Salary IT Value difference

ERPNext Accounting
1

Hello Everyone,

I have a few questions regarding the Income Tax deduction amount in Salary Slips for March and April.

Current Configuration

  • Fiscal Year: April to March

  • Payroll Period: January to December

  • Income Tax Slab Effective Date: 01-Apr-2025

  • Tax Regime: New Tax Regime (as per the official Income Tax Department guidelines)

Reference:
Income Tax Department – New Tax Regime

Observation

For the same employee:

  • March payroll: Income Tax deduction = ₹11,002

  • April payroll: Income Tax deduction = ₹11,330

My understanding is that March is the last month of the financial year, while April is the first month of the new financial year. Therefore, I expected the tax deduction in April to be reset or recalculated accordingly.

However, I noticed that the April Income Tax deduction is higher than the March deduction.

Questions

  1. How does Frappe HRMS calculate the monthly Income Tax deduction in this scenario?

  2. Does the calculation depend on the Fiscal Year, Payroll Period, or both?

  3. Since my Fiscal Year is April–March but the Payroll Period is January–December, could this configuration be causing the difference?

  4. Why is the Income Tax deduction for April (₹11,330) higher than the deduction for March (₹11,002), even though April is the beginning of a new financial year?

I would appreciate any explanation of the underlying HRMS tax calculation logic or guidance on whether my Payroll Period configuration is affecting the results.

Thank you.

1 Like
2

Hi @erp_jawahar

IT deduction component is solely based on Earning components which are decalared Is Tax Based.
Further one of the earning component is not constant bringing up more earning resulting in more tax as per tax slabs.

The other reason which i can think of is to check income tax slab for new year if those have higher rates as compare to previous financial year?

3

Hi @ahsantareen

We have implemented the Current Regime tax slab in our Frappe CRM, and it has been effective since April 1, 2025. There is no end date configured for this tax slab.

Could you please help us understand why the Income Tax amount for April is significantly higher compared to March? We would like to know whether any changes in tax calculation logic, annual projections, payroll settings, or other factors could be causing this variation.

Kindly provide your insights.

4

Also for that employee earning component basic value is same for april which is mentioned in march