Tax Declarations
Tax Declarations in CloudHR allow employees to declare their investments for tax saving and enable administrators to verify those declarations before applying them to payroll tax calculations.
This module ensures that employee tax deductions are calculated accurately based on declared and verified investments for a financial year.
Navigate to: Payroll → Settings → Tax Cycles
How Tax Declarations Work
Tax Declarations follow a structured yearly process:
- Admin creates or manages the Tax Cycle for a financial year
- Admin releases the declaration window
- Employees submit their IT Declarations
- Employees upload Proof of Investments (POI)
- Admin verifies and approves/rejects items
- Declaration is locked
- Approved values are used in payroll tax calculations
Key Components
Tax Cycle
A Tax Cycle represents a financial year (e.g., 2024–2025) and controls:
- Declaration window (open/locked)
- Proof of Investment (POI) window (open/locked)
Only one active cycle is used at a time.
Declaration Window
Controls whether employees can:
- Create or edit their tax declaration
- Select tax regime
- Enter investment amounts
| Status | Meaning |
|---|---|
| Open | Employees can create/edit declarations |
| Locked / Closed | No changes allowed |
Proof of Investment (POI) Window
Controls whether employees can upload proof documents.
| Status | Meaning |
|---|---|
| Open | Employees can upload proof |
| Locked | Uploading is disabled |
Tax Regime
Employees can choose between:
- Old Regime → Allows deductions via declared investments
- New Regime → No deductions required
If the New Regime is selected, employees do not need to submit declarations or proofs.
Declaration Lifecycle
Each employee declaration goes through:
| Status | Meaning |
|---|---|
| Draft | Employee is still editing |
| Submitted | Employee has finalized declaration |
| Locked | Admin has locked the declaration |
What Employees Do
Navigate to My Info → Tax and Payroll → Tax and Investments
Employees interact with three sections:
1. IT Declaration
- Select tax regime
- Enter declared amounts under tax sections
- Save as draft or submit
2. Proof of Investment
- Upload supporting documents (receipts, bills, etc.)
- Only available after declaration is submitted
- Disabled for New Regime
3. Form 12BB
- Upload Form 12BB (if applicable)
- Download existing uploaded form
- Replace file if needed
What Admins Do
Admins manage the process:
1. Control Tax Cycle
- Release / Lock Declaration window
- Release / Lock POI window
- Select month for POI release
2. Verify Declarations
- Review employee declarations
- Approve / Reject individual items
- Partially approve amounts
3. Lock Declarations
- Finalize declarations once verification is complete
- Locked declarations cannot be edited
Approval & Verification
Each declaration item (section) can be:
| Status | Meaning |
|---|---|
| Pending | Awaiting verification |
| Approved | Fully accepted |
| Rejected | Not accepted |
| Partially Approved | Approved with reduced amount |
Payroll Integration
Approved tax declaration values:
- Are used in tax calculation (TDS)
- Affect employee net salary
- Are applied during pay runs
Important Rules
Employees cannot edit declarations after submission unless the declaration window is reopened.
Proof of Investment can only be uploaded when the POI window is open.
Once a declaration is locked, no further changes can be made.
Best Practices
- Release declaration window early in the financial year
- Lock declarations before final tax computation
- Verify all proofs before locking
- Encourage employees to upload proof documents on time
Structure of This Section
- Tax Cycles → Manage declaration and POI windows
- Tax Declarations (Admin) → View and verify employee declarations
- Employee Declaration → Submit investments and proofs
- Approval Workflow → Approve, reject, or partially approve items