If you are looking to avail the services of a Payroll Tax Consultancy in Mumbai, it is crucial to know about the huge impact which the revised complex tax system can have on your finances.
Moreover, any delay in the proper and timely payment of taxes can cause legal troubles. This is why it is important to know what payroll tax really is and how a payroll tax consultant in your city can assist you.
What Is Payroll Tax?
A payroll tax is a tax which is levied or charged on the payroll maintained by an employer. It includes all forms of salaries, perks, wages, and other types of remuneration which an employer pays to its employees.
While charging this tax, the background or the circumstances of an employee aren’t taken into consideration.
In simple words, payroll taxes are taxes which are required to be withheld or paid by an employer on behalf of their employees.
Types of Payroll Tax
Payroll tax in India usually falls into two categories:
Deductions from salary
This is the tax which an employer withholds from their employee’s salary. It is generally used to cover income tax (tax deducted at source). But, it can also be used to cover the advance payment of unemployment and disability insurances.
Taxes paid in lieu of wages
This is the tax which an employee pays from their own funds. It normally comprises of the fixed charges which are incurred in proportion to the employee’s salary. For example, contributions towards social security, EPF, pension or other insurance programs fall under this category.
What Is a Licensed Tax Consultant?
A licensed tax consultant is someone who helps organisations file their payroll taxes every financial year. As a primary requirement, the firm should have significant credibility in tax consultancy. Possessing expertise in both, accounting and finance is an additional qualification for a payroll tax consultant in India.
What Is the Role of a Tax Consultant?
Efficient management of payroll taxes is the basic role played by a payroll tax consultant in India. This further includes the following:
– Monitoring payroll taxes at the employee and the employer level.
-Ensuring proper payroll tax reporting every month so that the employer is able to file returns accurately.
-Ensuring adherence to the prevalent tax code by the organisation.
-Reconciling payroll taxes to the general ledger and making appropriate journal entries.
-Aligning the business objectives with tax functions.
-Ensuring that a line of communication stays open between the employer and the employee.
-Simplifying complex taxation systems to facilitate better understanding.
-Resolving issues related to tax compliance.
-Making sure that rebates and reimbursements are made in time.
Apart from the aforementioned, a payroll tax consultant is also required to sort out all coordination issues and safeguard the interests of the organisation and its employees.
The Way Forward
A payroll tax consultant in India works as a significant link between the organisation and its employees. The timely filing of taxes assures that the finances of the company are kept in order. This is why it is paramount that you lay as much importance on hiring a competent payroll tax consulting firm as you do on payroll outsourcing.
After all, a payroll tax consultant in your organisation would prove to be the best solution for all the cumbersome tax filing systems and processes.