A PROJECT REPORT ON

“A COMPARATIVE STUDY OF GLOBAL TAXATION

WITH INDIAN TAX
(AS A GLOBAL PAYROLL PROVIDER) ”
FOR
NEEYAMO ENTERPRISE SOLUTIONS

SUBMITTED BY

PRANSHU PATHAK
BATCH 2018 - 19

UNDER THE GUIDANCE OF

PROF. SONALI BAGADE

SUBMITTED TO

SAVITRIBAI PHULE PUNE UNIVERSITY

In the partial fulfillment of the requirements for the award of

Masters in Business Administration (MBA)

Through

Dr. D. Y. Patil Unitech Society's

Dr. D. Y. Patil Institute of Management & Research,
Sant Tukaram Nagar, Pimpri, Pune – 411

1
 DECLARATION

I, the undersigned PRANSHU PATHAK student, of Dr.D.Y.Patil Institute of Management &

Research, Pimpri, Pune hereby declare that I have completed my project, titled “A
COMPARATIVE STUDY OF GLOBAL TAXATION SYSTEM WITH INDIAN TAX (AS
A GLOBAL PAYROLL PROVIDER)” to Savitribai Phule Pune University, in partial
fulfillment of requirement for the award of degree of Master of Business Administration under
the guidance of Prof. SONALI BAGADE, is an original work of the undersigned and has not
been reproduced from any other source.

Date: Yadav Prakashkumar Jogeshwar

Place: MBA II (Finance)

2
 ACKNOWLEDGEMENT

This project work, which is my first step in the field of professionalization, has been successfully
accomplished. I would like to sincerely thank my Project Guide Prof. SONALI BAGADE who
gave me the most Valuable Inputs and Feedback during the Preparation of this Project and
providing a platform to understand the corporate culture.
I am indebted to my other faculty members from finance as well as from other fields who gave
time and again reviewed options of this project and provide many valuable comments. I would
like to sincerely thank my Firm “NEEYAMO ENTERPRISE SOLUTIONS” which has
provided me with this Valuable Opportunity to fulfill my Quest for Knowledge.
I would also like to thank my Company Guide Ms. GULNAAZ PARVEEN and their
entire staff for providing me with valuable inputs, help and support whenever
required.

3
 EXECUTIVE SUMMARY

In the present paper an attempt has been made to study the taxation structure of India by
comparing it with some of the developed and developing economies. The Comparison is done by
selecting a sample of three countries and comparing their tax structures with India with respect to
the parameters like Tax rates, Time Required for Tax Compliance, No of Tax Payments, Ease of
Tax Payments, and Ease etc.

The particular study has been conducted with the reference and help of internship which I have
done at the “Neeyamo Enterprise Solutions”. The firm is engaged in providing payroll services
and making the life easier for their clients through their industry spread knowledge base and with
the help of experienced global payroll process. Neeyamo Enterprise Solutions aims at complete
satisfaction of clients and have been rated 8.9/10 in consumer surveys. The References also
taken from previously published journals and research papers on the related topic.

The goal of this study is to provide a comprehensive and updated review of the theoretical and
empirical economic literature on tax and compliances, taking also into account a number of
open, tax-related questions raised by the changing nature of economy, symbolized by the
growing importance of the collaborative economy.

Are taxes very high in India? In most of the parameters it was found that, there are many
countries where rates of personal income tax are much higher. In fact, in several Nordic and
other European countries the taxman takes away more than half the individual earnings, but
India tax Structure remains way behind than in some parameters though that’s perhaps justified
because other countries also have a strong social security net for citizens.

4
 INDEX

CHAPTER TITLE PAGE

NO

I INTRODUCTION 1–3

II COMPANY PROFILE 4–8

III REVIEW OF LITRATURE 9 – 10

IV THEORETICAL REVIEW 11 – 45

V RESEARCH METHODOLOGY 46 – 50

VI DATA ANALYSIS & INTERPRETATION 51 – 72

VII FINDINGS & SUGGESTION 73 – 74

VIII CONCLUSION 74 – 75

IX BIBILOGRAPHY 76 – 78

X ANNEXURE 79 – 82

5
 CHAPTER I

INTRODUCTION

6
1.1 INTRODUCTION TO THE TOPIC
The opening of a new international office is a major milestone for any company. As with every
benchmark reached, there are many obstacles to overcome. International expansion, although
presenting a whole host of new opportunities, also brings a new set of challenges for organizations of
every size. Managing global payroll is one of the most complex tasks involved with overseas
expansion. Considering all that’s involved – complex calculations, local compliance, language and
cultural differences, and reporting requirements – organizations must check a lot of boxes in order to
successfully manage their international team members’ remuneration. On top of that, there are many
ways to find trouble as you attempt to set up and execute payrolls in multiple countries. Businesses
may decide to outsource their payroll functions to an outsourcing service like a NEEYAMO or a fully
managed payroll service. These can normally reduce the costs involved in having payroll trained
employees in-house as well as the costs of systems and software needed to process a payroll.

What is global payroll and why is it good for business? It’s the management of your company’s entire
payroll function – for all your international offices – from one central location.

The top challenge for all organizations is compliance, especially since the regulations often differ
across state lines and among countries. “Taxes are often the first compliance challenge, said by
experts. Even the most mundane tax tasks can snowball when you’re managing international payrolls.
What’s the filing deadline? What specific documents does the company require? What tax documents
do employees need?”

What is Tax? Tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal
entity) by a state or the functional equivalent of a state to fund various public expenditures.
(Wikipedia). Taxation Structure of any country is the set of rules and laws set up by that particular
country for the collection of taxes from the public. The Fundamental objective of collecting Tax is to
raise government revenue for development and welfare programs in the country. The Secondary
objectives is to maintain economic equalities by imposing tax to the income earners and improving
the economic condition of the general people, to encourage the production and distribution of the
products of basic needs and discourage the production and harmful ones, to discourage import trade
and protect the national industries (Bhim Chimoriya). Growth and Development of a Country is
largely dependent on the Taxation Structure it adopts.High taxation rates and complex tax systems
curb growth. Complex Taxation System also results in evasion of taxes and thus increase the parallel
economy. Complex Tax Systems are also responsible for hampering the ease of doing business.
Whereas countries with simplified taxation systems has resulted in facilitating ease of doing business
as well as growth and development of that particular country.
India being one of the largest democracies has a very complex taxation structure featured with a large
number of taxes, excessive and complex tax literature (rules and laws), inefficient administration.
According to the white paper published by Indian government on black money in 2012, govt. cannot
deny the presence of parallel economy in the country. The amount of this parallel economy is nearly
equal to the GDP. This huge existence of parallel economy certainly denotes certain faults in the
taxation structure of India. In This Study we are Comparing Indian Tax Structure with the other
developing and developed countries Tax Structure in order to analyzeIndian tax structures strengths
and weaknesses.

7
Need of the study:-
The Development of any
country’s economy depends
directly on the Country’s
Taxation Structure. A
Need of the study:-
The Development of any
country’s economy depends
directly on the Country’s
Taxation Structure. A
1.2 NEED OF THE STUDY

The development of any country’s economy depends directly on the country’s Taxation Structure.
Taxation Structure which facilitates easy of doing business and having no chance for tax evasion brings
prosperity to a country’s economy. On the other hand taxation structure which has provisions for tax
evasion and the one which does not facilitate ease of doing business slows down the growth of
country’s economy. Therefore as taxation structure plays an important role in country’s development.
There is always need for study of the taxation structure to make the Taxation structure more simple that
earlier. The goal of this study is to provide a comprehensive and updated review of the theoretical and
empirical economic literature on tax and compliances, taking also into account a number of open, tax-
related questions raised by the changing nature of economy, symbolized by the growing importance of the
collaborative economy.

1.3 SCOPE OF THE STUDY

The study intends to evaluate the existing tax structure in India in comparison to some of the developed
countries. For this purpose, the following countries have been selected: USA and Italy. In some cases, we
have also looked at the tax system in China. The time period covered in the study is from 2017 to 2018.

8
1.4 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVES

 To understand the global taxation system with comparison of Indian taxation system (as a global
payroll provider).

SECONDARY OBJECTIVES

 To understand differences in income tax from country to country.

 To understand salary after tax of the employees.

CHAPTER II
COMPANY PROFILE
9
2.1 COMPANY PROFILE
A truly global organization, Neeyamo has feet on the ground in over 190 countries as a premier provider
of best in class HRO solutions. Neeyamo utilize this wide swath of global presence to ensure that they all
see the world and approach challenges with a holistic perspective. Every employee at Neeyamo is
empowered to ensure the success of its clients – they strive for excellence in all tasks. Neeyamo is a
100% employee-owned organization with opportunities provided to its employees to be granted an
ownership stake, thereby ensuring that the employees stay aligned to the vision of the organization and
thereby contributing to his future growth without interference from external public markets or venture
partners who at times tend to demand growth at the cost of service excellence. From hosting, corporate
parties to ensuring true gender-neutral hiring, from executing impartial pay and promotion practices to
providing flexible work hours for facilitating work/life balance Neeyamo looks upon its employees like
family – something immediately apparent when one steps into one of our global offices. Neeyamo
encourage you to engage with them, push them, challenge them, and take them up on offer to truly
understand why
Neeyamo is different.
2.1.1 CORE VALUE:

10
Neeyamo knows that positive values are the foundation for building healthy relationships. Our values
serve to guide us along the right path throughout our interactions with employees, clients, vendors, the
government and society at large. At Neeyamo fairness is not just a matter of choice, but a way of life.
Neeyamo account itself to hold the highest ethical standards.

2.2 MISSION
Client
 Create a Best-in-Class Organization with market winning capabilities and credentials

Investors
 Give Highest Ethical Return for our Investors

Employees
 Create a Best Place to Work for our workforce

Society
 Promote an environment that enables our Stakeholders to undertake activities to give
back to society

Government
 Conduct all business transactions with highest levels for professional ethics in
Compliance to the Legal Framework of the country of operation.

2.2.1 VISION
 Better work, Better life,

11
  To be a leader in providing HR services to global clients leveraging talent, process &
technology.

2.2.2 UNIQUENESS OF NEEYAMO

 Singular payroll platform

 Integration-ready payroll platform

 Triangulated compliance framework

 Improved employee experience

 Full control and complete visibility

2.3 LINE OF BUSINESS

 HRO
The complexities behind catering to human resources especially when they are large in number
and smeared across the globe could prove distracting and intensely burdensome for in-house
team. You may want your HR team to focus on achieving their core agenda and not get tumbled-
down by repetitive administrative or non-strategic tasks. An expert solution and a professional
touch is all you need to cast that cumbersome administrative load off your shoulders improve the
quality of your workforce and concentrate on your strategic objectives. For Neeyamo, HR(O) is
the core.
Neeyamo’s multi-process HRO solution can break the invisible walls between you and your
employees and help you address the needs of your global workforce effectively. Neeyamo
accomplish this through powerful technology and proactive global service delivery. Their service
portfolio includes 650+ HR activities covering the entire spectrum of hire-to-retire cycle
truncating all your HR operational tasks enabling your HR team to focus on optimizing their
people strategy. Their team comprises of certified (GPHR/ CIPD) professionals who are subject
matter experts in multi-country/ multi-process HR roll-outs. The professionals are also skilled in
12
 configuring, implementing and customizing major human resource management platforms such
as SAP SuccessFactors, Workday & Oracle. Neeyamo have adopted a multi-tier Global-Local
delivery model leveraging it’s world-wide presence to ensure a standardized global HR solution
tailored to provide a more localized experience.

Neeyamo’s multi-Process HRO service is a combination of transaction-intensive HR

OPERATIONS, state-of-the-art TECHNOLOGY and strategy-oriented CONSULTING
customized to accommodate the organizational needs. It’s services cover the entire HR lifecycle
relieving your in-house team of transactional activities thereby increasing their productivity. We
can be your single point of contact for all your HR operations across multiple countries resulting
in standardization of process, improved efficiency and substantial reduction of administrative
expenses. Neeyamo provides people with an extensive range of HR services to choose from based
on their requirements and objectives. Neeyamo encourage technology driven HRO transformation
powered by their proprietary home-grown platforms to increase automation and reduce the cost of
errors. Also, their proficiency in the HR domain combined with it’s strong network and presence
across geographies has enabled them to stay abreast of any compliance change affecting the HR
industry across the globe. They extend this knowledge to their customers in the form of
compliance assistance thereby mitigating regulatory risks for their clients.

 Global Payroll
Global expansion is a key attribute of successful organizations. With a widespread workforce
contributing towards growth from various geographies, a firm can reach the success in a short
span of time. But handling payroll for the global workforce could present an unforeseen
challenge. With the employee population fragmented across countries, payroll becomes more
complicated due to various compliance requirements. One may often find ownself distracted from
his core business, paying more attention to paperwork instead of it’s organization’s primary goals
and objectives.

13
 Neeyamo has its core focus on the organization’s non-core (yet significant) business functions.
Their global payroll solution is a combination of advanced technology, extensive global
compliance knowledge and service expertise that covers 150+ countries. Over the years Neeyamo
has studied and addressed the most complex global payroll challenges faced by several
multinational organizations. Neeyamo has accomplished this leveraging our single proprietary
global payroll platform – PayNComp™ unifying input, processing, and delivery of an innovative
technological solution. Neeyamo’s global payroll solution is a powerful blend of technology and
service excellence that is tailor-made uniquely for the requirements of each customer.
PayNComp™ – Neeyamo’s global payroll platform is a holistic solution for all your global
payroll challenges. Unlike traditional payroll applications, PayNComp™ was developed using
Neeyamo’s proprietary Cloud First, World First© design philosophy. Built ground up, it
incorporates next-generation technological capabilities including bots’, artificial intelligence and
advanced analytics. Its layered architecture supports extended payroll capabilities covering the
upstream (input preparation, validation) and downstream (compliance, helpdesk) activities on a
single platform. A powerful AI driven payroll engine, a global dashboard providing complete and
real-time visibility, a robust self-service portal and an intuitive helpdesk that we call
“SmartDesk” combines into one powerful platform that is ideal for all your payroll needs.

 Cloud Transformation Services

With rapid global expansion at the heart of the current business ecosphere, organizations require a
robust HR system to manage their expanding workforce. The C-suite require a single portal to
give them instant access to live information on their workforce. To keep up with the pace of
business disruption, the business layer demands an HR system that is simple yet comprehensive
in managing their people.
Neeyamo collaborates to truly understand global companies’ HR process/ technology challenges
and use its experience, the capability to help it become future-ready. Their extensive HR
technology expertise combined with their proprietary products allows them to build solutions that
leverage customers’ HRIT footprint and maximize their return on technology investment.

14
 Neeyamo’s Cloud Transformation Services those partners with leading HRIS have enabled global
organizations to digitize their HR and align their workforce with business goals.
HR is expected to strategically and efficiently manage transactional operations. This requires a
strong and flexible HR foundation and further build on the foundation with solutions that serve to
construct an engaged and better-prepared workforce. Neeyamo has partnered with leading cloud
HRIS providers to deliver a host of HR services enabled by the cloud. Regardless of where you
are in your cloud journey, they can help you not only find the best-fit cloud solution but execute it
seamlessly too. Their optimized solutions accelerate faster time-to-value by tapping maximum
value from your HR technology landscape. With proven expertise, strong partnerships and rich
experience in tech-enablement of workforce management, Neeyamo enable you to transform the
workforce into a driver of high performance through effectively designing, deploying and
transitioning to new HR processes and cloud solutions.
 Global Pre-employment screening
An organization’s success depends on hiring the right talent. The importance of acquiring the
right talent for organizational growth has become vital to gain competitive advantage and market
share. Technology has broken geographical constraints in hiring workforce from many parts of
the world. An HR manager positioned in Asia can effortlessly interview candidates in Western
Europe through modern methods. A resume holding bachelor’s and master’s degree from top-
notch universities, more than a decade-long work experience with multiple renowned
organizations is sure to grab the attention of any HR. But beyond the virtual or physical
assessment of a candidate’s talent, the employer faces greater challenges in the form of validating
the legitimacy of the background information declared by them. Lack of in-depth understanding
about the candidate’s history or hiring the wrong person can go as far as to jeopardizing the safety
of your existing employees. Gathering sufficient evidence to rule out the possibilities of

15
 recruiting such wrong applicants and ensuring compliance with the country-specific laws of
hiring are cumbersome tasks that – more often than always – burden the HR.
 Neeyamo’s #ITUS framework is designed to examine the resumes beyond what is laid out on
paper. The #ITUS solution framework consists of a simple yet powerful platform coupled with a
myriad of checks delivered by highly skilled verification specialists. Neeyamo’s background
check services cover 200+countries and union territories offering a wide variety of
comprehensive checks. Neeyamo’s solution is a combination of robust technology, compliance
expertise, efficient processes, and wide coverage providing an automated and accurate solution to
customers.
Deep domain expertise in global HR is what helps Neeyamo to deliver employee-centric
background check services to companies. Powered by its Cloud First, World First© Technology
and dedicated background screening experts, Neeyamo has helped global organizations leverage
standardized policies across locations. Neeyamo offers a wide range of background check
services covering education, employment, criminal, drugs, references, global database, identity
and others as required by customers. Neeyamo also allows its clients to customise their packages
or even order individual searches from its overall background check offering. Neeyamo’s round
the clock customer service is unparalleled; customers have multiple channels to reach them
anytime for getting statuses or asking compliance related queries.

 Global Benefits Administration

Neeyamo offers comprehensive global employee benefits solution that mitigates your
administrative burden by maximizing automation in the process and through expert advocacy and
ancillary services. With extensive experience in the HR domain, they offer their platform-based
global benefits solutions to customers by managing employee benefits, implementing a robust
benefits platform, supporting benefits audit & reconciliation and providing benefits helpdesk
support. Benefactorz™ is Neeyamo’s new age technology-based global benefits solution to help
you administer your employee benefits plan within a single platform. The application is a cloud-
based universal platform that can be accessed from anywhere around the globe on any device that
can connect you to the internet. Neeyamo’s global benefits solution is a combination of people,
process and platform. Neeyamo’s benefits solution encompasses expert guidance and support for
administration of enrolment support, dependent audits and verification, centralised system and
benefits helpdesk support, global view of statuses and progress across all countries.
Benefactorz™, their global benefits platform comes in the form of a unified system that gives
employees full understanding of their benefits plan and provides managers with an optimally
automated solution to enroll and administer employee benefits – across your countries spread
worldwide. Plans can be configured and monitored with ease for several countries in our global
16
 application from a centralized dashboard that gives administrators a comprehensive 360-degree
view for better visibility and control. The solution is cloud-based and compatible with any device
that can connect you to the internet. Any benefit component that is part of your employee benefits
plan such as statutory, non-statutory and organization-specific elements can be configured
according to your needs and administered using Benefactorz™. Our 24/7 helpdesk support
provides customers and their employees with proactive assistance to help them get a better
perception and guidance for managing their benefits plan.

 Global HR Compliance
Human resource compliance is an ever-changing labyrinth that poses a challenge to organizations
across the globe. Studies reveal that many HR managers have expressed their concern about
complying with policies and laws governing the human resource industry, especially in a global
operating environment. This can be attributed not only to the vast amount of HR regulatory
policies that differ from country to country but also the dynamic nature of these laws and
regulations. Incumbent policies frequently become obsolete and get replaced by newer
regulations. Even before your organization realizes and incorporates these changes, you could be
violating government norms.
Understanding the HR compliance obligations of your business operations worldwide is the key
to staying globally compliant – therefore HRCompliancePlus™. Managing multi-country
compliance is so much easier with Neeyamo’s system guiding you through global HR
compliances at all levels. HRCompliancePlus™ from Neeyamo is your one-stop tech-enabled
solution for global HR compliance. It is your HR compliance advisor, enabler, and auditor – all in
one!
Neeyamo’s HR Compliance Plus™ is a single, user-friendly platform to monitor and proactively
manage your global HR compliance. Developed using Cloud First, World First © design
approach, the system centralizes your compliance data and provides proactive assistance to help
you administer compliance within a single platform. Neeyamo understand that policies and
regulation vary from country to country and also within the country in a state or city. Neeyamo’s
solution has a repository of global policies at a country, state, and even city level to help you
track internal and external compliance. The system has an exquisite yet simple interface that was
designed with user-centricity in mind and gives you a hassle-free and friendly experience.
HRCompliancePlus™ provides a complete compliance health check and stats to help you get a
fair idea about your company’s adherence to relevant policies and regulations. The system
provides proactive alerts and reminders guiding you constantly to remain compliant with laws
and policies thereby mitigating the risk of legal consequences. Neeyamo’s primary objective is to
relieve you completely of compliance burden. With HRCompliancePlus™ and Neeyamo’s
17
 service excellence, being compliant with regulations and policies is no longer a cumbersome
experience.

2.4 Top Management

ASHOK
BILDIKAR

Chairman, MD

Ashok is the Chairman, Managing Director and the Chief Innovation Officer at Neeyamo. He is invested
in conceptualizing solutions that currently compete under the organization’s banner in the market. A five-
time HRO Superstar, he is passionately pursuing his vision to make Neeyamo a leader in providing Long-
Tail HR and payroll services. With over 35 years of experience in the domain, Ashok’s key focus in the
organization is to nurture innovation and create path-breaking technology products that address gaps in
the global HRO arena. Throw a complex problem at him, and he will leave you spellbound by the
simplicity of the solution.

RANGARAJAN
SESHADRI
CEO

Rangarajan, Neeyamo’s Chief Executive, is known to be an inspirational leader and true visionary. A
craftsman in building cohesive teams, Rangarajan drives commitment and adherence to Neeyamo’s core
values across the organization. He has extensive experience in creating HR & Payroll shared service
centres for global organizations and has managed large-scale global HRO service delivery engagement
covering operational consulting, technology and process management. At Neeyamo, he has pioneered and
architected the much-acclaimed global payroll service model and has helped expand its reach to over
125+ countries. Rangarajan has been named HRO Superstar for three consecutive years by HRO today.

18
 VIVEK
KHANNA

Chief Client
Partner
Vivek is the Chief Client Partner at Neeyamo. Vivek runs the Global Sales function, liaising with
prospects and customers to deliver solutions that meet their needs. He is a seasoned business development
professional with three decades of experience leading teams acquiring revenue. He serves in the advisory
role of several regional HR forums and associations, is a frequent speaker at global forums and is the Past
Chair of the NAPBS- Global Advisory Council. Vivek is an Associate Member of Institute of Chartered
Accountants of India. No matter the country he visits, Vivek is an expert in local cuisines. If you get to
meet him in person, you can be guaranteed to be treated to a restaurant that serves the best food in town.
In Vivek’s terms – Food is art –learn to relish it!

GUHAN
RAMANAN

Head, Customer
Success

Guhan is Head of Customer Success at Neeyamo. A GPHR certified professional, Guhan’s expertise in
envisaging and developing solutions to transform an organization’s HR infrastructure has been duly
acknowledged by Neeyamo’s customers and technology partners alike. Guhan specializes in setting up
and leading complex delivery organizations. He has hands-on experience in software development and
has led large-scale process consulting, solution design, infrastructure setup, and transformation initiatives.
Guhan has managed several large-scale global delivery engagements across all major geographic regions.
His business expertise aside, Guhan is a known to be a “Jack-of-all-trades” and a Master of many. Pick a
topic of your liking, and you would find yourself enthralled by his wealth of knowledge.

SAMUEL ISAAC

HEAD, GLOBAL
MARKETING &
STRATEGY

Samuel is Head of Global Marketing & Strategy at Neeyamo. With about two decades experience in
business process design and delivery, he has engineered several large-scale HRO and Payroll deals. He
has deep expertise in advising clients on major strategic business initiatives as well as organizational
19
design, operating model transformation, leadership development, etc. He is primarily responsible for
devising growth strategies for the organization and evangelizing Neeyamo’s value proposition. Often
considered the creative powerhouse in the organization, try engaging him in any business situation, and
he will always come up with a refreshingly new and rational dimension.

20
 CHAPTER III
RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

Research design is the plan, structure to answer whom, when, where and how the subject is under
investigation. Here plan is an outline of the research scheme & which the researcher has to work. The
structure of the research is a more specific outline and the strategy out, specifying the methods to be used
in the connection & analysis of the data.

3.1.1 DESCRIPTIVE RESEARCH DESIGN

The type of research design used in this study is the combination of Descriptive research and applied
research. The main characteristics of this method is that the researcher has no control over the variables
and he can only report what has happened or what is happening. This study which compares the European
21
income tax with Indian income tax has been undertaken based on the global payroll system. Hence, this
research study is categorized as Descriptive Research Method.

3.1.2 APPLIED/COHORTS RESEARCH DESIGN

The type of research design used in this study is the combination of Descriptive research and applied
research. The main characteristics of this method is Using a quantitative framework, a cohort study
makes note of statistical occurrence within a specialized subgroup, united by same or similar
characteristics that are relevant to the research problem being investigated, rather than studying statistical
occurrence within the general population. Using a qualitative framework, cohort studies generally gather
data using methods of observation. Cohorts can be either "open" or "closed”. As to meet the objectives
the research is design in a such a way that it’s a combination of Descriptive research and Applied
research.

3.2 DATA COLLECTION

3.2.1 PRIMARY DATA: It is a finished data which is collected by you only. The different way of
collecting primary data is personal interview, questionnaire, survey etc.

3.2.2 SECONDARY DATA: Secondary data is collected from already existing sources in various
organization broachers & records. Secondary data for the study were collected from the magazines,
websites & other previous studies. To meet the objectives, the study used qualitative research. The
descriptive study was done through review literature that helped in validation and extraction of the
important variables and factors. Data was collected from secondary sources. Secondary sources were
magazines, websites, books, office executives and company data. The main source of information for this
study is based on the data collection. Data collected is secondary in nature. Secondary data have been
collected from official websites of taxes of different European countries and from neeyamo website and
also from other official websites related tax.

CHAPTER IV

22
 THEORETICAL REVIEW

The global market of payroll is divided into the following segments based on geography:
- APAC
- Americas
- EMEA

4.1 EMEA- Europe, Middle East and Africa

4.1.1 TAX SYSTEM IN ITALY

Taxation in Italy is levied by the central and regional governments and is collected by the Italian Agency
of Revenue (Agenzia delle Entrate). Total tax revenue in 2017 was 44.4% of the GDP.[1] The total tax
23
receipts in 2013 were €782 billion. The most important revenue sources are income tax, social
security, corporate tax and value added tax, which are all applied at the national level. Personal income
taxation in Italy is progressive. Italian individual income tax is
called “impostasulredditodellepersonefisiche”, or IRPEF. Tax rates are progressive and range from 23%
to 43%. Additional taxes are due at the regional (0.9% to 1.4%) and local (0.1% to 0.8%) levels.

ITALY

INCOME TAX SLAB

2018

Income range Tax rate[2]

€0 — €15,000 23%

€15,000 — €28,000 27%

€28,000 — €55,000 38%

€55,000 — €75,000 41%

over €75,000 43%

If you’re a foreign resident working in Italy, you’re only taxed on the income earned in Italy. However, if
you’re an Italian resident, spend more than 183 days a year in Italy, and your “center of economic
interest” (i.e. your business and investments) is in Italy, your worldwide income is subject to IRPEF .

4.1.2 Tax exempt in Italy

 Social welfare
Mandatory social security contributions paid by the taxpayer are tax deductible from the taxable income.

24
  Medical insurance
Contributions of up to EUR3,615.20, for medical assistance made to Italian National Medical Service
Funds (Fondi Integrative al Servizio Sanitario Nazionale) both by the employer and the employee are not
taxable.

4.1.3 What is the tax year-end?

31 December.

4.1.4 Types of taxable compensation in Italy

Below is a list of typical items of an expatriate compensation package that will be considered fully
taxable, unless otherwise indicated:
 base salary
 school tuition reimbursement (unless special conditions are met)
 foreign location allowances
 employer contribution to rent
 reimbursement of foreign and/or home country taxes
 free or below-market-value use of employer furnished accommodation
 home leave
 company car, for the share attributable to the private use of the car
 shares given to employees, which are taxable at their fair market value.
Providing that some conditions are met, some of the earlier compensation items can be exempted fully or
partially from taxation. The below-mentioned benefits are also considered taxable.
 Loans to employees - Loans granted to employees (whether Italians or expatriates) are considered
employment income. The value of the taxable benefit is equal to 50 percent of the difference
between the interest calculated by applying the official rate of discount and the interest calculated
by applying the rate allowed by the employer.
 Transfer - The first allowance for the transfer of an expatriate from Italy to abroad be excluded
from taxation, subject to an amount equal to 50 percent of the allowance up to EUR4,648.11.

25
4.2 TAX SYSTEM IN UNITED STATES

The United States of America has separate federal, state, and local government(s) with taxes imposed at
each of these levels. Taxes are levied on income, payroll, property, sales, capital gains, dividends,
imports, estates and gifts, as well as various fees. In 2010, taxes collected by federal, state, and municipal
governments amounted to 24.8% of GDP. In the OECD, only Chile and Mexico are taxed less as a share
of their GDP.

UNITED STATES

INCOME TAX SLAB

2018

Married Filing
Marginal Married Filing
Single Taxable Jointly or Qualified Head of Household
Tax Separately Taxable
Income Widow(er) Taxable Taxable Income
Rate[24] Income
Income

10% $0 – $9,325 $0 – $18,650 $0 – $9,325 $0 – $13,350

15% $9,326 – $37,950 $18,651 – $75,900 $9,326 – $37,950 $13,351 – $50,800

25% $37,951 – $91,900 $75,901 – $153,100 $37,951 – $76,550 $50,801 – $131,200

28% $91,901 – $191,650 $153,101 – $233,350 $76,551 – $116,675 $131,201 – $212,500

33% $191,651 – $416,700 $233,351 – $416,700 $116,676 – $208,350 $212,501 – $416,700

35% $416,701 – $418,400 $416,701 – $470,700 $208,351 – $235,350 $416,701 – $444,550

39.6% $418,401+ $470,701+ $235,351+ $444,501+

The United States of America is has its autonomous state and local governments. It is a federal republic
country. Taxes in USA are levied by both autonomous state and the local governments. The taxes include,
taxes on income, property, sales, capital gains, dividends, estates, gifts and imports. The Taxation System
followed in USA is Progressive Tax System. Taxes are incurred on incomes of the individual. The
reliance on direct taxes is more than the indirect taxes

Tax-exempt income in United States

26
  Contributions to profit sharing or pension plans
Generally, contributions to profit sharing or pension plans paid by the employer on behalf of the
employee are not currently taxable (that is, they are tax deferred) if the plan is a U.S. qualified plan.
Certain tax treaties may provide favorable treatment for similar foreign plans.
 Medical expense reimbursements and accident and health insurance premiums
Medical expense reimbursements and employer-paid accident and health insurance premiums for
U.S. qualified plans.
 Meals and lodging
Lodging and 50 percent of meals, that are provided for the employer’s convenience, on business
premises, and as a condition of employment.
 Certain fringe benefits
 Temporarily-away-from-home travel expenses

What is the tax year-end?

December 31.
Types of taxable compensation
The following is a list of typical items in an international assignment compensation package that are fully
taxable (to a resident or non-resident) unless otherwise indicated. Please note this is not a comprehensive
list:

 basic salary
 foreign location premium
 reimbursement of host or home country taxes
 reimbursements of tuition for children
 home leave reimbursements
 employer contribution to rent
 free or below-market-value use of employer-furnished accommodation

27
TAX SYSTEM IN INDIA
Taxes in India are levied by the Central Government and the state governments. Some minor taxes are
also levied by the local authorities such as the Municipality. The authority to levy a tax is derived from
the Constitution of India which allocates the power to levy various taxes between the Central and the
State. An important restriction on this power is Article 265 of the Constitution which states that "No tax
shall be levied or collected except by the authority of law". Therefore, each tax levied or collected has to
be backed by an accompanying law, passed either by the Parliament the State Legislature. In 2015-2016,
the gross tax collection of the Centre amounted to ₹14.60 trillion (US$200 billion).

INDIAN

INCOME TAX SLAB

2018

Health and
Income Tax Slabs Tax Rate
Education Cess

Income up to Rs
No tax
2,50,000*

Income from Rs
2,50,000 – Rs 10% 4% of Income Tax
5,00,000

Income from Rs
5,00,000 – 20% 4% of Income Tax
10,00,000

Income more than

30% 4% of Income Tax
Rs 10,00,000

28
compliance requirements for tax returns in India
An individual is required to obtain a registration with the tax authorities [i.e. a Permanent Account
Number (PAN)]. PAN is a unique ten digit identification number given by the Indian tax authorities. PAN
is required to be quoted on all the correspondence with the tax authorities.

29
Tax-exempt income in India
Generally, subject to certain conditions, the following items of compensation are not taxable or partly
taxable
 House Rent Allowance
 certain travel/tour allowances
 reimbursement of medical expenses up to specified limits
 medical expenses of an employee or any member of his/her family incurred outside India
 leave travel concession
 allowance granted to meet payment of rent towards accommodation
 tax borne by the employer on non-monetary perquisites
 reimbursement of telephone expenses including cost of the telephone.
 Gratuity
 Leave encashment
 Gift from employer upto specified limit
 Superannuation Employer contribution
 Employer Provident Fund contribution

What is the tax year end?

An individual’s tax return must be filed by 31 July immediately following the end of the tax year on 31
March.

Types of taxable compensation

In general, income from employment includes all compensation, in-cash or in-kind, which is due to or
received by an employee in a tax year. Taxable compensation includes the following:
 salary, wages, bonuses, allowances, and other cash compensation;
 income tax paid by the employer on behalf of the employee;
 specified perquisites (such as Rent Free Accommodation, club membership, reimbursement of
utilities, etc.)

30
 Chapter V
DATA ANALYSIS & INTERPRETATION

31
SAMPLE TAX CALCULATION

In this tax calculation which includes simple settings (Single Filler living in New York(US),
UK(London), And Mumbai in India, no children/dependants or special tax circumstances). we provide
details on each main payslip deduction that you will typically see each month, including the Federal and
State tax deductions. So, how much tax will you pay on Euro 40,000.00 (Base for all) in this tax example

Let's take a look at how we calculated these income tax deductions in more detail. The table below breaks
the EURO 40,000.00 salary down into specific components like Social Security, Medicare, Federal Tax,
State Tax etc

32
 ITALY INCOME TAX CALCULATION

Component yearly %

Gross Income 40,000.00 100.00%

Adjusted Gross Income2 39,600.00 99.00%

Tax Free Personal Allowance 11,850.00 29.63%

Company Pension: Employee 400.00 1.00%

Company Pension: Employer 400.00 1.00%

Taxable Pay 27,750.00 69.38%

Tax Due 5,550.00 13.88%

National Insurance 3,772.32 9.43%

Total Deductions 9,722.32 24.31%

Net Pay 24,276 60.69%

Employers NIC Contribution 4,338.17 10.85%

Salary Package [Cost of

44,738.17 111.85%
Employee]

U.S INCOME TAX CALCULATION

33
 Components Yearly %

45,184.00
Gross Pay

Tax Deferred Retirement 0.00

Cafeteria/other pre-tax 0.00

Student loan interest deduction 0.00

Circumstance Exemptions 13,300.00

Taxable Income 31,884.00

Federal Income Tax 3,632.08 8.04%

State Income Tax 2,092.17 4.63%

Social Security 2,801.41 6.20%

Medicare 655.17 1.45%

Additional Medicare Tax 0.00 0.00%

Take Home Pay 36,003.18 79.68%

34
Gross Income For Taxation ₹32,54,624.00 100%

Income Tax Due ₹8,01,387.20 24%

Education Cass Tax Due ₹24,041.62 0.73%

Total Deduction Available 200,000

Take Home Pay ₹26,29,195.18 80.78%

35
INTERPRETATION

TAKE HOME MONEY

90%
80%
70%
60%
50% TAKE HOME MONEY
40%
30%
20%
10%
0%
ITALY UNITED INDIA
STATES

INTERPRETATION:-
While many in the Indian salaried class think that a good portion of their money goes into paying taxes,
the truth is that income tax in India is much lower than many countries across the world.

36
37
 Sample tax calculation
This calculation assumes a married taxpayer resident in the United States with two children
whose three-year assignment begins January 1, 2016 and ends December 31, 2018. The
taxpayer’s base salary is USD 100,000, and the calculation covers three years.

Other assumptions
 All salary income is attributable to services rendered in
 Bonuses are paid at the end of each tax year, and accrue evenly throughout the year.
 Interest income is not remitted to India.
 The company car is used for business and private purposes and originally cost USD 50,000.
The cubic capacity of the car exceed 1.6 liters and chauffeur is also provided by the
 Moving expense reimbursement are paid at the time
 The employee is deemed resident throughout
 Tax treaties and totalization agreements are ignored for the purpose of this calculation.

COMPONENTS 2018
USD

Salary 100,000

Bonus 20,000

Cost-of-living allowance 10,000

Housing allowance 12,000

Company car 6,000

Moving expense reimbursement 20,000

Home leave 0

Education allowance 3,000

Interest income from non-local sources 6,000

Exchange rate used for calculation: USD1.00 = INR65.00

Exchange rate used for calculation is the: USD 1.00 = EUR 0.89773.

38
 Year-ended 2017-2018 2017-2018 2017-2018
INR USD EURO

Days in India during

year 365 365 365

Earned income subject to - - -

income tax

Salary 4,897,260 100,000 89,773

Bonus 979,452 20,000 17,955

Cost-of-living allowance 489,726 10,000 8,977

Taxable housing 489,726 12,000 1,360

allowance

Moving expense 1,300,000 20,000 0

reimbursement

Home leave 0 0 0

Education allowance 146,918 3,000 2,693

Motor car 29,700 6,000 1,700

Total earned income 8,332,782 171,000 122,458

Other income (Income 0 6,000 0

earned outside of India is
not taxable in India in
case od non-resident)

Total income 8,332,782 177,000 122,458

Deductions: (200,000) (24,000) 0

Total taxable income 8,132,782 153,000 122,458

39
Calculation of tax liability

INDIA
Taxable income as Taxes Education Cess Indian tax thereon Take Home
above Money

8,132,782 1,922,335 63437 1985772 6,147,010

UNITED STATES
Taxable income as U.S. federal income Social security tax Total U.S. federal Take Home
above tax (FICA) taxes*** Money

153,000 21,539 10,441 31,980 121,020

ITALY
Taxable income as Italian and regional Italy substitute 26 Total Italian tax Take Home Money
above tax thereon percent tax thereon

122,458 48,833 1,400 50,233 72,225

40
41