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Prozessdokumentation Income Tax Calculation Dokument im Navigationsbaum lokalisieren

Purpose

This process computes tax on the income received by an employee, for a financial year.

Prerequisites

The master data records for the employee must exist.

Process Flow

India Income Tax computations payroll function (INTAX) processes tax on the income earned by the employee.

        Gross Salary wage type (/416) = Ann Reg Income wage type (/410) + Ann Irr Income wage type (/411) + Annual Perk wage type (/413) + Prev Gross salary wage type (/4V1) + Val of perk u/s 17(2)wage type (/4VJ) + Profts wrt sal u/s 17(3) wage type (/4VK) - Exm.under pro.to sec17(2) wage type (/414).

        Balance wage type  (/418) = Gross Salary wage type (/416) - Exemption U/S 10wage type (/130).

        Incm under Hd Salary wage type (/426) = Balance wage type  (/418) - Aggrg Deduction wage type (/424).

        Gross Tot Income wage type (/430) = Incm under Hd Salarywage type (/426) + Any other Income wage type (/131).

        Total Income wage type (/434) = Gross Tot Incomewage type (/430) - Agg of Chapter VI wage type (/432).

Total Income wage type (/434) is rounded off to the nearest multiple of Rs.10.

        Tax on total Income wage type (/436) = Tax calculated on Total Income wage type (/434).

Total Income wage type (/434) comprises of four components, which are taxed at different tax rates:

                                                  i.       Long Term Capital Gains (Normal Rate) = Lng trm cap gns normal wage type (/3O3). This is taxed at the rate stored in the Long capital gain normal rate constant (LCNRT) of table view Payroll Constants (V_T511K).

                                                ii.       Long Term Capital Gains (Special Rate) = Lng trm cap gns special wage type (/3OD). This is taxed at the rate stored in the Long capital gain special rate constant (LCSRT) of table view Payroll Constants (V_T511K).

                                               iii.       Other Income = Income from other sources wage type (/3O7). This is taxed at the rate stored in the Other Income - rate constant (OTHRT) of table view Payroll Constants (V_T511K).

                                               iv.       Normal Income = Total Income wage type (/434) - (Lng trm cap gns normal wage type (/3O3) + Lng trm cap gns special wage type (/3OD) + Income from other sources wage type (/3O7)). This is taxed at the rate configured in table view Taxation Slabs(V_T7INT3).

        Tax payable wage type (/446) = Tax on total Incomewage type (/436) - Agg of Chapter VIII wage type (/444).

        Surcharge payable wage type (/448) = Surcharge calculated on Tax payable wage type (/446).

        Tax payable and surcharge wage type (/450) = Tax payable wage type (/446)  + Surcharge payable wage type (/448).

Tax payable and surcharge wage type (/450) is rounded off to the nearest rupee.

        Tax deducted so far wage type (/456) = Prev Tax Deducted wage type (/4V5) + TDS other than salaries wage type (/4OC) + Income Tax wage type (/460) in the Cumulative Results Table.

        Net tax payable wage type (/458) = Tax payable and surcharge wage type (/450) - Sec 89 relief wage type (/451) - Tax deducted so far wage type (/456).

        Income Tax wage type (/460) = Net tax payable wage type (/458) divided by (Projection Factor wage type (/401) +1).

Rounding off monthly tax amounts rule (INTR) does the rounding off of the Income Tax wage type (/460) to the nearest rupee in all payroll periods, except for the last payroll period.

Result

The system calculates the income tax liability of the employee for the month.

Example

A male employee in your organization has the following pay structure for the financial year 2002 - 2003:

        Monthly Regular Income - The employee receives the following allowances that are cumulated in the Mon Reg Income wage type (/124).

        Basic Pay = Rs.9500.00

        Dearness Allowance = Rs.4200.00

        House Rent Allowance = Rs.3000.00

        Conveyance = Rs.1000.00

        Irregular Income - The employee receives the following allowance in the month of June 2002 that gets cumulated in the Mon Irr Incomewage type (/125).

        Annual Bonus = Rs.15400.00

        The employee pays a house rent of Rs.2500.00 per month.

        The employee has invested Rs.20000.00 in National Savings Scheme (Section 88).

You are running the payroll for the month of June 2002. The taxable salary is calculated as follows:

        Annual Regular Income = Ann Reg Incomewage type (/410)

= Rs.35400.00 (Value of Reg Incomewage type (/124) in the Cumulative Results Table)

+ Rs.17700.00 (Value of Reg Incomewage type (/124) in the Results Table)

+ Rs.159300.00 (Value of Mon Reg Income wage type (/124) in the Results Table multiplied by the value of Projection Factor wage type (/401))

= Rs.212400.00

        Annual Irregular Income = Ann Irr Incomewage type (/411)

= Rs.15400.00 - Annual Bonus (Value of Mon Irr Income wage type (/125) in the Cumulative Results Table)

+ 0.00 (Value of Mon Irr Income wage type (/125) in the Results Table)

= Rs.15400.00

        Gross Salary wage type (/416)

= Rs.212400.00 + Rs.15400.00

= Rs.227800.00

        Exemption U/S 10 wage type (/130)

= Conveyance Annual Exempt wage type (/4E3) + HRA Annual Exemptionwage type (/4E4)

= Rs.800.00 multiplied by 12 + minimum of Rs.(65760.00,36000.00,13560.00)

= Rs.9600.00 + Rs.13560.00

= Rs.23160.00

        Balance wage type  (/418)

= Rs.227800.00 - Rs.23160.00

= Rs.204640.00

        Deductions

        The professional tax liability of the employee is Rs.200.00 per month.

Empmnt tax (Prof Tax) wage type (/422) = Rs.2400.00

        The employee will get a Standard Deduction of Rs.25000. 00.

Std Deduction wage type (/420) = Rs.25000.00

Aggrg Deduction wage type (/424) = Rs.27400.00

        Incm under Hd Salary wage type (/426)

= Rs.204640.00 - Rs.27400.00

= Rs.177240.00

        As the employee does not have any income from other sources, Any other Income wage type (/131) = 00.00.

Gross Tot Income wage type (/430) = Incm under Hd Salarywage type (/426)

= Rs.177240.00

        As the employee does not have any Section 80 deductions, Agg of Chapter VI wage type (/432) = 00.00.

Total Income wage type (/434) = Gross Tot Incomewage type (/430)

= Rs.172200.00

Since, the year of assessment is 2002 - 2003,

        Tax on total Income wage type (/436) = Tax calculated on Total Income wage type (/434)

= Rs.27172.00

        Monthly Provident Fund deduction = 12% of (Basic salary + Dearness Allowance)

= Rs.1644.00

Ee Ann PF contribution wage type (/3F6) = Rs.19728.00

Sec 88 wage type (/438) = 15% of Rs.(19728.00 + Rs.20000.00)

= Rs.5959.20

        As there is no Section 88B and 88C rebate, Agg of Chapter VIII wage type (/444) = Rs.5959.20

        Tax payable wage type (/446) = Rs.27172.00 - Rs.5959.20

= Rs.21212.80

        Surcharge payable wage type (/448) = 5% of Rs.21212.80

= Rs.1060.64

        Tax payable and surcharge wage type (/450) = Rs.21212.80 + Rs.1060.64

= Rs.22273.44

= Rs.22273.00 (rounded off to the nearest rupee)

        Tax deducted so far wage type (/456) = Rs.2904.00 (Tax paid by the employee in the previous periods of the financial year)

        Net tax payable wage type (/458) = Rs.22273.00 - Rs.2904.00

= Rs.19363.00

        Projection Factor wage type (/401) = 9 (July 2002 to March 2003)

        Income Tax wage type (/460) = Rs.19363.00 divided by (9+1)

= Rs.1936.30

= Rs.1937.00 (rounded off to the nearest rupee)

The employee has to pay a tax of Rs.1937.00 for the month of June 2002.

See also:

Income Tax

 

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