Tax Proposals Applicable for FY 15-16

General Tax Payers Proposed Tax Rates
Up to Rs 2,50,000 NIL
Rs 2,50,001 to Rs 5,00,000 10 per cent
Rs 5,00,001 to Rs 10,00,000 25,000 + 20 per cent
Rs 10,00,000 and above 1,25,000 + 30 per cent
For Senior Citizens of 60 years But less than 80 years Proposed Tax Rates
Up to Rs 3,00,000 NIL
Rs 3,00,000 to Rs 5,00,000 10 per cent
Rs 5,00,001 to Rs 10,00,000 20,000 + 20 per cent
Rs 10,00,000 and above 1,20,000 + 30 per cent
Very Senior Citizens of 80 Years and Above Proposed Tax Rates
Up to Rs 5,00,000 NIL
Rs 5,00,000 to Rs 10,00,000 20 per cent
Rs 10,00,000 and above 1,00,000 + 30 per cent

 

  • Surcharge of 12% of tax on income exceeding Rs. 1 Crore.
  • 3% education cess remains
  • Section 80D tax deduction amount increased from Rs. 15,000 to Rs. 25,000. Plus an additional Rs 30,000 if paying for dependent parents who are senior citizens.
    • For senior citizens limit increased to from Rs. 20,000 to Rs. 30,000
    • For very senior citizens (80 years or more) – who are not covered by health insurance, medical expenditure upto Rs. 30,000 is tax deductible
    • Deduction limit of Rs. 60,000 towards expenditure on account of specified diseases of serious nature to be enhanced to Rs. 80,000 for very senior citizens
  • Section 80U and Section 80DD
    • Additional deduction of Rs. 25,000 will be allowed for differently abled persons under section 80DD and 80U
  • Deduction on account of contribution to a Pension fund and New Pension Scheme enhanced from Rs. 1 lac to Rs. 1.5 lacs
  • 80CCD – additional deduction of Rs. 50,000 for contribution to New Pension Scheme
  • 80C – Investments under Sukanya samriddhi scheme is already eligible for deduction under 80C. Now even interest payments will be exempt. (Sukanya Samriddhi scheme to be included in 80 C Sub Sections)
  • Conveyance allowance or transport allowance – amount eligible for deduction increased to 1600 per month from 800 per month
  • Section 80CCG Rajiv Gandhi Equity Scheme – For first time investors in listed shares and Mutual funds. Eligible Benefit available for 3 consecutive years
  • Tax rebate of Rs 2,000 for all whose total income is upto Rs. 5 lacs…Section 87a continues

Summary

1 Deduction under Sec 80C Rs.1,50,000
2 Deduction under Sec 80CCD Rs.50,000
3 Deduction on account of interest for home loans (self occupied property) – Section 24 Rs.2,00,000
4 Deduction under Section 80D on health insurance premium Rs. 25,000
5 Exemption on Transport Allowance Rs. 19,200
6 Exemption on Medical Allowance Rs. 15,000
7 HRA Benefit Applicable as before
8 LTA Benefit Applicable as before
9 Reimbursements for expenses under Section 10(14) applicable

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In Case of General Assesses:

Income Bracket Rate
0 to Rs. 1,80,000 0   %
Rs. 1,80,001 to Rs. 5,00,000 10 %
Rs. 5,00,001 to Rs. 8,00,000 20 %
Above Rs. 8,00,000 30 %

In Case of Women Assesses:

Income Bracket Rate
0 to Rs. 1,90,000 0   %
Rs. 1,90,001 to Rs. 5,00,000 10 %
Rs. 5,00,001 to Rs. 8,00,000 20 %
Above Rs. 8,00,000 30 %

In Case of Senior Citizens (> 60 Years but less than 80 Years):

Income Bracket Rate
0 to Rs. 2,50,000 0   %
Rs. 2,50,001 to Rs. 5,00,000 10 %
Rs. 5,00,001 to Rs. 8,00,000 20 %
Above Rs. 8,00,000 30 %

In Case of Very Senior Citizens (80 Years and above):

Income Bracket Rate
0 to Rs. 5,00,000 0   %
Rs. 5,00,001 to Rs. 8,00,000 20 %
Above Rs. 8,00,000 30 %

eVetan is a simple, easy to use, self-service and completely online payroll processing platform; that also helps you generate all reports required for employee related statutory compliances.

Before we begin to understand how you can operate eVetan, let us understand what it does for your business:

1)        Setup all your employee records; their personal & professional information, tax declarations, salary summary, leaves, advances & loans details.

2)        With eVetan; you can process accurate salaries for your employees and also deduct sums whether Professional Tax, Income Tax, advances, loans etc.; to arrive at the monthly net pay.

3)        With eVetan; you can give online access to your employees through the online ESS (employee self service). Employees can login to check their pay slips, declare their investments for tax purposes and also view other summaries such as leaves, advances and loans history.

FAQs

1)      How do I start using eVetan for processing payroll?

To start using eVetan; you will have to first register yourself as a business by accessing the following URL:

http://www.evetan.com/online-payroll-software-system-india/sign-up.php

When you register, you will receive an automated email on your email address which will ask you to click on a link. On clicking this link; we verify your email address and also send you the password for your eVetan account on your mobile phone.

To login to your eVetan account, you will need to access the following URL:

http://www.evetan.com/userauth/login.php

2)      While registering, what do I need to register as – Business, Service Provider or Reseller?

If you want to use eVetan for your own company’s payroll needs; you will have to register as a Business.

Service Provider registration is for businesses/individuals that wish to use our online platform to offer payroll services to their clients.

Resellers are businesses/individuals who wish to become our authorized partners. These entities are typically software distributors who take our product to the market. With a reseller login, entities can allocate credits to their clients.

3)      Tell me the process flow of setting up data on eVetan and processing salaries on a monthly basis?

Once you have registered with us and you receive a username and password for your online eVetan account; you have access to all features of eVetan. As soon as you login; the system takes you to your home page. Here you can create as many companies as you want by clicking on “Add a new company”. With this you have created the database which will records all your company information for processing payroll.

Setting up data on eVetan is easy and a step by step process. The entire setup process is divided into 3 categories

a)      Company Details – Please enter the information asked by the system. The most important sub category here is “Policy Information’ where you need to enter Policy rules for the company whose payroll you wish to process.

b)      Salary Heads – This section within Setup lets you define your monthly allowances, annual allowances, your deductions and various other heads as per the needs of the organization. You can create as many heads as you want.

c)      Employees – a simple click through process will guide you in setting up employee records here.

4)      Once I have finished the setup process, what is the next step?

Once you have finished setting up your company, salary heads and employee details; you are ready to start processing salaries for the first month.

To do this, you need to go to the “Pay” page from within the “Company” home page or access “Process Payroll” from your Home Page.

Payroll processing is divided into 2 steps –

a)      Process Pay – in this section; you can enter the number of days that the employee was present in a month and overtime hours (if applicable). Additionally, you have an option to enter any ad-hoc allowances or deductions by clicking on Ad-hoc, that opens up a pop-up window for any last minute editing.

b)      Approve Pay – Approve Pay gives you the option to review the net pay details before you finalise the payroll for a particular employee for the month. In this stage, you have an option to make any last minute changes to the deductions by clicking on “Change” under deductions heading.

5)      How do I set Overtime feature on eVetan?

To be able to pay your employees Overtime; you will need to select this allowance head by accessing

Setup — >Salary Heads — > Heads for Monthly Earnings.

Once you have selected Overtime as an allowance head; you can set the Overtime rate by accessing

Setup — > Employees — > Pay

6)      How do I setup leaves on eVetan?

You can define leave heads for your company by accessing

Setup — >Salary Heads — > Heads for Leaves

Once you have defined leave heads; you can allocate leaves for a particular employee by accessing

Setup — > Employees — >Leaves

This section lets you define annual or monthly leaves for the particular employee. If you setup a type of leave as an Annual Leave; these will be valid for the entire year (eVetan considers the year as the financial year from April to March)

Similarly you can also define a leave as a Monthly Leave also. In this scenario; leaves are allocated every month.

You also get the option to define whether the leaves are forwarded or encashed in this sub-section.

7)      How do I ensure that eVetan does not deduct pay for absent days if such absenteeism was approved or leave was granted?

To ensure that eVetan does not deduct for absent days; you will have to sanction those number of days as approved leaves.

You can do this by accesing

Setup — > Employees — > Leaves — > Sanction Leave

(You will have to ensure that leaves that you sanction are less than the leave balance that the employee has in his account. Refer to FAQ 6 to understand how you can allocate leave balance to an employee)

Once you do this, you will see that the “Process Pay” page (when you are processing payroll for a particular month) carries the number of leaves sanctioned for a particular employee under the “Leaves” head.

8)      How does eVetan manage Advance and Loans?

When you give an advance or a loan to an employee; eVetan gives you the option to manage these payout and to collect them with or without interest over subsequent months.

You can setup Advance or Loan details for a particular employee by accessing

Setup — > Employee — > Pay — > Give an Advance/Give a Loan

9)      How does eVetan manage all statutory compliances related to employees?

With eVetan, you don’t have to worry about various statutory compliances that are applicable to your employees. eVetan has inbuilt formulae  setup that ensures that when you process payroll for your employees, the system calculates accurate PF, ESI, PT and TDS deduction.

To turn this auto feature on, you need to access

Setup — > Salary Heads — > Heads for Deductions

Here you can select the deductions that you wish to comply with; whether PF (Employee Provident Fund Contribution), ESI (Employee State Insurance Contribution, PT (Professional Tax) or TDS (income tax).

However, for some employees, where you do not wish to deduct any PF, ESI, PT or TDS contribution; you can choose to turn this feature off by accessing

Setup — > Employees — > Pay — > Deductions

10)      How do I give online logins to employees?

eVetan allows you to allocate online accounts called as Employee Self Service (ESS) to your employees.

This feature gives username and password details to employees which they can use to login to their own personal and secure payroll account; to view their paylips, and other details. With their online ESS, they can also declare investments for tax purposes and you need not collect physical investment forms from the employees.

To give online ESS

Setup — > Employees — > ESS

The central government has revised the Employee State Insurance applicability norms for employees.

Effective 1 May 2010, units which are under ESIC coverage will have to start making ESI contributions for all employees whose gross monthly wages are Rs. 15,000 or below. Earlier ESI contributions for entities under coverage was mandatory for only those employees whose monthly gross wages were Rs. 10,000 or below.

The amended notification was released by the ministry of labour and employment on 28 April 2010. This is a positive step that will benefit thousands of employees who will now have access to various benefits provided by the Employee State Insurance Corporation (subject to conditions):

  1. Medical Benefits
  2. Sickness Benefits
  3. Maternity Benefits
  4. Disablement Benefit
  5. Dependants’ Benefits
  6. Funeral Expenses

In addition, the scheme also provides some other need based benefits (subject to conditions) to insured workers such as:

  1. Rehabilitation allowance
  2. Vocational Rehabilitation
  3. Unemployment Allowance (Under Rajiv Gandhi Shramik Kalyan Yojana)

This notification will however lead to higher costs for employers as they will need to bear 4.75% of Gross Wages for the additional employees who will come under coverage, as employer contribution towards overall ESI contributions.
(Employee contribution is 1.75% of Gross Wages.)

Team eVetan

Tax Slabs

1) In Case of General Assesses:

Income Bracket Rate
0 to Rs. 1,60,000 0   %
Rs. 1,60,001 to Rs. 5,00,000 10 %
Rs. 5,00,001 to Rs. 8,00,000 20 %
Above Rs. 8,00,000 30 %

2) In Case of Women Assesses:

Income Bracket Rate
0 to Rs. 1,90,000 0   %
Rs. 1,90,001 to Rs. 5,00,000 10 %
Rs. 5,00,001 to Rs. 8,00,000 20 %
Above Rs. 8,00,000 30 %

3) In Case of Senior Citizens:

Income Bracket Rate
0 to Rs. 2,40,000 0   %
Rs. 2,40,001 to Rs. 5,00,000 10 %
Rs. 5,00,001 to Rs. 8,00,000 20 %
Above Rs. 8,00,000 30 %

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

Exemptions:

1) 80 C Limit Unchanged (Rs. 1,00,000)(refer to our earlier blog for all options under section 80 C (http://bit.ly/4px5hz)

2) 80 CCF – Additional Rs. 20,000 on investments towards approved Infrastructure bonds

3) 80CCD:

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

4) 80 D

Mediclaim Premium on the Health of Investment limit
a)     Self Spouse and Children Rs. 15,000
b)    Parent/Parents Rs. 15,000
c)     If Parent/ Parents Senior citizen Rs. 20,000

5) Section 80DD

Deduction under section 80DD

  • Exemption given for Expenditure made for a disabled dependant towards Medical Treatment/Training/Rehabilitation. It also includes the LIC/Insurance premium paid towards maintenance of such dependant.
  • Maximum deduction allowed is Rs. 50,000/- in case of normal disability and Rs. 1 Lakh in case of severe disability.

6) 80DDB

Deduction under section 80DDB

  • Exemption given for expenditure incurred on specified disease or ailments such as cancer/aids.
  • Maximum deduction allowed is Rs. 40,000/-. In case of Senior Citizens, maximum deduction allowed is Rs. 60,000/-

7) Section 80E

Deduction under section 80E

Deduction is allowed for repayment of interest component of Higher Education loan. All education after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.

8 ) Section 80G

  • Contribution to exempt charities – 25/50/75/100% depending on the charity and as per approval
  • 100% exemption on donation to political parties

 

9) 80U

Deduction under section 80U

  • Deduction upto Rs. 50,000/- is allowed in case of Permanent Disability.
  • In case of Permanent Disability exceeding 80%, maximum deduction allowed is Rs. 75,000/-.

10) Section 24(1)(vi)

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

 

11) Superannuation – Any contribution made by a company to superannuation fund upto Rs. 1,00,000 tax free in the hands of the employee

12) Conveyance/Transport Allowance – Any Conveyance / Transport Allowance given to an employee is tax free upto Rs. 9,600 /- (No Supporting Bills required)

13) Medical Allowance – Any Medical Allowance given to an employee is tax free upto Rs. 15,000 /- (Supporting Bills required)

14) HRA – Any House Rent Allowance given to an employee is tax free upto the minimum value of the following conditions (subject to – when an employee can produce rent paid receipts from landlord for the period and if the employee has not availed of tax exemptions for home loan interest / principal repayment):

a) 50% of Annual Basic (40% of Annual Basic in case of non-metros)

b) Actual HRA received

c) Rent Paid – (10% of Annual Basic)

15) Professional Tax – Any Professional Tax deducted from an employee’s salary can be reduced from the annual salary income to arrive at taxable salary

16) Provident Fund – Provident Fund contributions (under section 80 C and subject to an overall investment limit of Rs. 1,00,000 ) deducted from an employee’s salary are tax exempt.

Team eVetan

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It’s that time of the year again. Make the right investment decisions to reduce your tax liability. The provisions under Section ‘8O 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:

Salary/Wage Earned (Monthly) PT
Between 30,000 and 40,000 100
Between 40,000 and 50,000 110
Between 50,000 and 60,000 120
Between 60,000 and 70,000 130
Between 70,000 and 80,000 140
Between 80,000 and 90,000 150
Between 90,000 and 100,000 160
Between 100,000 and 110,000 170
Between 110,000 and 120,000 180
Between 120,000 and 130,000 190
Above 130,000 200

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)