at “Income tax”.
- Enter the amount of exemption availed from your previous organization at “Leave encashment exemptions”.
- Other sources of income
You can club your income other than salary income and compute your tax liability as per the income tax act. This provision lets you club the income from other sources such as dividends received for the financial year to compute your tax workings.
If you wish to add your other sources of income details, click on them to enter the details.
- If you receive income from other sources, ” enter the total income received here.
- If you receive interest in your savings account, enter the total “Interest earned from savings deposit”. If you want to receive an exemption for this, make sure you provide the same information under the other investment section.
- Similarly, enter the total interest amount received in fixed deposit at “Interest earned from fixed deposit”.
- Enter the total interest amount received in National Savings Certificates at “Interest earned from NSC”. If you want to receive an exemption for this, make sure you provide the same information under the 80 C investment section.
- Other allowances
Other Allowances are paid to employees to meet their needs while performing official duties. Other allowances will vary from the organization based on the nature of the job. For example, a manufacturing plant will provide the employees with uniforms, safety shoes, and food allowances.
If you wish to add your other allowances details, click on it to enter the details.
- Enter the amount at “Conveyance Allowance.”
- Enter the amount at “Traveling Allowance.”
- Enter the amount at “Food Coupon.”
- Enter the amount at “Child Education Allowance.”
- Enter the amount at “Daily Allowance.”
- Enter the amount at “Helper Allowance.”
- Enter the amount at “Hostel Expenditure.”
- Enter the amount at “Uniform Allowance.”
- Enter the amount at “Research Allowance.”
- Finally, tap on the “Save” button to save the IT declaration.
Proof of investments #
Employees can submit their Proof of investments in the office portal under the employees’ section. Proof of investments is a necessary document to verify with the investment declaration. Each IT declaration item needs to be matched with the proofs to reassess the tax liability and determine the TDS calculation for the remaining period.
You can submit your Proof of investment only when your employer unlocks the Proof of Investment (POI) window. We will send you an email and a push notification in your office portal.
The following scenarios will happen when the investment proofs are submitted.
- When the proofs are less than the IT declaration, the difference amount will be included in the taxable income, and the tax will be calculated again based on the slab.
Then the TDS paid already will be reduced from the total tax, and the remaining tax will be divided with the remaining month to find out the monthly TDS deduction.
- When the Proof submitted is more than the IT declaration, then your taxable income will be reduced, and thereby it will reduce the tax, and you will pay a lesser TDS amount.
- When the Proof is exactly matched with the IT declaration, you will continue to pay the same TDS as there won’t be any difference in the taxable income.
- If you fail to submit the proofs within the due date, the IT declaration will not be considered except for the standard deduction allowed by the Income Tax, which will increase your monthly TDS.
To submit Proof of investment
- Navigate to Employees
- Click on EDIT of any employee
- Select “Income tax” and click on “Proof of investment”.
- Click on “EDIT” to enter the Proof of investment details.
If you have already configured the IT declaration, you can view the same details here.
- If you want to provide the same value as declared, all you need to do is click on the “Copy from declared”
- We will copy all the values provided in the declaration to the actual amount.
- You can modify the actual amount if needed.
If you have not configured the IT declaration, you can directly add the Proof of investment.
- You can follow steps 6 to 14mentioned in “IT declaration” and enter the value directly in the actual amount.
- Click on the attachment icon near each investment and add proofs for your declaration.
- Finally, tap on the “Save” button to save the Proof of investment (or). Click on Save & Submit for approval.
Note: You can modify the values and resubmit for approval within the window period.
