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https://help.tallysolutions.com/docs/te9rel51/Payroll/Budgetary_Changes.htm

Budgetary Changes 2014-15

As per Union Budget for the financial year 2014-15, the changes to exemption and deduction limits are supported.

Income Tax Exemption Limit

For the income tax exemption limit raised to Rs. 2,50,000/- for male and female and to Rs. 3,00,000 for senior citizens, the slab rates have been supported. To view the new slab rates,

Go to Gateway of Tally> Display>Statutory Info.>Income Tax Slabs>Income Tax Slab

In the Income Tax Slab screen, the exemption limits applicable for male, female and senior citizens for financial year 2014-15 appears as shown below:

Exemption Limit for Investments

The income tax exemption limit is raised from Rs. 1,00,000 to Rs. 1,50,000 for investments made under Section 80C and 80CCE. To view the new exemption limit,

Go to Gateway of Tally>Display>Statutory Info.>Income Tax Classifications>Investments Under 80C

The new exemption limit applicable from 1st April 2014 appears as shown below:

Deduction Limit – Interest on Loan for Self-Occupied Property

The deduction limit for interest on loan for self-occupied property is increased from Rs. 1,50,000 to Rs. 2,00,000. To view the new deduction limit,

Go to Gateway of Tally>Display >Statutory Info.>Income Tax Classifications>Interest on Housing Loan - Self Occupied

Note: As the budgetary changes of FY 2014-15 are supported from Tally.ERP 9 Series A Release 4.91, the calculations in payroll vouchers processed and reports generated till July 2014 followed the old slab rates as per the pre-budget rules.  Hence, the difference amount has to be adjusted in the payroll vouchers processed from 1st August 2014 using the latest release – Tally.ERP 9 Series A Release 4.91.

Creating Pay Heads, Transactions and Generating Reports

Illustration

Roshan Kashyap Kiran joined ABC Company on 1st April 2014. The pay structure is given below:

Earnings

Basic Salary – 10,80,000 PA

Deductions

Employee Provident Fund – 12% (limited to 6,500)

Investments declared for the FY 2014-2015 are as follows:

  1. National Saving Certificates (NSC) – 1,00,000

  2. Public Provident Fund (PPF) – 50,000

  3. Interest on Housing Loan (Self Occupied) – 1,75,000

To process payroll with the new exemption and deduction limits, create the masters, transactions and generate reports.

Pay Heads

Basic Salary

To create basic salary pay head,

  1. Go to Gateway of Tally>Payroll Info.>Pay Heads>Create

  2. Enter the name of the pay head

  3. Enable the option Set/Alter Income Tax Details

  1. In Income Tax Details screen provide details as shown below:

  1. Accept the Income Tax Details screen

The completed Pay Head appears as shown below:

  1. Press Enter to accept

Employee Provident Fund

To create employee provident fund pay head,

  1. Go to Gateway of Tally>Payroll Info.>Pay Heads>Create

  2. Enter the name of the pay head

  3. In Compute option, select On Specified Formula

  1. In the Computation on Specified Formula screen, select Basic Salary as the Pay Head

The completed Pay Head appears as shown below:

  1. Press Enter to accept

Employee Creation

To create an employee,

  1. Go to Gateway of Tally>Payroll Info. >Employees>Create (under Single Employee)

  2. Provide details as shown below:

  1. Press Enter to accept.

Declarations

Interest on Housing Loan - Self Occupied,

Go to Gateway of Tally>Payroll Info.>Income Tax Details>Declarations>I: Single Employee Multi Component under Income declared by Employee

Provide details as shown below:

Investment Declaration

Go to Gateway of Tally>Payroll Info.>Income Tax Details>Declarations>S: Single Employee Multi Component under Investments (u/s 80C, 80CCF, 80CCG, etc. of Deductions Under Chapter VIA)

Provide details as shown below:

Tax on Total Income

To view the slab rates as per the AY 2014-2015,

  1. Go to Gateway of Tally>Display>Payroll Reports>Statutory Reports> Income Tax > Computation> Total Tax on Income

  2. Press Enter to drill down. Tax on Total Income report appears as shown below:

Tax Deducted Till Date

Tax deductions for April, May, June, July 2014, will be based on the following:

  • Slab Rates as per the AY 2014-2015

  • Exemption limit for investment in financial instruments under 80C is raised to Rs. 1,00,000/-

  • Deduction limit on interest on loan for self-occupied house is now Rs. 1,50,000/-

Tax deductions for all the months after July will be based on the following:

  • Slab Rates as per the AY 2015-2016

  • Exemption limit for investment in financial instruments under 80C is raised to Rs 1,00,000/-

  • Deduction limit on interest on loan for self-occupied house is raised to Rs 2, 00,000/-

To view tax deducted till date,

Go to Gateway of Tally>Display>Payroll Reports>Statutory Reports> Income Tax > Computation> Tax Deducted till Date

Form 16, ITR 1, Annexure II Form 24Q, E-Return (24Q)

In all the above statutory forms, the tax calculation will happen based on the following rules:

  • Slab Rates as per the AY 2015-2016

  • Exemption limit for investment in financial instruments under 80C raised is Rs 1,50,000/-

  • Deduction limit on interest on loan for self-occupied house is Rs 2,00,000/-

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