It’s that time of the year again. Make the right investment decisions to reduce your tax liability. The provisions under Section C can help you reduce your taxable income upto Rs. 1 Lac and resultantly a lesser tax outflow.

For your benefit we have listed all investments / expenses that qualify under Section 80 C.

Section 80 C

1)       Life Insurance and ULIP Premium

2)       Pension Plan/National Pension System

3)       Tax Exempt Mutual Funds (ELSS)

4)       FD above 5 years in Scheduled banks

5)       Infrastructure Bonds

6)       NSC Purchase

7)       NSC Interest

8)       Post Office SB (Cumulative Time Deposit)

9)       Annuity Plan for LIC

10)   Approved Superannuation Fund

11)   Deferred Annuity

12)   Public Provident Fund – Maximum allowed: Rs. 70,000/-

13)   Recognised Provident Fund

14)   Statutory Provident Fund – the employee contribution that gets deducted from your salary

15)   Housing Loan Principal Repayment

16)   Tuition fees – Only Tuition fees excluding Development Fees, Donations, etc. Maximum allowed: Rs. 24,000/-

17)   Expenditure on Children Education – Upto Rs. 200 per month for upto 2 children

Team eVetan

Finally there is clarity on valuation of perquisites provided by employers to employees, as notified by the Central Board of Direct Taxes on 18 Dec 09 , through introduction of new  norms  called the Income Tax (Thirteenth Amendment Rules) 2009.

The new norms will come into effect with retrospective basis from April 1, 2009. The finance bill presented this year had abolished FBT and perks had become taxable in the hands of the employees. However norms were yet to be introduced on how to value the perquisites.

In the new regime, the value as calculated based on the new norms notified, will be added to the total income of the employee and will be taxed depending on the tax bracket that the employee falls under.

(To view different tax brackets, refer to our blog article dated 21 July 09 (http://www.evetan.com/blog/2009/07/21/budget-2009-10-impact-on-payroll/)

The perquisites that become taxable in the hands of the employees now; include cars, rent free accommodation, services of personal attendant, interests free loans, gift vouchers, employee stock options etc.

For a complete list of taxable perquisites and how to value them, visit: http://www.itatindia.com/datafolder/flash/Flashst19-12-09_1.htm

Team eVetan

IRDA is planning to introduce mediclaim policy portability and is preparing guidelines for general insurance companies for the same.

What does it mean?

If you think your general insurance company is not providing you with satisfactory services with respect to your health insurance policy, you will soon be able to change the company without giving up any benefits.

Essentially when you buy a health insurance policy, you are subjected to medical tests to exclude any existing diseases that you may have. Also you are not allowed any claim during the initial few months. In a scenario where you contract a disease during the policy period, the disease remains covered if you go for the renewal of the policy. However if you wish to change the company, the same disease does not get covered..

With the new guidelines , IRDA hopes to empower the consumers so that they may change the insurance company if services are unsatisfactory without losing any benefits or being subjected to unfair new policy terms.

Our take:

Power to the consumers!Will ensure health insurance companies do not get complacent and are committed to providing the best services to their customers.

- Team eVetan
(For any queries on payroll, salaries, personal finance, personal income tax; write to info@eVetan.com)

EPFO, Employees Provident Fund Organization is considering increasing the minimum wage limit from Rs. 6,500 per month for mandatory deductions in Provident Fund by employers to Rs. 15,000 per month.

What does this mean for employers?

Currently if you have employees with monthly wages (Basic + DA) less than Rs 6,500 per month, it is mandatory for you to make PF deductions (12% employee contribution + 12% employer contribution + 1.61% as PF administration charges). EPFO intends to increase this limit per month to Rs. 15,000. So PF deductions become mandatory if any of your employees have monthly wages less than Rs. 15,000.

eVetan’s take

A progressive step especially for millions of workers who gain access to assured retirement benefits, which otherwise becomes difficult for workers to subscribe themselves.

-Vineet Pandey
(Vineet is a co-founder with eVetan.com. He can be reached at: vineet@eVetan.com)

Professionals in Delhi earning over Rs 30,000 per month may now have to pay a ‘professional tax’ of up to Rs. 200 under the new tax proposal presented by Municipal Corporation of Delhi in its budget for 2010-2011.

The tax will be imposed on all professions, trade callings and employments.

Proposed:

Salary and wage earners may have to pay PT as per the following structure:

Even those people who are living in Gurgaon and Noida but are working in Delhi will be liable to pay this tax. However as mandated by the Central Government, the tax will not exceed Rs. 2,500 per annum.

eVetan.com will keep you updated with when and if the proposal is accepted and implemented.

In case the proposal is accepted, our customers need not worry, the online payroll engine will have the changes incorporated so that you have a hassle free and most relevant payroll experience.

-Vineet Pandey
(Vineet is a co-founder with eVetan.com. He can be reached at: vineet@eVetan.com)

Payroll Calendar (Download) contains a yearly calendar that will help you manage your payroll function by setting reminders for various payouts as well as statutory compliances.

Assuming your salary date as the 7^th of every month, which may change from organization to organization, the attached document outlines the cut-off dates every month of statutory compliances (monthly PF, ESI, PT, TDS payments) as well as the cut-off dates for quarterly, half-yearly and yearly return filings.

• PF – Annual Return Filings
• ESI – Half Yearly Return Filings
• TDS – Quarterly Return Filings
• PT – Annual Return Filings

Download Payroll Calendar for companies in India

As your organization grows, the demands on your operations ensure you hire human resources and pay them salaries based on their responsibilities and deliverables. Salaries may be fixed or based on performance or a combination of both. Additionally you need to conform to various labor laws that ensure employee benefits.

As the number of variables grows each time you are processing salaries, the chances of errors creeping in increase. You need to keep a track of all your employee details, their attendance, Overtime, performance linked incentives, leaves, expense reimbursements as well as various deductions mandated by labor and income tax laws such as PF, ESI, PT, and Income Tax deductions.

Your salary calculations should be efficient enough to provision for any investments that your employees make and which entitle them to various tax exemptions provided by the Government.

The entire process becomes extremely cumbersome and any errors have serious implications in terms of interest and penalties for delayed statutory compliances as well low employee morale.

Eventually every organization outgrows Excel. In fact, it’s never too early to move to an automated payroll system. Below are key advantages that should be the key motivators for you to establish a professional and automated payroll system:

• Simplifies data entry, saves time and helps reduce errors.
• Processing payroll becomes fast and easy compared to manual systems; save on time and extra manpower costs
• Employee Self-help tools helps enhance productivity across the board; employees can view their pay slips, apply for leaves, reimbursements and declare investments without eating into your quality HR time
• All payroll information remains in one location, giving you extreme control over your payroll systems
• Auto calculates all deductions related to labor laws and income tax, and ensures you meet all your statutory compliances
• All government reporting becomes easy, such as filing PF, ESI returns accurately and on time

eVetan.com which is India’s first pay-per-use online payroll software helps you automate all your payroll tasks in quick easy steps from employee records, attendance management, salary processing and disbursement, to statutory compliances; at rates which the smallest of businesses can afford.

When you hire employees for your company, it is mandatory to conform to various central and state regulations that ensure employees are well protected and have access to various benefits – from retirement funds, medical insurance, bonuses, to gratuity. Additionally, the government expects you to collect taxes from employees and remit the Tax Deducted at Source on fixed dates. If your hiring needs change as per your business cycles, you may choose to avail of human resources from a labour / manpower contractor. There are regulations that you need to conform to when you hire such contracted labour.

Broadly, whenever you hire employees, statutory compliances (governed by various Central and State Acts) can be categorized into the following groups: (Key Acts are listed within each category)

1) Laws related to wages

1. The Payment of Wages Act, 1936; The Payment of Wages Rules, 1937; The Payment of Wages (Amendment) Act, 2005
2. The Minimum Wages Act, 1948; The Minimum Wages (Central) Rules, 1950
3. The Payment of Bonus Act, 1965; The Payment of Bonus Rules, 1970

2) Laws related to Working Hours, Conditions of Services and Employment

1. The Factories Act, 1948
2. The Contract Labour (Regulations and Abolition) Act, 1970
3. Shops and Establishment Act

3) Laws related to Equality and Empowerment of Women

1. The Maternity Benefits Act, 1961
2. The Equal Remuneration Act, 1976

4) Laws related to Social Security

1. The Workmen’s Compensation Act, 1923; The Workmen’s Compensation (Amendments) Act, 2000
2. The Employees’ State Insurance Act, 1948
3. The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952; The Employees’ Provident Fund & Miscellaneous Provisions (Amendment) Act, 1996
4. The Payment of Gratuity Act, 1972

It is critical that you consult with your Chartered Accountant and/or Labour Consultant to accurately interpret the various laws applicable to your organization before hiring employees.

It is desirable that you move to an automated payroll system, such as www.evetan.com,  that gives you the option to auto calculate deductions mandatory as per various labour laws such as PF, and ESI deductions.

eVetan.com which is India’s first pay-per-use online payroll software helps you manage all your statutory compliances (PF, ESI, PT, TDS) including monthly deductions and annual filings.

The following are the changes proposed in the Budget for FY 2009-10 that have an impact on Payroll:

Tax Slabs:

In Case of General Assesses:

In Case of Women Assesses:

In Case of Senior Citizens:

* On final tax amount, a surcharge of 3 %
**No surcharge above 10 lacs.

Exemptions:

1) 80 C Limit Unchanged

2) 80 D

3) Section 80DD

1. Exemption was given for Expenditure made for a disabled dependant towards Medical Treatment/Training/Rehabilitation. It also includes the LIC/insurance paid towards maintenance of such dependant.
2. Such exemption was up to 50,000 in case of normal disability and 75,000, in case of severe disability.
3. This limit has been kept the same 50,000 in case of normal disability, but increased to Rs. 1 Lakh in case of severe disability.
4. Applicable for AY 2010-11 (FY 2009-10)

4) Section 24(1)(vi)

Housing loan interest.
Maximum Investment Limit 1,50,000 (for loans taken after 1 April 1999, for loans before that Maximum Investment Limit 30,000).

5) 80DDB

Expenditure incurred on specified disease or ailments such as cancer/aids
Maximum Investment Limit – 40,000
In case of senior citizen; Maximum Investment Limit – 60,000

6) 80U

Permanent disability benefit (Self) – adhoc amount
Maximum Investment Limit – 50,000
In case of disability exceeding 80%, Maximum Investment Limit – 75,000

7) Section 80E

1. Earlier it was applicable only for Graduate / Post-Graduate, Fulltime studies
2. Now all studies after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.
3. Applicable for AY 2010-11 (FY 2009-10).

8 ) 80CCD:

Contribution to NPS and returns on NPS tax free, but withdrawal still taxable

9) 100% exemption on donation to political parties

10) Fringe Benefit Tax

1. FBT was introduced in 2005.
2. FBT is now completely withdrawn.
3. Consequently, the fringe benefits will be taxed as perquisites in the hands of the employees.
4. Superannuation – Any contribution made by a company to superannuation fund above Rs. 1,00,000 taxable in the hands of the employee
5. Applicable for AY 2010-11 (FY 2009-10).

Friends, family, ex-colleagues wonder !!!!

Why a venture the concept of which would put the vast majority to sleep…. Considering the team that we have, the backgrounds, the intellect; why of all business ideas was eVetan conceptualized? Obviously, this isn’t a Google-kinds search play, neither an uber-cool consumer portal nor the next-gen social network.

Well eVetan serves a purpose, and it serves pretty well. It’s for the lacs and lacs of small businesses who want to incorporate a professional process in their organizations. Something that till now was only for the big boys; large businesses, which did not have to think twice before implementing an expensive payroll application.

The founding team has had experience of running startups prior to eVetan, and that’s when the concept of eVetan came about. We had the fortune of working with large MNCs and when we started our own entities, the idea was to implement the best that they have in terms of systems & processes into our own startups. Obviously that was not to be. So whether it was a finance control package or an HRMS or a stand alone payroll system; we realized that there was nothing for us. Everything that we wanted had an expensive upfront cost, prohibitive AMCs and features that were more than we ever needed.

eVetan.com is our endeavor to address this need gap. Offer the most reliable and professional industry benchmarked payroll application at prices that small & mid sized businesses can easily afford.

And yes, for our friends, family and ex-colleagues, we will be one of those internet plays that will go onto make money; what with more than 13 mio SMBs as our potential market.

This means we can continue to hire the best talents, offer the most exhaustive online features & quality service to our customers, generate scale & tech efficiencies to continually offer more value for money; and be the one point source of all knowledge related to Indian Payroll & Employee Regulations for SMBs.

Obviously, this isn’t a Google-kinds search play, neither an uber-cool consumer portal nor the next-gen social network…