Tax declarations
Employees declare their tax regime, rent, 80C, 80D, NPS and home-loan interest with proofs; HR verifies; monthly TDS follows the year to date.
Each financial year, employees tell payroll how they want their salary taxed — the new or the old regime — and what they will claim: rent for HRA, 80C investments, health insurance, NPS and home-loan interest. HR checks the proofs. Monthly TDS then uses what HR has verified.
Before you start: any employee can fill in their own declaration. Seeing and verifying everyone's needs Full control on People (HR). This is what payroll computes from your settings, not tax advice — check unusual cases with your CA.
For employees: declare
- Open Payroll › My tax declaration (or Tax declaration under your own payroll).
- Choose the Tax regime: New regime or Old regime. Which regime costs you less shows the taxable income, tax for the year and about how much a month under each, with Lower tax on the cheaper one. It is estimated from your current salary for a full year and your saved declaration — save to refresh it.
- Fill in what applies to you:
| Item | Notes |
|---|---|
| Rent paid per month | For the HRA exemption. Tick I live in a metro (Delhi, Mumbai, Kolkata, Chennai) if you do. Add Landlord's name and Landlord's PAN — the PAN is needed when rent is over ₹1 lakh a year. |
| 80C investments (a year) | PPF, ELSS, life insurance, tuition fees… Your PF is added automatically; capped at ₹1.5 lakh. |
| 80CCD(1B) NPS (a year) | Up to ₹50,000. |
| 80D health insurance — self & family / — parents | Up to ₹25,000 each (₹50,000 if senior). Tick I am a senior citizen or My parents are senior citizens. |
| Home loan interest (a year) | Self-occupied, up to ₹2 lakh. |
| Previous employer's salary this year and Tax your previous employer deducted | Only if you joined this year. |
- Under Proofs, pick Proof for and click Upload a proof — rent receipts, investment statements, premium receipts.
- Click Save declaration. You see "Declaration saved". The badge shows Declared, Proofs submitted or Verified.
Most deductions apply only in the old regime; the new regime keeps the standard deduction. Changing your declaration after HR verified it sends it back for verification.
Note: HR can set a date after which declarations close ("Declarations closed on …") and a date for proofs. After the proofs date, anything HR has not verified stops counting and tax is withheld on the rest.
For HR: verify
- Open Payroll › Tax declarations. The list shows each employee's Regime, Status, Declared (a year) and number of Proofs.
- Click an employee. Open each proof, enter the Approved amount for each item, and add a Note to the employee if you approved less.
- Click Verify these amounts. You see "Declaration verified". Payroll uses the approved amounts from the next run.
How monthly TDS is worked out
TDS is worked out on the year to date, not month by month:
- Taxable income for the year = what was paid on finalized payslips earlier in the financial year (April–March) + this month + this month's salary for each month still to come + a previous employer's salary, less the exemptions and deductions of the chosen regime.
- Tax on that, using the slabs, rebate, surcharge and cess in your payroll settings.
- Less the TDS already deducted this year (here and by a previous employer), spread over the months left including this one. It is never negative.
So a raise, a bonus or a late declaration evens out over the rest of the year. Each payslip shows Income tax · … regime, projected for the year with Taxable income, Tax for the year, Deducted so far and This month. A fixed monthly TDS on a salary, or a TDS figure HR types on a payslip, still wins.
Tip: example — Rohan gets a raise in October. From the October run, the higher salary is projected for the rest of the year and the extra tax is spread over October to March, instead of piling up in March.