Employees can submit their Investment Declaration at the start of the financial year. Based on the declarations, the income tax is computed and TDS on salary is deducted.
Certain deductions like Life Insurance Premiums, Medical Insurance Premium, and 80G deductions like (PM care Funds, Covid), etc., recovered from employees through salary are eligible for Income Tax benefits and those components should be mapped to Tax Declaration Component.
The most common tax-saving investments are under Sec 80 C which has an annual limit of 1.50 lacs.
To map the declaration components
On the Home Page click “Compliance”.
Click “Income Tax” under “Compliance”.
Click “Map Tax Declaration Components” under “Configuration, Settings”.
Once you have clicked on Map Tax Declaration Components you can see the three tabs
- Sec 80C – 80U.
- Other Income.
- NPS Perquisite.
Section 80C – 80U
In this tab, you will have the listing of all the eligible deduction components under sections 80C to 80U. Map the deduction components to the relevant Tax Declaration from the “Pay Component” drop-down.
All components which are mapped as “Statutory Components” under “Pay Type” are displayed.
Please click here to refer to “How to Create Salary Component” for more information.
Enable this checkbox “DON’T DISPLAY IN ESS” if you do not want to display a particular Income Tax Declaration component in the ESS. Hence, the employees will not have the option to declare those investments.
Click “Save”.
Other Income
The three different heads under Other Income
- Income from Other Sources- This refers to any income other than salary.
- Income/Loss from House Property
This refers to the Income / Loss from House Property owned by Employee.
- Interest on Home Loan (Self-Occupied)
This refers to Interest paid towards self-occupied property owned by the employee.
Enable this checkbox “DON’T DISPLAY IN ESS” if you do not want to display a particular Income Tax Declaration component in the ESS. This will ensure that employees will not be able to declare.
Click “SAVE”
NPS Perquisite
As per Income Tax Rules, If the Employer contribution towards National Pension Scheme (NPS), PF Employer and Superannuation Fund exceeds INR. 7.50 lacs in a year, it is treated as Perquisite.
Map the Earning Pay components to the relevant Perquisites from the “Pay Component” drop-down.
Click “Save”.
