Tax exemption refers to the exclusion of income, property, or transactions from taxes that would typically be imposed on an employee.

At the start of a payroll period, employees have the opportunity to declare the amount of exemption they intend to claim from their taxable salary. BizCentric HR provides the functionality to specify tax exemption categories/sub-categories, exemption amounts, and other relevant details within the Employee Tax Exemption Declaration form.

To access Employee Tax Exemption Declaration, go to:

> Home > Human resources > Employee Tax and Benefits > Employee Tax Exemption Declaration

1. Prerequisites

Before creating an Employee Tax Exemption Declaration, it is advisable you create the following:

• Employee
• Employee Tax Exemption Category
• Employee Tax Exemption Subcategory

2. How to create Employee Tax Exemption Declaration

To create a new Employee Tax Exemption Declaration:

1. Go to: Employee Tax Exemption Declaration > New.
2. Select the Exemption Sub Category and Exemption Category.
3. Enter the Maximum Exemption Amount and Declared Amount.
4. Save and Submit.

The Total Exemption Amount will be exempted from annual taxable earnings of the employee while calculating the tax deductions in Payroll.

> Note: Employees can only submit one Employee Tax Exemption Declaration for a Payroll Period.

3. Features

3.1 Employee Tax Exemption Category

Tax exemptions from taxable salary typically pertain to specific categories determined by governmental or regulatory authorities. BizCentric HR offers the capability to set up various categories eligible for exemption. Examples of such categories (in the context of India) include 80G, 80C, B0CC, and others.

You can configure Employee Tax Exemption Category by going to, Employee Tax and Benefits > Employee Tax Exemption Category

3.2 Employee Tax Exemption Sub-Category

Under each category, there could be many heads for which the exemptions are allowed. For example, in India, sub categories under 80C could be Life Insurance Premium

You can configure Employee Tax Exemption Category by going to, Employee Tax and Benefits > Employee Tax Exemption Sub-Category

3.3 HRA Exemption (Regional – India)

For the ongoing fiscal year in India, the House Rent Allowance (HRA) exemption from taxable earnings is determined by the following criteria:

1. The actual amount allocated by the employer as HRA.
2. The actual rent paid minus 10% of the basic salary.
3. 50% of the basic salary if the employee resides in a metro city (40% for a non-metro city).

Employees can specify the HRA Exemption as part of their Employee Tax Exemption Declaration. BizCentric HR automatically calculates the eligible HRA exemption and applies it when computing the taxable earnings.

Employees should input their Monthly House Rent and indicate if they reside in a Metro City by selecting the ‘Rented in Metro City’ checkbox if applicable. After submitting the form, both the Annual and Monthly HRA Exemption will be computed automatically.

Once the declaration is submitted, employees can provide proof of their tax exemption by clicking on the ‘Submit Proof’ button.

> Note: HRA component needs to be configured in Company master under HRA Settings sections for the HRA exemption to work.

4. Related Topics

1. Employee Tax Exemption Proof Submission
2. Employee Benefit Application
3. Employee Benefit Claim