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: PRANSHU PATHAK

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 I
also want to thank my director sir Dr. Rakesh Dholakia and Head of the department Dr.
Meghana Bhilare madam for 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

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.

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 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 this tax calculation which includes simple settings ( Filler living in New York(US),
Italy(millan), And Mumbai in India). 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, in this tax example you see. The time period covered in the study is from 2017
to 2018.

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 OBJECTIVES 4–8

III COMPANY PROFILE 9 – 10

IV RESEARCH METHODOLOGY 11 – 45

V THEORETICAL REVIEW 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
 INTRODUCTION
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

6
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.

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
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

7
by the changing nature of economy, symbolized by the growing importance of the collaborative
economy.

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.

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 and compare the salary after tax of the employees in different countries.

8
 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
9
encourage you to engage with them, push them, challenge them, and take them up on offer to
truly understand why
Neeyamo is different.
CORE VALUE:
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.

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,
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  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

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/
11
 CIPD) professionals who are subject matter experts in multi-country/ multi-process HR
roll-outs. The professionals are also skilled in 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
12
 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.
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
13
 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.

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
14
 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
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 &
15
 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 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
16
 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 service excellence, being compliant with
regulations and policies is no longer a cumbersome experience.

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.

17
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.

VIVEK
KHANNA

Chief Client
Vivek is the Chief Client Partner at Neeyamo. Vivek runs the Global Sales
Partner
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
18
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 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.

19
 Research Methodology

Methodology is the systematic, theoretical analysis of the methods applied to a field of study.
It comprises the theoretical analysis of the body of methods and principles associated with a
branch of knowledge. Typically, it encompasses concepts such as paradigm, theoretical model,
phases and quantitative or qualitative techniques.A methodology does not set out to provide
solutions - it is, therefore, not the same as a method. Instead, a methodology offers the theoretical
underpinning for understanding which method, set of methods, or best practices can be applied to
specific case, for example, to calculate a specific result.

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 income tax with Indian income tax has been undertaken based on
20
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.

21
 THEORETICAL REVIEW

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

EMEA- Europe, Middle East and Africa

4.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 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

22
 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.

23
Tax exempt in Italy
 Social welfare
 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.

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 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

25
  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

26
 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

27
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.

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.)

28
 Highest tax slab comparison

Tax Slab
50%
45% 43.00%
39.60%
40%
35%
30.00%
30%
Tax Slab
25%
20%
15%
10%
5%
0%
ITALY UNITER STATES INDIA

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.

29
 DATA ANALYSIS & INTERPRETATION
CASE - 1

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.
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.

30
 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 Employee] 44,738.17 111.85%

U.S INCOME TAX CALCULATION

31
 Components Yearly %

Gross Pay 45,184.00

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%

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 INDIA INCOME TAX CALCULATION

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%

Take Home Pay ₹24,29,195.18 75%

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 GARPHICAL REPRESENTATION OF DATA

TAKE HOME MONEY

90%
81%
80% 75%
70%
60%
60%

50% TAKE HOME MONEY

40%

30%

20%

10%

0%
ITALY UNITED INDIA
STATES

INTERPRETATION:-
Here the calculation is done on the basis of above case, in the above case, I have taken a sample
situation, a resident from each country getting a salary 40,000 Euro in all three country, for the
calculation i converted the euro into dollars into Indian rupees. The graphical presentation is
done by take percentage of net pay from the actual pay (deducting major compulsory taxes), If
you are earning 40,000 Euro in this three countries your take home salary is good in INDIA as
compared to other countries (around 80% of salary). In USA as compared to other countries take
home salary is also good due to highest tax brackets.

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 CASE - 2
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.

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Calculation of above sample

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 allowance 489,726 12,000 1,360

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

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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

GARPHICAL REPRESENTATION OF DATA

37
 TAKE HOME MONEY
90.00%
79%
80.00% 76%
70.00%
59%
60.00%

50.00% TAKE HOME MONEY

40.00%

30.00%

20.00%

10.00%

0.00%
ITALY UNITED SATES INDIA

INTERPRETATION:-
Here the calculation is done on the basis of above case, in the above case, I have taken a sample
situation, a resident from each country having a equal salary base of 100,000$ and some general
components of salary. By take percentage of net pay from the actual pay, If you are earning
100,000$ in this three countries your take home salary is good in USA as compared to other
countries (around 80% of salary). In India as compared to USA take home salary is less due to
less tax brackets

Findings
38
  India has low tax rates as compared to other countries.
 India also has a significantly less tax brackets as Compared to the selected sample.
 USA’s take home salary is good due to strong holding in social security and several tax
brackets also help in progressive method to lower the taxes
 Italy has highest tax rate among the all three countries.
 Treatment of salary component is different among all three countries.
 The concept of standard deduction has been discontinued for salaried employees in India
and United States, but in Italy allowance in the form of standard deduction is available.

Recommendations

 Development of the Indian Tax structure is closely linked with needs and circumstances.
It is not based on any scientific lines as some taxes in Indian have been imposed under
compulsion but subsequently withdrawn under political pressure and on purely political
considerations. Therefore steps must be taken to build Indian tax system based on
scientific lines and not on political whims and fancies.
 Governments should work to reduce the complexities in calculating and filing the tax.
 Easy Tax returns and compliance could make people more Aware about tax structure.

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Conclusion

Are taxes very high in India? Or is the widening ambit of service tax creating such an
impression... A global comparison, based on my data, shows 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, though that’s perhaps
justified because those countries also have a strong social security net for citizens.

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41
BIBLIOGRAPHY

Books

1. Pithisaria’s and Chaturvedi’s book on Income Tax law in India.

2. K. LASSER’S 1001 DEDUCTIONS AND TAX BREAKS: YOUR COMPLETE GUIDE
TO EVERYTHING DEDUCTIBLE by Barbara Weltman

Websites

1. https://papayaglobal.com/importance-of-global-payroll-compliance/
2. h. poirson, "Tax System in Inda: Could reform Spur growth," International Monetary
Fund, 2006.
3. 7 J. o. a. R. Parry, "Why Tax Matters for development," 2009.
4. PWC, "Worldwide Tax Summaries
5. https://www.redwingsoftware.com/home/articles/payroll/payroll-calculations

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