Tax calculation in payroll software
Almost all small to medium business owners are in charge of handling taxes of their employees. Before every salary disbursement period the HR & payroll department is required to withhold the employee income taxes. Therefore, every organization handling employee income tax needs to know all the income tax related policies and the calculation method of payroll taxes.
According to NBR (National Board of Revenue), the return of income of employees of an organization gets compulsory when the basic salary of the employee is BDT 250,000. There might be certain exceptions in some cases such as, woman and 65 years or more old taxpayers, person with disability, gazette wound freedom fighter.
Many organizations proceed the return of income tax by their HR & payroll department on a certain time period of an income year.
Furthermore, a taxpayer is entitled to get the benefit of his/her tax rebate on the basis of the investment allowance as ruled by the NBR. The entire calculation of the tax rebate will be changed if the taxpayer invest or donate in any of the prescribed entity by the NBR. Such changes in calculation will result in the reduction of any kind of tax liability.
A HR & payroll system would maintain this configuration for the employees of the organization. The system will automate the whole tax deduction procedure while yielding outcomes without any error. The percentages of each employee tax deduction have to be set by the HR admin including the tax rebate or investment in a Government recognized organization.
As the income tax process is a process including many steps and provisions. There are certain ways in which the meaning of the Tax rules could be bent. To avoid all kinds of misunderstanding and error, an organization has to set up a group of professionals well acquainted with the income tax procedures. After that, the HR & payroll system has to be configured based on the principles.
Every year at a certain time these procedures are done in organizations which deducts tax from employee payments. Besides, the challan copy of each tax payer is dispersed as a proof of the tax payment. Employees can ask for return of income to the NBR submitting the challan copy. A HR and payroll system helps to automate the whole process of income tax submission to the release of challan copy. A printed version of the challan copy can served to an employee any time after the income tax payment. This simplifies the process of tax payment and all the related chores that otherwise had to be done manually.
A HR and payroll system does the income tax deduction and post the transaction directly to the exact payroll expense and liability accounts. This centralized system is a good middle of the road option making transactions between two entities safe and error free.
LinesPay is such a HR & payroll system which is configured with the tax deduction functionality and the employee payment procedures. The risk of any error in the proceedings is minimised at a maximum level through regular updating and customizations. With over 300 organizations using LinesPay, the processing functionalities are now more steady and dependable. The reporting tool produces multi- language reports which is a big advantage for local organizations.
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