Finance – People First

[Download the checklist at the end of this article]

Are you looking for a payroll (managed) partner in India? It can be overwhelming as to what aspects to be mindful of in the process.

Here is a set of questions that you can consider to ask the vendors you have shortlisted. Not all of these questions may be applicable to all organisations and not all questions are on this document either.

Below are some abstract set of questions and a detailed set of questions are provided at the end of this article for you to download.

Input and Output

Starting with how the input-output communications occur, their cadence, mode of communication, how results are presented, availability of various reports, pay structuring and support for pay components, monthly or year-end TDS process, etc. can be points of discussion. How about new joiners and leavers?

Admin

Whether the partner allows admin access to the payroll platform to select employees of the client organisation, what kind of reports can be generated by the admin, etc. can be thought of before taking a decision.

ESS

Will employees get access to an Employee Self-Service portal where they can see their pay details, and tax calculations, declare investments, download payslips, submit reimbursements and year-end proofs, etc.? Well, this is important for employee experience and should be considered as a serious point of discussion. Questions like whether there is a mobile app for the ESS is also good question to ask.

Payslips

How customisable are the payslip structure and formats? Can the client organisation’s branding guidelines be followed? What information (such as PF#, UAN, LWF#, PAN, Bank Account#, etc.) can be shown on the payslip?

Integration

Can the payroll partner integrate their tool into the client organisation’s HRIS? How about various documents such as Payslips, Form 16, etc.? Will they appear on the HRIS as well? How about compensation analytics and tax projections?

Compliances

Can the payroll partner take care of EPF/ESI/PT/LWF payments, returns, etc.? How about the other labour law returns/forms to be kept/registrations to be taken? Or, will the client organisation have to engage another service provider for these services?

The list is not close to complete, but here’s a set of questions you can start with.

This article is also published on LinkedIn and Medium

Hence, the article below stands void.

In the 2020-21 budget by the Govt of India, a new tax regime was announced. The below table depicts the difference between the old regime and the new regime. HOWEVER, Govt has announced that it will give an option for the citizens to choose which tax regime they would like to be taxed on.

Does that mean I can tell my employer to tax me on which regime?

As it looks, your employer cannot take such an option from you to choose which income tax regime they should tax you on.

So, what will the employer do?

The employer will still need to, as of today, continue deducting income taxes per the old regime (like how they used to do during FY 2019-20). They cannot ask, or take a choice from, the employee on which regime to tax on, nor they can tax them other than on the old tax regime.

When can I then choose my tax regime?

The employee can choose the tax regime at the time of his/her Income Tax returns. The IT department will recalculate the income tax and ask you to pay/refund an additional amount.

Why is it that so? Why can’t employers take option from employees?

As per the Finance Act, 2020 which is enacted by the Parliament, taxes are to be withheld and paid to the Government as per Part I of First Schedule of the Act (please see screenshots below).

The Government has, in fact, introduced the new tax regime not by altering the Part I of First Schedule above, but instead by introducing the new regime as a new section (Section 115BAC). As long as Part I of First Schedule is changed/amended with the rates mentioned in 115BAC, the employer needs to follow the old regime for TDS.

Can I change choose old regime in the years to come, if I choose the new regime during FY 2020-21 (AY 2021-22) during income tax returns?

No, 115BAC mandates that in case of individuals and HUFs who have income either from a business or a profession, once this option is exercised, they will have to continue with the new regime for that year and all subsequent years.

(with inputs from multiple resources and people, including Sreelal).

Also published at LinkedIn and Medium.

Tag: Finance

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