Human resources headache of 2 tax systems
Payroll management could become an administrative nightmare for large employers as the new tax regime enters into force. Experts said organizations should strive to advise on the new tax regime before April 1 of this year.
Employees whose salaries fall into the respective tax tranches where the tax reduction benefit is offered, earning between Rs 5 lakh and Rs 15 lakh per year, must decide the path they wish to choose. If they choose to continue with the existing tax regime (let's call it plan 'A') and decide to claim deductions from their investments in tax-saving schemes as they do each year, then the organization would not make any changes in the way their taxes are calculated.
However, if they opt for the new tax regime (for example, Plan B), they must declare this intention to their employers before March 31 of this year. Once employees opt for the new tax regime, they cannot return to the previous one. For employees who opt for Plan B, it will be easier since taxes will be deducted in advance from the employees' salary.
Aditya Birla Group The human resources director said: “Employee compensation will continue in the same way. However, we will have to advise employees in both fiscal ways, explaining the implications and possibly creating a help line that can help employees with any type of consultation. Once employees voluntarily declare the fiscal route they would like to opt for, the organization will format and calculate it accordingly. ”