Income Tax (ISLR) Calculation
Objective
The aim of this process is to calculate the employee income percentage to be deducted for Income Tax (ISLR).
Requirements
Before carrying out the Income Tax (ISLR) calculation, you must maintain the
Information on Income Tax (ISLR) Calculation and the Taxable Income Scale.Process
The Income Tax (ISLR) calculation process is carried out on ordinary, adjustment and off-cycle payroll runs using the VETAX function. In addition to calculating the Income Tax (ISLR) rate applicable, this function also cumulates employee income amounts and the tax deduction amount for the current fiscal year.
The general process calculates the tax deduction amount for the payroll period being run by applying the Income Tax (ISLR) rate to the calculation base. Later, it maintains the cumulated income and deduction amounts.
Example of the input values required for the function:
Salary (Taxable Basis): 350,000.00
Deduction Rate: 2.50
Cumulated Remuneration: 2,450,000.00Cumulated Deductions: 50,000.00
Using these values, the function applies the deduction rate to the taxable basis and then calculates the income amount that must be deducted from the employee. In addition, it maintains the cumulated payment and deduction amounts. The results obtained are shown below:
Total Deduction: 8,750.00
Cumulated Remuneration: 2,800,000.00
Cumulated Deductions: 58,750.00
Result
The function contains routines that enable you to calculate the tax deduction amount if the employee’s income includes retroactive accounting.