PeopleSoft Enterprise Global Payroll for India 9.1 PeopleBook

Withholding Taxes

This chapter provides overviews of tax computation process flow and delivered tax elements and discusses how to:

Set up and maintain tax information.
Report tax information.

Understanding Tax Computation Process Flow

This section discusses:

Income tax process flow.
Profession tax computation flow.

Note. To examine the specifics of the calculations, use the core PeopleSoft Global Payroll application to examine the tax-related elements and rules.

Income Tax Process Flow

To calculate payee income tax to be withheld, the system:

Calculates taxable earnings.

Taxable earnings are the sum of all earnings that a payee has received for the tax period, including previous employment earnings, basic salary from current employment, house rent allowance, and perquisites.
Totals previous and current employer exemptions.

Previous and current employer exemptions for the payee are totaled. These exemptions can be items such as house rent allowance, conveyance, or leave travel allowance.
Calculates gross salary.

Gross salary is calculated as taxable earnings minus exemptions.
Calculates the standard deduction, based on the previously calculated gross salary. Profession tax is taken into consideration during this step.
Calculates salary income.

Salary income is Taxable Earnings – Exemptions = Gross Salary – Standard Deduction = Salary Income.
Calculate other income.

Income from other sources is income derived by the employee from sources such as business income and income from capital gains. The employee may choose to declare this income to the employer. Such income or loss is added or reduced from taxable income while taxes for the year are determined.
Calculate gross total income.

Gross total income is calculated by considering the total of all heads of incomes before allowing any deductions under chapter VIA.
Total chapter VIA deductions.

All chapter VIA deductions (such as medical insurance or self-education) that the payee claims are calculated. Each deduction has a statutory limit defined in variables.
Calculate total taxable income (net income).

Total taxable income (net income) is calculated as gross total income minus chapter VIA deductions. The tax liability of the assessee is determined based on this result. The rates of taxes applicable, and the rebates that are given, are all based on this amount. The applicability of the surcharge also depends on this result.
Calculate tax liability.

The total taxable income (net income) is used to determine the applicable income tax rate. The income tax rates are stored in a bracket.
Apply rebates.

Rebates are reductions from the tax liability of an employee. Rebates are allowed for employees who make certain investments during the current year. They include premium on life insurance and investments made in certain government-supported bonds such as Infrastructure bonds, RBI Bonds, and National Savings Certificates. A certain percentage of the investment is allowed as a rebate. This percentage is usually determined by the annual finance bill proposed every year.
Calculate balance tax.

Net tax payable is calculated as the result of the tax liability minus the rebates.
Calculate surcharge.

Surcharge is an additional levy on the net taxes of an employee. When the net tax payable is determined, the surcharge is calculated. The amount calculated is added to the taxable income and considered for tax deduction. This is the last step in the tax computation process. The amount calculated is prorated and deducted on a monthly basis.
Calculate net tax liability.

The final tax liability is the result of the net tax payable plus the surcharge.
Determine monthly tax deduction.

To determine the month's tax deduction for the payee, the balance tax of the employee is determined after reducing the tax deducted so far from the employee's tax liability for the year, and the balance determined. This is divided by the number of months left in the year and tax for the month determined. This is the amount that will reflect as TDS (tax deducted at source) month on month.

Profession Tax Computation Flow

The frequency with which you must deduct profession tax varies among states. The deduction frequencies for each state (monthly, quarterly, semiannually, or annually) are stored in variables, one variable for each state.

Rates and slabs that are applicable to each state are stored in brackets, one bracket for each state.

Each employee is linked to an establishment and the establishment is linked to a state. The rates that are applicable to each state are stored in a bracket.

Profession tax differs from state to state, and the deduction occurs based on the specified frequency. The amount deducted for profession taxes is considered for the calculation of the standard deduction as discussed in step 4 of the Income Tax process flow.

Note. Make sure that a payee's profession tax establishment is set up using the Establishment component (ESTABLISHMENT_DATA) in PeopleSoft Enterprise Human Resources because this information is vital to the proper calculation of a payee's profession tax deduction. This is the only source where an employee is linked to an establishment and an establishment to the state, therefore determining the correct deduction.

See Also

Accumulators

Setting Up Establishments

Understanding Delivered Tax Elements

This section discusses:

Delivered tax earnings.
Delivered tax deductions.

Delivered Tax Earnings

While the elements in this section are defined as earnings, they are actually used to store specific information. "Previous" in the following table refers to previous employment, such as "Previous Employment Salary." The elements in this section do not function as typical earning elements.

Global Payroll for India delivers the following elements to process payee taxes:

Earning	Description
PREV SAL	Previous salary.
PREV PT	Previous profession tax.
PREV TDS	Previous tax deducted at source.
PREV HRA	Previous house rent allowance.
PREV LIC	Previous life insurance deduction.
PREV SAL HRA	Previous salary for house rent allowance.
PREV MED EXM	Previous medical exemption.
PREV LTA EXM	Previous leave travel allowance exemption.
PREV PF	Previous provident fund.
PREV EDU EXM	Previous child education exemption.
PREV HOS EXM	Previous child hostel exemption.
PREV HRA EXM	Previous house rent allowance exemption.
PREV CON EXM	Previous conveyance exemption.
RTO BASE SAL	Captures the salary changes due to retroactive processing of on the basic salary. This excludes the DA. This retroactive processing value is forwarded from the segment accumulator SEG AC BASE SAL.
RTO HRA EXM	Captures the changes due to retroactive processing on the on monthly HRA exemption (HRA EXMPT). This retroactive processing value is forwarded from the segment accumulator HRA AC EXM SEG.
CHILD EDU ALW	Child education allowance.
CHILD HOSTEL	Child hostel allowance.
CONVEY EXM	Conveyance exemption.
PEN FND 80CC	Pension fund 80CCC.
MED INS 80D	Medical insurance premium 80D.
MED HND 80DD	Medical treatment (handicapped dependents) 80DD.
MED AIL80DDB	Medical treatment (special ailments) 80DDB.
EDU LOAN 80E	Education loan 80E.
DONAT 100PCT	Donations - 100 percent 80G.
DONAT 50PCT	Donations - 50 percent 80G.
RENT 80GG	Rent paid 80GG.
DONAT 80GGA	Donations - scientific research 80GGA.
INT SEC 80L	Interest on securities 80L.
PERM DIS 80U	Permanent physical disability.
LIC PREM	Life insurance corporation premium.
DEFRD ANNTY	Deferred annuity.
PPF	Public provident fund.
PO CUML DEPOSITS	Post office cumulative term deposits.
NSC DEPOSITS	National Savings Certificate deposits.
NSS DEPOSITS	National Savings Scheme deposits.
INT NSC	Interest on National Savings Certificate reinvested.
PRIN LOAN RE	Principal loan repayment.
MUTUAL FND	Mutual funds.
NHB SCHEME	National Housing Board scheme.
TX REBAT 88B	Tax rebate Section 88B.
TX REBAT 88C	Tax rebate Section 88C.
TX REBAT 89	Tax rebate Section 89.
INFRA BONDS	Infrastructure bonds.
LIC ANNUITY	Life insurance corporation annuity.
ULIP	Unit-linked insurance plan.
PERQ CAR	Car perquisite.
PERQ HOUSE	House perquisite.
TDS STD DED	Standard deduction.
HRA EXM	House rent allowance exemption.

Delivered Tax Deductions

Global Payroll for India delivers the following tax deductions:

Deduction	Description
TDS	Tax deduction at source.
PT	Profession tax.

Note. PeopleSoft Global Payroll delivers a query that you can run to view the names of all delivered elements that are designed for India.

See Also

Viewing Delivered Elements

Defining Earning and Deduction Elements

Setting Up and Maintaining Tax Information

This section provides an overview of tax information setup and maintenance and discusses how to:

Define the setup for tax information.
Enter payee general tax information.
Enter house rent allowance tax information.
Enter payee rebate tax information.

Understanding Tax Information Setup and Maintenance

To enter tax-related data as part of the setup and ongoing data maintenance:

Enter the income and profession tax-related information pertaining to the establishment.

See Setting Up Establishments.
Define the setup for payee tax declarations and previous employment.

You define the setup for each page in the Specify Tax Details IND component (GPIN_TDS_GEN).

See Defining the Setup for Tax Information.
Enter the declarations of a payee's general and house rent allowance tax information.

See Entering Payee General Tax Information.

See Entering House Rent Allowance Tax Information.
Enter the payee's rebate, previous employment, deduction, exemption, other sources, and perquisites tax information.

See Entering Payee Rebate Tax Information.

Note. Oracle provides tax element updates when amendments are made to the legislated rules governing income tax by the Central Finance Bill. However, for changes in slabs or rates, you must change the existing values to the amended rates or slabs.

Pages Used to Set Up and Maintain Tax Information

Page Name	Definition Name	Navigation	Usage
Income Tax Details IND	GPIN_TDS_SETUP	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Income Tax Details IND, Income Tax Details IND	Define the element setup for payee tax declarations and previous employment data.
General Information	GPIN_TDS_GEN	Global Payroll & Absence Mgmt, Payee Data, Taxes, Specify Tax Details IND, General Information	Enter the declaration of the payee's general tax information.
House Rent Allowance	GPIN_TDS_HRA	Global Payroll & Absence Mgmt, Payee Data, Taxes, Specify Tax Details IND, House Rent Allowance	Enter the declaration of the payee's house rent allowance tax information.
Rebates	GPIN_TDS_REBATE	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Tax Declarations IND, Rebates	Enter the payee's rebate tax information.
Prev Employment (previous employment)	GPIN_TDS_PREV	Global Payroll & Absence Mgmt, Payee data, Taxes, Maintain Tax Declarations IND, Prev Employment	Enter the payee's previous employment tax information.
Deduction	GPIN_TDS_DEDN	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Tax Declarations IND, Deduction	Enter the payee's deduction tax information.
Exemption	GPIN_TDS_EXEM	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Tax Declarations IND, Exemption	Enter the payee's exemption tax information.
Other Sources	GPIN_TDS_OTH	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Tax Declarations IND, Other Sources	Enter the payee's other source tax information.
Perquisites	GPIN_TDS_PERQ	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Tax Declarations IND, Perquisites	Enter the payee's perquisites tax information.

Defining the Setup for Tax Information

Access the Income Tax Details IND page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Income Tax Details IND, Income Tax Details IND).

You define the setup per data entry page. For example, the elements that you define for the Rebates page (GPIN_TDS_REBATE) are the elements from which you can select when entering payee tax information on the Rebates page.

Sequence Number	Enter a sequence number to indicate the sequence of elements for the page.
Entry Type	Select the element's entry type.
Element Name	Select the element name. Only those elements with the entry type that you select in the Entry Type column appear as choices. The corresponding description appears when you select the element name.

See Also

Entering Payee Rebate Tax Information

Entering Payee General Tax Information

Access the General Information page (Global Payroll & Absence Mgmt, Payee Data, Taxes, Specify Tax Details IND, General Information).

Number of Children

Enter the number of children for the payee.

Disabled

Select if the payee is disabled.

In some states (for example, Lakshadweep and Madhya Pradesh), profession tax exemption applies to payees who are disabled. To apply exemption to the profession tax calculation, select this check box and the PT Exemption check box. The GC FM looks for employees with disabilities and calculates exemption if the particular state has the rule of exemption.

Disabled Dependent

Select if the payee has a disabled dependent.

Senior Citizen

Select if the payee is a senior citizen.

In some states, profession tax exemption applies to payees who are senior citizens. To apply exemption to the profession tax calculation, select this check box and the PT Exemption check box. The GC FM looks for senior citizen employees and calculates exemption if the particular state has the rule of exemption.

Severely Disabled Dependent

Select if the payee has a severely disabled dependent.

Severe Disability

Select if the payee has a severe disability.

In some states, profession tax exemption applies to payees who are severely disabled. To apply exemption to the profession tax calculation, select this check box and the PT Exemption check box. The GC FM looks for employees with severe disabilities and calculates exemption if the particular state has the rule of exemption.

Emp with Substantial Interest (employee with substantial interest)

Select for employees who are shareholders of the company.

Profession Tax

Establishment ID

Select the establishment ID that is related to the profession tax for the payee.

Eligible for LWF (Eligible for Labour Welfare Fund)

Select to indicate that the payee is eligible for LWF deductions.

This deduction can occur monthly, semiannually or annually depending on policies of each individual state. The deduction amount also varies from one state to another.

Income Tax

Classification Code	Select the proper classification code for the payee.
Resident Status	Select Non-Resident or Resident.

See Also

Setting Up Establishments

Entering House Rent Allowance Tax Information

Access the House Rent Allowance page (Global Payroll & Absence Mgmt, Payee Data, Taxes, Specify Tax Details IND, House Rent Allowance).

The HRA (House Rent Allowance) calculation accommodates monthly HRA exemption.

Accommodation Type

Select what type of accommodation the employee currently uses: House Rent, Company Lease, or neither (None). Select None if the payee is not eligible for HRA/CLA or if the payee resides in his own house.

House Rent Allowance

Rent Paid	Enter the amount of rent that is paid by the employee using the code INR.
Location	Select whether the payee resides in a metropolitan area, such as Bombay, Calcutta, Chennai, or Delhi, or a nonmetropolitan area.

Company Lease Accommodation

Furnished

Select the company lease accommodation type: Furnished, Un-Furnished, or Not Applicable.

This is used for calculation of perquisites. This column is to be updated only if the Accommodation type is Company Lease. The type decides the extent of taxation of perquisite.

Entering Payee Rebate Tax Information

Access the Rebates page (Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Tax Declarations IND, Rebates).

Element Name

This column displays all of the elements that are defined for this page on the Income Tax Details IND page.

Amount

Enter an amount that is to be accumulated. The defined rules determine whether the amount is to be added to or subtracted from the payee's gross income.

Begin Date and End Date

The End Date field is desirable because the employee may change his or her tax plans year on year. The begin date is the later of the financial year begin date or date of joining. The end date is the earlier of the close date of the financial year or termination date.

Note. All of the remaining pages in this component function identically to this Rebates page. Therefore, the fields on the remaining pages in this component are not documented.

See Also

Defining the Setup for Tax Information

Reporting Tax Information

This section discusses how to:

Create Income Tax (IT) computation sheets.
Report profession taxes.
Report allowance taxable amounts.

Pages Used to Report Tax Information

Page Name	Definition Name	Navigation	Usage
Income	GPIN_ITCS_INCOM	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Define IT Sheet Template IND, Income	Define the earning elements listed in the main income tax statement for the IT Computation Sheet.
Calculation	GPIN_ITCS_CALC	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Define IT Sheet Template IND, Calculation	Define the income tax calculation components and elements displayed in the IT Computation Sheet.
Exemptions	GPIN_ITCS_EXM	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Define IT Sheet Template IND, Exemptions	Define the exemption elements listed in the main income tax statement for the IT Computation Sheet.
Perquisites	GPIN_ITCS_PRQ	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Define IT Sheet Template IND, Perquisites	Define the taxable perquisites earned listed in the main income tax statement for the IT Computation Sheet.
Deductions Chap VIA (deductions chapter VIA)	GPIN_ITCS_DED	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Define IT Sheet Template IND, Deductions Chap VIA	Define the deductions displayed in the main income tax statement for the IT Computation Sheet.
Prev Employment Details (previous employment details)	GPIN_ITCS_PREV	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Define IT Sheet Template IND, Prev Employment Details	Define the previous employment income and deductions displayed in the main income tax statement for the IT Computation Sheet.
Create IT Comp Sheet IND (create income tax computation sheet IND)	GPIN_RC_ITCS	Global Payroll & Absence Mgmt, Taxes, Create IT Comp Sheet IND, Create IT Comp Sheet IND	Create income tax computation sheets for employee self-service review.
Profession Tax Report IND	GPIN_PR_RC	Global Payroll & Absence Mgmt, Taxes, Profession Tax Report IND, Profession Tax Report IND	Calculate and reports on profession taxes.
Allowance Taxable Amounts IND	GPIN_RC_GPINTX01	Global Payroll & Absence Mgmt, Taxes, Allowance Taxable Amounts IND, Allowance Taxable Amounts IND	Calculate and reports on allowance taxable amounts.

Creating IT Computation Sheets

Access the Create IT Comp Sheet IND page (Global Payroll & Absence Mgmt, Taxes, Create IT Comp Sheet IND, Create IT Comp Sheet IND).

This run control page creates individual IT computation sheets. Employees can review their IT computation reports through the View Payslips self-service page.

Reporting Profession Taxes

Access the Profession Tax Report IND page (Global Payroll & Absence Mgmt, Taxes, Profession Tax Report IND, Profession Tax Report IND).

Period ID

Select the period ID. The begin date and end date appear as soon as you select the period ID. A period ID is created for each reporting period, such as monthly or annual. If the reporting is monthly, create a period ID for every month for reporting purposes.

Payee Sort Option

Select a sort order for the report. Options are:

Employee ID, Employee Rcd Nbr: Employee ID, employee record number.

Name, Employee Rcd Nbr: Name, employee record number.

This field disappears after you select a period ID.

Establishment ID

Select the establishment ID.

Bracket Name

Select the bracket name.

PT calculation is based on a particular rate for a pay range or slab, which differs from state to state. This information is captured in a bracket, which you need to be select here.

Payee List

You can list the payees to be included in the profession tax report by specifying their employee IDs.

Group

Alternatively, you can specify a group for this process and the group can be set up to contain individuals in the system who may belong to different job codes, departments, or even company lines. You create groups using the Group Build feature.

See Understanding Group Build.

Reporting Allowance Taxable Amounts

Access the Allowance Taxable Amounts IND page (Global Payroll & Absence Mgmt, Taxes, Allowance Taxable Amounts IND, Allowance Taxable Amounts IND).

Period ID

Select the period ID. The begin date and end date appear as soon as you select the period ID.

Begin Date and End Date

Displays the beginning and ending dates of the tax period for which you want to report.

Taxable Amount

Select whether the allowance is for leave travel allowance or medical.

Number of Children	Enter the number of children for the payee.
Disabled	Select if the payee is disabled. In some states (for example, Lakshadweep and Madhya Pradesh), profession tax exemption applies to payees who are disabled. To apply exemption to the profession tax calculation, select this check box and the PT Exemption check box. The GC FM looks for employees with disabilities and calculates exemption if the particular state has the rule of exemption.
Disabled Dependent	Select if the payee has a disabled dependent.
Senior Citizen	Select if the payee is a senior citizen. In some states, profession tax exemption applies to payees who are senior citizens. To apply exemption to the profession tax calculation, select this check box and the PT Exemption check box. The GC FM looks for senior citizen employees and calculates exemption if the particular state has the rule of exemption.
Severely Disabled Dependent	Select if the payee has a severely disabled dependent.
Severe Disability	Select if the payee has a severe disability. In some states, profession tax exemption applies to payees who are severely disabled. To apply exemption to the profession tax calculation, select this check box and the PT Exemption check box. The GC FM looks for employees with severe disabilities and calculates exemption if the particular state has the rule of exemption.
Emp with Substantial Interest (employee with substantial interest)	Select for employees who are shareholders of the company.

Element Name	This column displays all of the elements that are defined for this page on the Income Tax Details IND page.
Amount	Enter an amount that is to be accumulated. The defined rules determine whether the amount is to be added to or subtracted from the payee's gross income.
Begin Date and End Date	The End Date field is desirable because the employee may change his or her tax plans year on year. The begin date is the later of the financial year begin date or date of joining. The end date is the earlier of the close date of the financial year or termination date.

Period ID	Select the period ID. The begin date and end date appear as soon as you select the period ID. A period ID is created for each reporting period, such as monthly or annual. If the reporting is monthly, create a period ID for every month for reporting purposes.
Payee Sort Option	Select a sort order for the report. Options are: Employee ID, Employee Rcd Nbr: Employee ID, employee record number. Name, Employee Rcd Nbr: Name, employee record number. This field disappears after you select a period ID.
Establishment ID	Select the establishment ID.
Bracket Name	Select the bracket name. PT calculation is based on a particular rate for a pay range or slab, which differs from state to state. This information is captured in a bracket, which you need to be select here.

Period ID	Select the period ID. The begin date and end date appear as soon as you select the period ID.
Begin Date and End Date	Displays the beginning and ending dates of the tax period for which you want to report.
Taxable Amount	Select whether the allowance is for leave travel allowance or medical.