Built with Sandbox: Payroll Tax compliance

Introduction

It is evident that India.inc is exponentially growing and pulling individuals onto its digital platform. Hence, such platforms couldn’t rely on slow and inefficient tax compliance processes. So when we at Quicko realized the dearth of tech-enabled tax compliance platforms, we decided to develop India’s first Tax Compliance API Platform — Sandbox.

Sandbox provides APIs which cover the entire gamut of Tax Compliance requirements of Income Tax, Goods & Services Tax (GST), Tax Deducted at Source (TDS), and Know Your Customer (KYC).

With no other service provider providing such tech-enabled tax compliance solutions, it was natural to see Industry Disrupters celebrating the value that Sandbox provides. So, let’s see how Payroll Softwares are using Sandbox’s APIs to simplify tax compliance!

TDS — meaning & liability

A Payroll or an HRMS platform has to effectively manage TDS compliance. But, first, let’s understand how and when TDS is deducted.

TDS is Tax Deducted at Source and it applies to specific payments such as salary, contractual & professional fees, etc. This means that the employers have to deduct a specified percentage of the salary paid to their employees and are liable to deposit the deductions to the Income Tax Department.

Automating Tax Compliance

Payroll softwares automate the salary payments to the employees for the employer. For each such payment, TDS has to be calculated, deducted, and filed. However, many Payroll softwares do not have TDS compliance integrated into their workflow. Therefore, such softwares can now use Sandbox APIs for enabling compliance of TDS and other taxes.

A Payroll software automates multiple processes for the business that requires tax compliance. We shall illustrate how Sandbox has enabled and simplified Taxes for each of the steps!

Step -1 | Onboard Employees

When an employee is hired by a company, their details are added to the HRMS/Payroll platform. For example, these details could be the employee’s Bank account details, PAN details, Previous/other income sources, etc.

Payroll softwares use Sandbox KYC APIs to onboard employees with ease. The employee’s KYC processes such as verification of PAN, Bank Accounts details, etc are automated using Sandbox’s Tax KYC APIs. Also, our ITR APIs fetch the tax filings to verify such details as required by the employer.

On the other hand, TAN details of the company are also fetched using our APIs and incorporated onto the platform. Important to note, PAN and TAN details are essential for filing TDS returns, and previous to Sandbox, to access or verify such details, one had to manually check through the Income Tax’s website.

Step-2 | Automate Monthly TDS

Now that the employee is onboarded, they start to receive their monthly salary, which is automated by the payroll platform! Cha-ching! However, the monthly TDS deductions and filings based on the salary payments were needed to be automated.

TDS compliance is a process that repeats every month. Each month, the employer deducts TDS from the salary of the employee. This deduction needs to be calculated and has to be communicated to the employee using Form 16. And the TDS deducted is to be recorded as challans for record-keeping.

The payroll software uses Sandbox APIs to automate the calculation of the deductions and creation of Form 16s and challans. Accurate challans are produced by the APIs to mitigate excess challan payments and to prevent short or late deductions.

Step — 3 | File TDS

In the last step of the process, Sandbox APIs enable the deductor, in this case, the employer to file TDS return to the Income Tax Department, automatically! Therefore, the result is complete automation of TDS compliance which in turn makes the HRMS/payroll process more seamless and comprehensive.

Benefits of Integrating with Sandbox

Payroll and HRMS software have benefited from the frictionless and plug&play integration of Sandbox. The integration has enabled tax compliance for businesses, which is a costly affair if they falter to remain so.

Hence the most important value of Sandbox APIs is that they are always updated to reflect the latest tax compliance requirements.

We, therefore, enable our partners to focus on the development of their products, while we take complete care of the tax compliance. All this by simply plugging Sandbox APIs!

Want to Integrate Sandbox?

We offer a variety of Tax Compliance APIs. Feel free to check out our offerings at Sandbox.co.in or reach out to our team. And get access to the FREE TRIAL to Sandbox!