How to update the settings for tax calculation on bonuses

Bonuses have an impact on tax calculations. Since you are responsible for making the right calculations to deduct the appropriate amount of TDS from the employee, it is important to consider bonuses. It could be the case that a bonus will be paid out in the future and you want to consider it while projecting the tax calculations. 

It could also be the case that you would need to deduct the tax that is applicable to a particular bonus when it is being paid out. There are options on Keka where you can do this.  Let us take a look. 

Navigate to Payroll (1), choose Settings (2), and click on Pay groups (3). Select the appropriate pay group and choose Configure (4) under Actions.

Now, navigate to Other Settings (1) and click on Miscellaneous Settings (2). Click on the 3 Dots (3) and select Update settings. 

On the Miscellaneous settings overlay window, scroll down to find Additional. Under it, choose Yes or No to the question: 'Do you consider bonuses with future payout dates (unpaid bonuses) for projected tax calculation?'

If your answer is ‘No’, you will be prompted to answer another question: ‘Do you deduct total payable tax on bonus in the month it is paid out?’ Choose Yes or No and click Save.

If you enable the tax to be deducted in the same month when bonus is paid, there will be a huge tax difference in same month. If we choose to spread the tax, then whatever the tax which need to be deducted for the paid bonus amount will be divided to the upcoming months of the financial year.

With these steps, you can update the settings for tax calculation on bonuses on the Keka HR portal.