Before Tax Deduction

Before Tax Deduction is components/deduction from an employee’s gross salary that is deducted prior to the calculation of income tax. In payroll, these deductions reduce the taxable income of an employee; therefore, they will have an effect on TDS calculations and on the amount of money an employee takes home after taxes.

Payroll and Taxation Benefits

• Decrease in Employee Taxable Income.
• Tax Deduction at Source (TDS) Calculation for employee payroll.
• Salary Structures and Cost to Company (CTC) Plans Often Utilise This Benefit.
• Includes Statutory and Voluntary Pre-Tax Deductions.
• Payroll Software and Human Resource Management System (HRMS), manage these Benefits.

Policies and Laws regarding Legal Compliance 

Compliance with all applicable laws, policies, and regulations to comply with Indian laws, regulations, and policies related to employee salary (i.e., Tax Deduction) must be in accordance with:

• Income Tax Act, 1961 (tax deductions and exemptions)
• Employees’ Provident Funds Act, 1952
• Professional Tax regulations (state by State)
• Company payroll and salary policies.

Failure to handle correctly can result in miscalculation of taxes.