Annual Income

Definition and Meaning:

An individual’s complete yearly income (Annual Income) includes salaries and allowances, bonuses and incentives, and any other taxable income received (from all sources); Annual income is used by payroll in HR for calculating taxes, structuring salaries, and reporting for compliance.

Highlights of Payroll & Taxation

• The purpose of calculating an Individual Tax liability.
• Assists in structuring a CTC (cost to company) and Salary components.
• Will determine an individual’s TDS (tax deducted at source) deduction and Payroll processing.
• Required for issuing Form No. 16 and Tax Declaration Forms to an employee.
• Managed within Payroll Software and HRMS (Human Resource Management System) Software.

Legal Compliance/Policies/Regulations in India.

The requirements for calculating annual income include: Income Tax Act, 1961 (Income Tax Slabs/Tax Exemptions);
The TDS requirements as per Section 192.

The Reporting Requirements of the TDS Certificate (I.e., both Form 16 and Form 12BA).

To ensure that taxes are calculated accurately (based on these requirements) and to be compliant with tax laws.