India Payroll Compliance Map

Email: bom4ww@evershinecpa.com
A-16, 1st Floor, Aruna Asaf Ali Marg, Qutub Institutional Area, New Delhi, 110067, India
Manager Punit Singh Negi, speak Indian and English.
Skype: cspunitnegi

WWT – India Payroll Income Tax Deduction

WWT-IN-01 WWT Tax Entity

Question from client:
Is the India salary income tax levied in central or state? Or both central and state?
Are the central and state personal income tax that levied separately? Or levied together?
What is the standard withholding tax rate?

Answer from Evershine RD:
Tax Deducted at Source (TDS) is solely administered by the federal government through the Income Tax Department, which is governed by the Central Board of Direct Taxes (CBDT).

Standard rate (for residents age below 60 years):

Standard rate (for resident ages 60-79 years):

Standard rate (for resident ages 80 years and above):

If employee do not provide PAN (Permanent Account Number) to employer, rate is 20%.

Concessional rate of Tax u/s 115BAC (any ages) (foregoing certain tax exemptions and deductions)

Surcharge tax rate (for annual taxable income >5,000,000):

WWT-IN-02 Registration

Question from client:
The India salary income tax collection is under the jurisdiction of which government unit?
The registration of the India salary income tax collection status, that is, the application procedure for the employer withholding certificate number, paper certificate number application, or online account application? Website? Employer withholding certificate?
What is the advance certificate number?
Do you need to use the industrial and commercial certificate e-card to apply?

Answer from Evershine RD:
The Central Board of Direct Taxes (CBDT) is the governing bodies for direct tax administration in India.
TAN (Tax Deduction and Collection Account Number is a 10-digit alpha-numeric number issued by the Income-tax Department.
TAN is to be obtained by all persons who are responsible for deducting tax at source (TDS) or who are required to collect tax at source (TCS).

There are two modes for applying for TAN:

1. OFFLINE – An application for allotment of TAN is to be filed in Form 49B in duplicate and submitted to any TIN-FC.
   Addresses of TIN FCs are available at NSDL TIN website.
2. ONLINE – Online applications for TAN can be made from the website of NSDL TIN website (https://www.tin-nsdl.com).

WWT-IN-03 WWT Order (OD)

Question from client:
What is the order of India salary income tax withholding declaration (information flow determines tax base) and payment (fund flow)?
Pay first and then declare?
Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit First (DF): Make monthly payments then file the required forms. 

WWT-IN-04 Mechanism of Filing (MOF)

Question from client:
India salary income tax withholding declaration (information flow determines the tax base)
What is the method of account return?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Web site URL?

Answer from Evershine RD:
TDS must be deposited within 7^th of the following month of deducting the tax. For the month of March, TDS is deposited by 30^th April.
Visit NSDL’s website https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp for e-payment of taxes.
Use Challan No. 281 for depositing TDS amount.
TDS return filing for salaries (Form 24Q) is a quarterly statement that must be done online.
The deadlines for submission are as follow:

TDS deductors/ collectors are required to prepare e-TDS statements as per file formats using, NSDL e-Gov.
Return Preparation Utility or in-house software or any other third-party software and submit the same to any of the TIN-FCs established by NSDL e-Gov.
NSDL e-Gov has developed software called e-TDS Return Preparation Utility (RPU) to facilitate the preparation of e-TDS returns.
This is a freely downloadable VB based utility.
Employer must issue TDS certificate (Form No.16) on tax withholding on an employee’s salary by 15 June annually.

WWT-IN-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for the India salary income tax withholding payment (funding flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
Due date or deadline for TDS payment are as follows:

It is mandatory for all corporate to deposit TDS online.
Visit NSDL’s website https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp for e-payment of taxes.
Use Challan No. 281 for depositing TDS amount.
NSDL portal will redirect to the net banking page of your bank. Login to the banking pages and make the TDS payment.

BNF – Deduction of Employee Social Welfare

BNF-IN-01 BNF Entity

Question from client:
India’s social insurance, medical insurance, pensions, and other employee social welfare levy, is it Central? Is it states? Or is there a central plus state?
If there is a central and state, are they levied separately? or levied together? What is the withholding tax rate?

Answer from Evershine RD:
The Social Security system in India is levied by Central government.

*Option 2 is for companies that employ less than 20 employees or meet specific conditions as notified by the Employees’ Provident Fund Organization (EPFO).

BNF-IN-02 Registration

Question from client:
Social Security Certificate Number? What is the name of the government agency in charge of social insurance?
Medical insurance certificate number? What is the name of the government agency in charge of medical insurance?
Pension certificate number? The name of the government agency in charge of pensions?
How to apply for the social welfare certificate number for employees in the country? Paper certificate number application? Or online account application? Website? Need to use the industrial and commercial certificate electronic card to apply?
Are the above three certificate numbers unified or separate?

Answer from Evershine RD:
The Social security system is run by the Social Security Division of India’s Ministry of Labour and Employment.
Employers are required to finance the following programs:

Employers with at least 20 employees are required to register with the EPF, the EPS, and the EDLI.
Employers with fewer than 20 employees still can register for the EPF, EPS, and EDLI programs on a voluntary basis.
Employers must register to transact with the EPFO upon commencement of operations using the Ministry of Labour & Employment’s Shram Suvidha electronic registration portal, https://www.epfindia.gov.in/site_en/For_Employers.php or https://registration.shramsuvidha.gov.in/user/login.

Each employer must electronically register its employees for the EPF by their date of hire through signing into the employer’s EPFO online account, which is accessible from the EPFO’s Employers Portal, then clicking the Member tab, selecting Register Individual, providing member registration data for each employee, then clicking Approve for each employee whose member registration data was provided.

Employers must register to transact with the ESIC upon commencement of operations using either the Shram Suvidha portal or the ESIC’s electronic registration portal. Employers must electronically register their employees for the ESI Scheme by their date of hire using the ESIC’s electronic registration portal, https://shramsuvidha.gov.in/home or http://www.esic.in/ESICInsurance1/ESICInsurancePortal/Signup.aspx.

BNF-IN-03 BNF Order (OD)

Question from client:
What is the order of the withholding declaration of social welfare for India employees (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pays? At the same time as the declaration and payment?

Answer from Evershine RD:
Same period: Report and pay at the same time.

BNF-IN-04 Mechanism of Filing (MOF)

Question from client:
What is the method of reporting for withholding of social benefits for India employees (information flow determines the tax base)?
Filing cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Web site URL?

Answer from Evershine RD:
An employer is liable to pay his contribution in respect of every employee and deduct the employee’s contribution from the wages bill and shall pay within 15 days of the last day of the month in which it falls due.

Monthly Return

The employer can use the monthly e-return software.
Monthly returns of PF must be filed by 15th every month. PF Challan, Form5, Form 10, Form 12A- monthly report that contains the payment details that are contributed to the account of the respective employee in a particular month.
Visit https://unifiedportal-emp.epfindia.gov.in/epfo/ for filing. Monthly returns of ESI- must be filed by 21^st every month.
ESI Challan- Visit http://www.esic.in/EsicInsurancePortal/PortalHome.aspx and choose File Monthly Contributions.

Annual Return

Annual returns of PF must be filed by 30 April every year. Below 2 forms are the two forms used to file annual Provident Fund return.
Form 3A EPF- Employee’s annual contribution card describes the contributions made by the employee and employer towards Provident Fund and Pension Fund every month in that respective year, sum up by month.
Form 6A EPF- Annual contribution statement which holds all the information related to the annual contributions of each employee of the organization.
Employers also must file Form IW-1each month detailing their employees’ payment details, sum up by employee.
ECSI is mandatory for employer to submit half-yearly Return of Contributions (RC) (Form 5, Form 6) by 11^th May and 11 November every year.

BNF-IN-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for India employee social welfare withholding contributions (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
Contributions to these funds must be made on per monthly basis, regardless of whether employees are paid daily, weekly, biweekly, or monthly.
Employers must electronically pay the contributions by the 15th day of the month following the month when employment income was paid upon which the contributions were assessed, although a five-day grace period is given following the deadline.

EPFO payment

Visit https://unifiedportal-emp.epfindia.gov.in/epfo/ to pay online.

ESIC payment

Visit https://www.esic.in/ESICInsurance1/ESICInsurancePortal/PortalLogin.aspx and choose to pay e-challan option.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Email: bom4ww@evershinecpa.com
A-16, 1st Floor, Aruna Asaf Ali Marg, Qutub Institutional Area, New Delhi, 110067, India
Manager Punit Singh Negi, speak in Indian and English.
Skype: cspunitnegi

or
For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System, please send an email to HQ4bom@evershinecpa.com
LinkedIn address:Dale Chen

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