Who can deduct TDS?

The Finance Ministry has initiated the e-TDS since year 2003. When the paper work became huge at corporate level, the instances of typo-errors started increasing thus making it difficult to check and balance the TDS deducted and paid to the Government. The TDS software helps in filing the eTDS returns to both corporate and non-corporate Tax payers and tax deductors.

The responsibility of remitting the taxes deducted to the Government lies on the person who deducts the tax at source. The prescribed time is within 7 days’ from the end of the month for which the tax is deducted.

The Income tax laws identify two types of assessees who can deduct Tax:

• 1)    Corporate assessees
• 2)    Non Corporate Assessees
• 3)    Individuals and Partnership firms that are subject to Tax Audit under Section 44AB of the Income tax Act, 1961.
• Separate challan should be used for the above type of deductees.

a)    Any person who makes payment to other, which exceeds Rs 20,000/- per year should deduct Tax at source.

b)    In case of interest payment, if the amount exceeds Rs 10,000/- per annum, the Tax has to be deducted at source from such interest payment.

c)    Company or firm that makes payment to contractors or suppliers should deduct TDS from the gross payment and pass on the net amount to the concerned.

d)    Partnership firms/ individuals who do not fall within the purview of tax audit (i.e. gross income does not exceed Rs 40 Lakhs per annum) are not required to deduct tax at source.

e)    Again, those firms or individuals who are subject to Tax audit under Section 190 of the Income Tax Act, 1961 have to deduct Tax at source and remit the money to Government Treasury.

Rule 30 lays down the due dates for remittance of TDS amount into the Government treasury:

1. 1.    In case of Government – the same day on which Tax was deducted.
2. 2.    In case of Non Government: within 7 days from the month ending in which tax was so deducted.
3. 3.    In case of tax that was deducted as provision for payments to be done, then the amount should be deducted within 60 days from the end of the financial year to which such provision applies.
4. If there is any delay in remitting the amount, the assessee will be liable for penalty by way of interest on the TDS amount payable to the Government, which is normally @ 1%. Timely filing of TDS returns will save the penalty.

The TDS software is a boon to the Government and also for the Corporate and non-corporate assesses whose entries are voluminous. The Government can easily track the erratic filings and incomplete returns. The software is a handy tool for corporate assesses because it generates all kinds of reports and helps in filing the e-TDS returns online without much trouble. Without the TDS software, the manual entries were cumbersome and time taking. The software is featured to calculate the TDS amount, generate the TDS certificates in prescribed format and also to retain data for any number of years.

When is TDS not applicable?

The TDS software is provided by many solution providers who are in the business of Tax consultancy. Before buying TDS software one must make sure that the vendor is of proper standing in the industry with atleast 5 years of experience. The vendor should be able to provide training to the users within the organization and also should be available to resolve any issues while running the programme.

TDS is applicable for almost every payment made or payment received. There are of course a few classes of services received or provided that is not subject to TDS. These can be enlisted as:

1.    Where the gross amount payable or receivable does not exceed Rs 10,000/- or more during the previous year

2.    When the receiver submits the form 15H or 15G as may be applicable before tax is deducted at source

3.    When the salaried employees’ income does not fall in the ambit of tax slabs for that particular year

4.    When the advertising agency makes payment to the media, TDS is not applicable, however TDS is applicable when client makes payment to the advertising agency

5.    When PAN is provided by the transporter, TDS and surcharge is not applicable

6.    Not applicable to hotel rents

7.    Also in cases where the court decision exists, TDS is not applicable. This applies to the rest of the class of similar nature.

8.    In some cases, the Assessing officer considers the merits of the case and exempts certain services from applicability of TDS for that particular case. This ruling may or may not be applicable to classes of similar nature.

TDS applicability can be avoided in cases where the assessing officer certifies that the income of the professional or service provider of technical services does not exceed the prescribed limits. In such cases, the assessed should furnish this certificate to the clients so that they do not deduct tax at source from the payments made to him.

All the TDS certificates do now bear the TIN (Tax Identification Number) of the person deducting taxes, which makes it easy for the Department as well as the individual to track if the money is actually deposited with the Government.

The TDS certificate also bears the challan number and date of filing the challan at the IT department which helps in tracking, if the person deducting the tax at source is prompt in notifying the Government of the taxes.

The TDS software has the in-built programme to generate the TDS certificates in the prescribed format. The user has to enter the TIN, challan date and the PAN of the person from whom Tax was deducted. The data is then processed and a certificate is printed automatically with the click of a mouse without having to manually write the details of challan every time. Not only the TDS certificates in prescribed form, the TDS software also enables storage of data, synchronization of data with other software and generate statements and challan as per the prescribed format. 

Ways to pay TDS easily

Earlier, the tax payments to the Government was pretty difficult –one while deducting the taxes from the assesses at source which was due to multiple tax rates for various items and second- payment of taxes so deducted to the Government which was due to manual entries and errors in manual system. But now with TDS software, the tax deduction at prescribed rates and also online payment of tax returns/ TDS challan has become very simple and easy.

The Income Tax department has designated the National Depository Services Limited (NDSL) as the authority to collect taxes on behalf of the Government. NDSL is the largest depository in India which was incorporated in the year 1996. Since its inception, it has made its presence felt in paperless environment in India with services related to demat of shares, issue of PAN card/ tracking the status of PAN/TAN and many more.

The Tax information Network of this NDSL website makes the online payment of taxes and filing of tax returns a simple task with the click of a mouse. This article gives a brief on how to go about the ways to pay TDS easily:

• 1.    Log on to the NDSL website
• 2.    Under the e-payment section of the Tax information network, one can view the options to pay taxes
• 3.    Select the challan No ----/ITNS 281 under the TDS/TCS drop down menu
• 4.    Complete the data in the challan with TIN, PAN and other details as required
• 5.    Click on the proceed button
• 6.    The screen opens up to next page which allows verification and modification of data
• 7.    Once done, click on the “payment to Bank” button
• 8.    This page redirects to the payment gateway of the Banks designated for deposit of Taxes
• 9.    Proceed to make the payment
• 10.  Once done, the system generates a challan copy which should be printed and filed for record purposes.

Payment of taxes on time avoids penalty. Whether it is an individual or a corporate assesse, they should pay taxes on time. The TDS deducted, if any should be deposited with the Government within 7 days from the end of the month in which Tax was deducted at source. After generating the challan, the date and number of the challan should be appropriately mentioned in Form 16 or 16A and issued to the concerned persons. This will enable the filing of returns by those concerned persons on time. This will go a long way in ensuring that neither the person deducting tax nor the assessed is put to avoidable problems of payment of interest and penalties.

After reading the above points, one may wonder why we need the TDS software when the website provides everything. But, one has to notice that the data required to be filled in the challan for online payment of tax has to be kept ready while filing the returns. The use of TDS software makes available the required data all at one place and that too the accurate information which is not possible in manual entries.

Traditional TDS vs eTDS

The TDS software enables easy calculation of TDS payable and tax credits receivable by corporate/ individual during the previous year.

As per the Income Tax laws, every entity –be it a corporate or non-corporate- that makes payments to third parties are required to deduct Tax at source, called as TDS from the payments to be done and remit the amount so deducted to the Government. The payment can be done by depositing the monies at the branch of designated banks via challan.

The challan should accompany the TDS returns giving the details of the taxes deducted, the names of the deductee(s) and the bank where the amount is remitted. From the year 2003 onwards, the Government has

a)    Made it mandatory for corporate assesses to furnish their TDS returns in electronic mode only, which is called the eTDS return.

b)    However, this compulsion is not applicable to non-corporate assesses and hence they can file their returns in physical mode only.

c)    Option is also given to non-corporate assesses to furnish their return via electronic mode by using the NSDL portal.

d)    After filing the e-return, the details of the deductee(s) along with the challan has to be submitted to the Department. This serves as a control chart. The list can be furnished in a CD or a floppy diskette. The prescribed form is Form 27A which checks and balances the “Amount Paid” and Tax deducted at Source”.

In physical TDS era, the option was not available. Every assessee had to furnish their return in physical mode which ended up in manual errors and huge queues at the Department of Income Tax during the last date of filing. This mode used to increase the tension of default which directly affected the quality of returns being submitted. Even the scrutiny was difficult as some of the manual entries were erratic and unclear.

Due to the huge rush for filing, the persons acknowledging the receipt of TDS returns at Department level had no time to pre-scrutinise the returns, this led to filing of incomplete returns also. This gave scope for scrupulous assesses to evade tax by furnishing the erratic returns. By the time the Department scrutinizes the returns and initiates the proceedings, it would have taken years together, resulting in delayed justice. These kinds of loopholes encouraged more evasion of tax at the deductor’s level.

But after the year 2003, with the eTDS initiative, it saves not only the precious time of the tax return preparers, but also restricts incomplete returns being filed with the Department. The information furnished in Form 27A should match with the amounts mentioned in the eTDS return. These kinds of checks and balances were not available in the traditional TDS filing.

The click of a mouse is sufficient now with the TDS software in place. The software enables calculation of TDS percentages, generation of TDS statements, tracking of TDS certificates receivable and the like. Even the past data relating to TDS can also be retrieved using the TDS software.

Important features of TDS software

The importance of TDS software need not be mentioned in specific as any kind of software is a boon today especially with the technology replacing many manual systems. The technology is simply excellent in the sense that it rules out the possibilities of errors that are, but common in manual systems.

The TDS software is more or less like a robot that does everything one asks them to do. In a nutshell, the features are:

1. 1.    It keeps the data for any number of years
2. 2.    With the click of a mouse, one can get the details quarter wise, client wise, employee wise and whatever category one requires
3. 3.    The data can also be uploaded into the website of the Income Tax department  without any further manual workings
4. 4.    The issue of TDS certificates becomes easier
5. 5.    The e-signatures can also be loaded into the software with limited usage permissions
6. 6.    There are few chances of errors being done
7. The user of the TDS software is advantaged in the following ways:
8. 1.    Automatic calculation of TDS and TCS
9. 2.    Generation of e-TDs and e-TCS statements
10. 3.    Print the Challan and certificates
11. 4.    Import of data directly from the Tally package or any other accounting software
12. 5.    Can be used for any size and structure of the company
13. 6.    Easy calculation of TDS on salaries, payments to contractors, TDS on interest payments/ receipts, Commission, professional fee , rent and the like
14. 7.    The format of certificate is already available which enables the auto printing  of TDS certificates
15. 8.    The challan for filing to the Income Tax department can be generated with the software
16. 9.    Statements for quarterly returns of TDS can be generated in prescribed form 24Q, 26Q, etc
17. 10.  Validation of the statements online with linkage to the NSDL website
18. 11.  Keeps the backup of TDS data for many years (even though a company is required to maintain data for 8 years only), the software can maintain data for more than that.
19. 12.  They can restore the data if a physical copy is lost.

The only care one must exercise is that the entry made is accurate. And that is it!! The software calculates the rates of TDS for different service providers, TDS on quarterly basis, reminder for filing returns on time, TDS for employees, TDS receivables, TDS payable and so on.

In a LAN network environment, the software can have multiple users with checks and balances in place which allows data to be fed from different locations and a moderator at the helm of all who authenticates the entries on periodical intervals.

The formula can be pre-fed into the system so that as soon as entry is made, the software recognizes the particular entry from the formula and calculates the TDS and gives the output in the form of

• a)    whether TDS is already paid
• b)    is there any excess TDS payments done
• c)    Any adjustments to TDS
• d)    Should advance tax be paid
• e)    Is the employer required to follow up for TDS certificates from clients
• f)     Any pending TDS calculations
• g)    Missing data, if any

Status of Tax assessments and TDS links to that assessments/ scrutiny

Importance of TDS in India

TDS is the acronym for Tax deducted at source. The article is incomplete without the mention of TDS software which is a handy tool to track the TDS payments into the Government treasury and any lacunae in deducting the TDS. It is also easy for individuals to get their salary certificates and TDS certificates at the click of a mouse.

           

In India, the income from unorganized sector is more as compared to that from the organized sector. The monies generated from the unorganized sector like unregistered associations, illiterate individuals and the like escapes the Tax purview as there are many escapades for them to avoid tax due to their size and huge burden on the department to scrutinize each and every file. This is paving way for the total tax burden being taken up by the organized sector. With a view to streamline this lacunae, the Ministry of Finance introduced the concept of TDS wherein the tax liability is spread across the sectors in economy. The monies generated from the unorganized sector, when comes into the hands of individuals becomes taxable. The TDS, instead of making individuals pay taxes, has fixed the onus to pay taxes by the source of income directly.

Earlier, the people working in unorganized sector never used to file tax returns and it was difficult for the department to track the errant public due to the heavy volume of filings done during April till September. The volume is a mind boggling number when there are revised returns, rectified returns, NIL returns and belated returns being filed by millions of Indian across the country. Now, as TDS is made compulsory, the employees get the salary as net of Taxes and the Government simply tracks the taxes deposited by the employer (both in organized and unorganized sector). Whether or not the individual files the Tax returns, the Government is sure that the taxes are received into its treasury to run the administrative expenses.

Further, in India where the illiteracy rates are comparatively high, people seldom make errors in filling the accurate data in their Income Tax returns. Though not intentionally, the error is pictured as an illegal act of the individual. In such cases, when TDS is deducted, the Assessing Officer can be sure, at least to some extent that the taxes are paid to the Government from the source of income directly.

As the onus of remitting the tax deducted to the Government treasury lies on the person deducting the tax, and that too within the prescribed period of time, the tracking of defaults become pretty easier for the Income Tax department too.

The advantages of TDS software can be clearly explained by using the following example: if Mr A is a businessman, he receives money from client X and has to pay salary to Mr Y. the TDS software keeps track of the taxes deducted by client X and also the taxes deducted from Y. This facilitates the synchronization of data and issue of salary certificate to the employees. And also facilitates the follow up of the TDS certificates from the client. 

How to save TDS legally?

With the green initiative being taken up by the Indian Government, almost every department is going the e-way. The Income Tax department is no exception and the TDS software is one useful tool in this direction to save paper-save environment.

Tax is deducted at source from the gross amount payable. The receiver seldom has any say in the TDS aspects. However, the onus to pay this amount back to the government lies on the person deducting the tax, but the receiver is not too happy to pay the TDS via the source of income.

Hence, the Finance ministry has given some relaxation to save TDS legally by using certain planning techniques:

1.  Taxes are deducted at source by banks on interest on Fixed deposits, when the interest exceeds Rs 10,000/- per annum. It is advisable to diversify the fixed deposit amount into different banks so that one does not receive Rs 10,000/- as interest from a single bank.

2.  Salaried employees can save under Chapter VI-A of the Income Tax Act, 1961 upto Rs 1,00,000/- per annum. This reduces the taxable income per year thus reducing the TDS amounts also.

3.  For professional services rendered, there is no possible way to save TDS legally. However, a TDS exemption certificate can be obtained from the Assessing officer  for professional fee or technical services as per Section 194J of the Income Tax Act, 1961.

4.  Professionals and businessmen can also reduce their TDS liability by providing proofs for business expenses. Though this is not considered as a strict method of TDS saving, it can reduce the tax burdens.

5.  Also, one can submit form 15G or Form 15H (for senior citizens and citizens below 65 years of age respectively) if they do not have any taxable income in the previous year. The form should be submitted to the concerned person at the source of income (be it a bank or a Company or otherwise) before 31^st March of the previous year.

From the above article, one can observe that a proper planning of the income receipts and due submission of relevant papers before 31^st March of the previous year will definitely reduce the Tax deduction at source. The tax savings so done is in a legal way. Tax avoidance is illegal whereas tax saving is legal. One can also set aside certain sums of money for long term savings such as savings in the schemes mentioned under chapter VI-A of the Income tax Act, 1961 and also get TDS relief for that particular year. However, the returns of few of those investments are taxable in the year of receipt.

The green initiative as mentioned before has reduced the paper work to a large extent. The TDS software is one such move by the technical guys out there, who have worked extensively on providing a fool-proof electronic method to have complete information on Tax deducted at source. The TDS software is capable of capturing the data from the Tax deducted and calculations as may be required so that there are minimum errors while paying the TDS amounts back to the Government.

How to calculate TDS?

TDS stands for Tax deducted at source. One can calculate the TDS using the TDS software which is available in the markets in India. In India, the Finance Minister places the budget before the Parliament in March of every year which fixes the rates for Taxes and other finances which is revenue for the Government to meet the administrative expenses.

The slabs for applicability of taxes for different classes of persons/ associations are clearly detailed in the Finance Bill. The concept of TDS lies on the premise that the tax be paid at the source itself instead by the person/ company receiving the income. The service provider or the taxpaying authority such as corporate or bank before paying monies to the individual deducts tax and then passes on the net amount to the individual/ company as per the tax slabs applicable to the receiver. The tax so deducted is paid to the Government treasury within the time prescribed under the Income Tax Act, 1961.

The net amount in the hands of the receiver is the gross amount receivable less the Tax deducted at source. The source of income thus is liable to deposit the money so deducted into the account of the Government. If the person so deducting tax but does not pay to the government is liable for prosecution and fine as may be decided by the scrutinizing officers in accordance with the applicable laws.

The TDS is deductible in almost every case where the gross amount of outflow is more than Rs 10,000/-. The slabs for TDS are mentioned as a percentage of the gross amount payable and not as whole numbers. For example, a person who has a deposit of Rs 2,00,000/- in a bank receives an interest of Rs 18000/- per annum @ 9% interest on Fixed deposit. At maturity, the Bank should deduct a 10% from this Rs 18,000/- and pay Rs 17200/- (Rs 18000-Rs1800) to the depositor. Similarly, an employee receiving an annual salary of Rs 3 Lakhs or more falls in the taxpaying brackets. Hence, the employer should deduct tax at source and pay the net amount to the employee. At the end, if there is any excess taxes paid or payable is adjusted and accordingly returns are to be filed. In case of salary income, the gross salary is reduced by Provident fund, Mediclaim policies, House rent Allowance, conveyance allowance, Repayment of House Loan, savings under chapter VIA of the Income Tax Act, 1961 and so on. After such reduction, if the salary payable is above Rs 3.00 Lakhs per annum, taxes are deducted at source and net amount is paid to the employee.

In the globalised era, people have moved on from physical filing of taxes to e-filing of taxes. To synchronise the filing of tax returns with the TDS data, the TDS software are being made available to the public at large. This is enabling a green channel for dissemination of data on TDS and tax returns filed by the tax payers in India.

How TDS benefits the Government?

TDS stands for Tax deducted at Source. The TDS software enables the generation of data fed into the software into information in prescribed format to file the e-TDS returns.

TDS is one of the various methods adopted by the Government to collect taxes from the Citizens. In this mode of collection, a prescribed percentage of tax is deducted at the time of making or crediting the payment (nature of payment also should be of prescribed category) to the person. The amount so deducted should be remitted to the Government account by paying into the designated branches of the Banks. It is also called as “pay tax as you earn”. This scheme is also called as Withholding tax in USA and some other countries. The concept encourages the payment of tax as soon as one earns the monies without any delay. The administrator of taxes, being the Government, decides the percentage of taxes to be deducted at source and the services/ products on which taxes are to be levied.

• ·        The TDS facilitates the sharing of onus of tax collection by and between the tax collector (government) and the tax deductor (corporate and non-corporate entities).
• ·         The TDS ensures that the administrator of taxes has constant inflow of monies into its treasury by way of tax payments/ remittances
• ·         It is a powerful tool to restrict tax evasion and also expands the tax brackets
• ·         Earlier the concept of TDS was based on the premise “pay as you earn” now the concept is widely encompassing
• ·         The tax burden for salaried people reduces, as TDS enables payment of taxes in a phase wise manner. The TDS on salaries are deducted every month as the employee earns every month on installment basis. So the tax burden is not pushed to the end of the year, disturbing the cash flows of the employee.
• ·         Enables collection of taxes from professionals, contractors and other unorganized sectors of the economy.
• ·         Advance tax and TDS ensure that the Government does not have a cash crunch during the year. The funds flow on monthly basis ensures that the Government has sufficient liquid funds throughout the year to run the administration smoothly.
• ·         It restricts the options to evade tax. The TDS, being pay tax as you earn, withholds the taxes before it passes on to the receiver of income, thus forcing him to pay tax, who would otherwise think of evading the tax.
• ·         The thresholds for TDS deduction is wide encompassing to cover every sector of the economy, individuals, corporate, firms and associations and is fixed on par with the prevailing rates of taxes in similar economies across the globe.

To run the Government smoothly, every person should pay taxes. But, it is even easier for administrative purposes, if taxes are collected in advance by way of TDS and remitted to the Government at regular intervals (on periodical basis). The TDS software ensures that the taxes so deducted and remitted are matching with each other and there is no gap in the tax calculations.

Advantages of using TDS software

The uses of software need not be mentioned separately. The advent of technology has zoomed all the industries to a large extent. There are very few organizations which do not use software in one form or other. Every industry, organization and individual comes across some software or other in one form or another. The TDS software, though in nascent stages of development has gained prominence among the Tax payers and people who fall under the Tax brackets.

The TDS software is relatively new as compared to the rest of the world. The implementation of TDS percentages for various products/ services/ items as per classification in Finance Bill for various departments in Government offices and private offices started relatively in recent years.

The customized TDS solutions and other IT based solutions to reach out to the employers operating in any industry are the order of the day. The various modules provided encompass every aspect of the Taxes with a pinch of IT, thus relieving the Managers/ staff to concentrate on the business rather on wasting their time on mediocre day-to-day processing activities.

The TDS software helps the Accounts & Finance department to monitor the TDS data and generate the TDS certificates on periodical basis and maintain a database of all taxes with the click of a mouse. Before buying a complete version of any TDS software for the organization, one has to go for a demo for the product and a trial version may also be asked, if required. The complete version of the software should be scrutinized for price and smooth functioning and also competitive rates should be found out from the market. Many of the TDS software are designed to be user friendly and all the user has to do is feed in the data and the software generates the reports.

Advantages of TDS software

Choosing the right type of TDS software is equally important as choosing the right IT solution for your organization.  Appropriate, customized TDS software relieve the executives from the work load of cross checking the data entered manually. A wrong TDS software module will not only increase the cost of implementation but also increases frustration of the users with wrong output. A flawless expiry tracking of delayed TDS payments, excess TDS or shortfall in TDS, calculation of salaries with a formula, integrated solution are some of the many salient features offered by competent TDS software.

Customer Support

A proper Customer support enables the businessmen to relieve themselves of maintenance costs at a later stage. The technical team at backend office is effective and fast in responding to crucial customer needs. Nothing is left to chance when it comes to TDS, as a precautionary measure, the buyers of customized TDS software are usually offered training for the employees. Also, fresher’s who are exposed, IT solutions are also provided through extensive training, so that their on job work is made simpler and accurate. The training provided apart from giving exposure to beginners also enhances the skills and technical knowledge of experienced personnel in the hierarchy of Accounts & Finance department.

What is payroll software? – An Introduction

There has been a proliferation of the number of companies in the recent times that have increased their business to mammoth proportions. There are many employees working in such companies and it is a real pain when you are the head and you need to manage the salary structure of each employee.

There are many solutions in the market but the most reliable is the payroll software that makes the process of calculation of salary a breeze. The next few lines would give an overview of the Payroll system. The dawn of computer revolution has changed the way business is conducted in different sectors of the economy. The conventional office has transformed itself into the paperless mode. As a result the management of the organization is able to automatically create salaries based on the taxes and the deductions.

It is very important to know the important attributes of the payroll system. For start it provides comprehensive information about the employees. There are different fields like the employee name age and date of joining. It is very important to know the third options because based on that the salary is calculated.

It uses programming language to design the user interface and the database to store the important data about the employees. It is imperative that you enter the required information about the employees in an accurate manner because any discrepancy in entering the data may lead to incorrect assignment of the salaries. The modern payroll system also counts the number of days for which the employees took leave in a month. Many companies follow different policies in calculating the net salaries.

Some organizations provide a day off in the month and for the next subsequent days they deduct from the basic pay on a pro rata basis. The salary of an employee has many components but the most important of them are the basic pay Home rent allowance and the transport allowance. The incentives are offered as a reward on the performance and they are included in the calculation of the gross salary. The payroll software helps in preparing the virtual copy of the salary slip and also helps in the printing of the same.

When the employee takes loan it is also registered with the software and the employee gets a rebate on the total taxes. The insurance schemes feature as well in to the overall scheme of things. The software follows the latest TDS principle that helps you to evaluate the exact amount of taxes. It takes into account the interest provided by the bank and others. 

The government charges 10% on the interest. The gift taxes are only 2% that are also managed by the virtual application. The payroll software is customized according to the requirements of different organizations because their requirements and issues are also varied.  In event of the non existence of permanent account number the rate of taxes become double which is taken into consideration when creating the software. It is therefore advisable to apply for the number if you do not have it.

Web based Vs Online Payroll Software

The launching of the different software applications in the market has confused the users in a big way because they are not able to comprehend as to which software they must use to beat their rivals in the particular product domain. Different types of companies that operate in other countries have multiple rules and guidelines that they need to adhere to in order to attain the desired improvement in the methodology and the seamless integration of the Payroll Software in their system. 

It has been the topic of discussion since the start of the millennium that which software is the best. One school of thought says that the online management system is better however another view has emerged in the recent past and it says that the web based is ahead in terms of quality.  The web based payroll system provides amazing array of features that seem to dwarf the online version.

The payroll software provides the creation of the company on the remote web server and it helps to designate a financial year as well in which you want to calculate the annual salary and the taxes. The complete information about the employees is stored remotely which makes it more secured and you can also save on the money because it is not needed to buy expensive storage space for data. The documents for the company consumption can be uploaded on the server and can be seen by the branches of the company located across the globe.

The pay slip and the employee verification information can be retrieved from the database that is normalized to the core and is quite efficient in performing search. The web based software is useful when the company has units that are located geographically apart and a network between the systems is necessary to coordinate information. The online system is basically used when the company is small and all the employees are located locally. If the company expands it would be advisable it switches to a web based solution. It provides for an individual password for the employees to ensure security and the integrity of the software. 

The Payroll Software has made it possible for the managers to assess the history of the employees including the blood group and its past job history.  It also plays a very important role in tracking the status of the job application of the prospective employees. The overall feedback is very important in hiring of the new recruits. 

If the employee has to apply for leave he can login to the system and write an application to the required authorities using the user interface of the application and send it to the web server of the company thereby speeding up the process of the sanctioning of the leave which is not possible in the online mode. If the employee has performed transactions with the bank the same information is stored in the database that is automatically subtracted from the salary if it is an earning. One the other hand in case of a loan he might get a rebate on the income tax deductions.

Payroll Software application in industries

In the modern world every country has joined the rat race of globalization and they are following the simple rule of decreasing the interest rate and increasing the cash flow in the economy to achieve growth however in the long term it is very crucial that the infrastructure is developed to accomplish higher development and progress index. The Launching of the different industries both hardware and the software has led to a tremendous demand in the job market with more and more people joining the work force that has made the employee management a difficult task for the companies because the number of employee ids just got bigger with each day and a yardstick was needed to measure the performance of the professionals working in the organization. 

The Payroll Software stepped in to fill the void because it has made the task easier and also helps in performing valuable operations that previously were very difficult to accomplish. In the iron and steel industry which is a labor intensive industry it has helped to gauge the overall efficiency of an employee by calculating the number of work hours he or she puts in and how much is the output. The overtime allowance issue is a big problem but the software solves this problem in a simple way and adds the total amount to the salary as an overhead incentive.

In the software industry payroll software plays a very important role because to measure the productivity of an employee is based on entirely on different parameters as compared to the hardware discussed above. The software work hours spent on designing a project are the important criteria for judging efficiency and another important parameter is the scope of error that are committed during the testing of the project. The basic functionalities required during the calculation of the insurance paid by the employee and the numbers of dependents are very crucial in arriving at the final result and the software exactly does that.

The Payroll Software is also instrumental in preparing the day book for the employees that consists of the expenses incurred by the individual and the amount can be deducted from the salary by the end of the month. If the payroll report is not processed in a timely manner and the salary experience delays because of the hiccups it might lead to large scale tax deductions which is not desirable by the company and would lead to the loss of the morale of the employees. Some packages also provide the facilities of accounting as an add-on services that can be used by the financial professionals of the organization. 

The complete report can be send to the accounting department so that it examines the leave and the TDS modules. The above information could be used by the accounting department to prepare the balance sheet for the company in the current financial year. The ESI and the provident fund information are also available as the part of the documents that would help in the overall process of accounting. In the hindsight the tool has become so important that every industry is running one version or the other.

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