This May, we are glad to unveil new capabilities in Zoho Payroll that simplify your payroll activities. Here's the list:
Let Employees Choose Their Tax Deduction Method for One-Time Payments
Calculate variable earnings based on percentage of CTC
Carry forward unclaimed reimbursements and encash them quarterly
1. Let Employees Choose Their Tax Deduction Method for One-Time Payments
When making one-time payments, such as bonuses, the manner in which tax is deducted makes a significant difference to an employee's take-home pay. With this new feature, you can now provide employees with the ability to decide how they would like the tax deducted from such payments.
Your employees can choose from the options you provide from the employee portal. You can give them three choices:
| |
| The full tax amount is deducted at once. The remaining amount is credited to the employee. |
| The full bonus amount is credited upfront. The tax is deducted in future months. |
| An amount specified by the employees is deducted during the time of disbursement. The remaining tax is deducted in future months. |
Here’s how you can implement this for the employees in your organisation:
- Go to Pay Runs on the left sidebar.
- Click Create Pay Run in the top right corner and select One Time Payout.
- Select the one time component and when you would like to pay the employees.
- Select the Allow employees to select their tax preference checkbox.
- Select if you want to allow ad-hoc based tax deductions.
- Set a deadline for employees to submit their tax preference.
- Click Save and Continue.
- Add employees to the one time payment and click Continue to Payroll.
- In the one-time payroll screen, click Allow tax preference in the top right corner.
Note: For employees who do not have access to the employee portal, you can select their preferred tax deduction method by selecting the employee.
Your employees can now log in to their portal and choose their preferred tax deduction method.
You can also opt to lock the ability for employees to submit their tax preference before the deadline date, if required. To do this:
- In the one-time payroll screen, click Lock Tax Preference in the top right corner.
Your employees will no longer be able to submit their preferred tax deduction method. Once the deadline has passed, the ability for employees to submit their tax preference will be locked automatically. However, you can choose to extend the deadline for employees to submit their tax preference. Here's how:
- In the one-time payroll screen, click Extend Tax Preference in the top right corner.
If you want to have a backup, you can also export to download the tax preference.
2. Calculate variable earnings based on percentage of CTC
Variable earnings are earnings that are not fixed and vary based on the performance of an employee. In Zoho Payroll, you can now calculate these variable earnings such as bonus based on percentage of CTC (Cost to Company) of an employee.
For example, you have two employees - employee A and employee B - in your company. For employee A, you want to calculate their bonus based on 5% of their CTC. For employee B, you want to calculate their bonus based on 10% of their CTC. Here's how you implement this in Zoho Payroll:
- Navigate to Settings > Salary Components.
- Click Add Component in the top right corner and select Earning.
- Select Bonus as the earning type.
- Select the Make this earning a part of employee's salary structure option under Other Configurations.
- Select Percentage of annual CTC as the calculation type.
- Add other details about the bonus.
- Click Save.
Once you've saved this earning, you associate it to an employee by including one-time payments as part of their salary structure.
- You enter the bonus percentage as 5% of annual CTC for employee A and 10% of annual CTC for employee B.
When the pay run is processed for the variable earning, the bonus of 5% and 10% of annual CTC will be calculated for employees A and B respectively.
3. Carry forward unclaimed reimbursements and encash them quarterly
You can now choose to carry forward your employees' unclaimed reimbursements and encash them on a quarterly basis.

This feature is currently in early access. Contact support@zohopayroll.com and we'll enable this feature for you.
For example, let's say you want the telephone reimbursement that, when unclaimed by employees, gets carried forward and encashed at the end of the quarter. Here's how you can implement this in Zoho Payroll:
- Go to Settings and select Salary Components.
- Switch to the Reimbursements tab and select Telephone Reimbursement.
- Enter the other details and select Carry forward and encash quarterly for the How do you want to handle unclaimed reimbursements? field.
- Click Save.
The unclaimed telephone reimbursements of your employees will be carried forward from the beginning of the year and will be encashed at the end of the quarter.
That's a wrap for now! We are always eager to hear your suggestions so we can help you do payroll better. Feel free to share them in the comments below.
If you need any assistance, please write to us at support@zohopayroll.com, and we'll help you. Stay tuned for more updates from Zoho Payroll.
With a shared purpose,
The Zoho Payroll Team
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