Impact of FY 20-21 Budget on Payrolls
An important part of being in the Payroll outsourcing industry is that we stay updated and compliant. The most anticipated Union Finance Budget was presented by The Hon’ble Finance Minister on Feb 01, 2020. As always, Individuals across the length and breadth of this country expected that taxes will be lowered so as to have higher take-home income. Well, this can happen only in 2 ways – Increase deductions and exemptions and/or reduce tax rates. Well, the Finance Minister did come out with a solution to this – a totally New Tax Regime! Let’s discuss briefly this “New Tax Regime” and how it compares with the existing one.
Brief Points on the New Regime
- Simplified Regime
- No Allowances (except 4) under Section 10
- No Exemptions (except 2) under Chapter VI(A)
- No Deductions under Section 24
- No Non-taxable perquisites
- Losses cannot be carried forward in future years
Operating Condition for the New Regime
- Once Individual opts this regime, cannot go back to the Old Regime during the FY
- One Tax Slab for everyone – No different tax slabs for Senior Citizens or Super Senior Citizens
“Employers now face a daunting task – to provide an option for each employee to choose between the existing tax regime or the new tax regime.”
As Employers, what challenges to anticipate?
- Mis-information among employees about the nitty-gritty of the tax regimes
- Changes to the payroll software/system to be undertaken & the time available is very little
- Changes in statutory reportings like on ETDS Filings. We should foresee higher complexities
- May require employers to relook at their Salary/Pay components
- May render many FBP items “obsolete” if the majority of their employees choose the new tax regime
Many questions are unanswered.
Whether your payrolls are in-house or outsourced, there is going to be an impact. If payrolls are in-house and use mainstream systems such as SAP, Successfactors, Oracle, Workday, Ramco ERP, etc, what are you supposed to do? If your payrolls are outsourced, how is your payroll outsourcing partner going to accommodate this change? What is your role in it and by when should this happen? As an employer, are we even required to provide this option?
Let’s discuss some Industry observations and Impact of this (in the employer’s perspective) during our webinar scheduled for 17th March 2020, Tuesday between 11AM to 12.30PM. We invite everyone to join and know more.
Webinar Title: Impact of FY 20-21 Budget on Payrolls
Webinar Time: 17th March 2020, 11AM to 12.30PM
For Registration, please click here or copy and paste the below link on your browser.
If you have any questions, please write to [email protected]