For any successfully in-house payroll software to run smoothly, the foremost thing to attend is that it is fully compliant with the guidelines of Indian Payroll System. Doing so ensures that the companies/ businesses can avoid tax penalties and be safe of paying heavy interests. Discussed further are some of the commonly made tax mistakes and why you should protect yourself from making them-
- Filing Income Tax Wrongly
More than a mistake, filing income tax incorrectly may be referred to as an unethical practice that misleads the Government. This is mostly done to avoid paying a part of income to the government. But, this may result in adverse effects wherein companies and businesses can be penalized. Though this penalty is not applicable if this act is not willful and has a realistic cause behind it. The percentage of penalty may vary and is subject to increase on failure of clearing it on or before due date.
- Submitting Incorrect Forms
Correct listing of tax related information in the forms helps in paying payroll taxes appropriately, without under or overpaying them. This means at the time of IRS (Income Tax Returns) filing, you will be at ease. For submitting the forms correctly, make sure that you cross check the details twice or thrice, place right amounts in the respective fields and verify the totals. All the details must be correct and complete so that you do not fall into the pitfalls of income tax departmental enquiries.
- Filing Taxes Past the Due Date
The Income Tax regulatory bodies fix a due date and communicate the same to the people of all groups so that they can deposit their taxes on time. In case of failure in meeting these fixed dates, you may have to sum up a percentage of penalties on the amount of your payroll taxes. This means just because you exceeded the time limit (when you could have paid your taxes); you need to pay extra to the government.
- Manipulating Employees’ Salaries
If at all you are willingly or reluctantly manipulating the records of employees’ salaries, not disclosing correct distribution of salaries in quarterly/ half yearly audits or not following the structured approach to deduce salary components (like PF, HRA, Gratuity etc.) then you put yourself into danger. If payroll is not your strength, it is better to hire an experienced accountant rather than unwillingly breaching with the actual figures.
It is your responsibility to confront your payroll provider about their competency in meeting Indian Payroll standards before associating with them. Embrace our payroll software named PayWheel in your company for end-to-end Payroll Management that defends you from making payroll mistakes. For more details on our comprehensive Payroll Automation software, call us today or fill the enquiry to have us contact you.