Typically this module is used to track time spent on projects or specific activities. Non-adherence with the statutory law can lead to hefty fines and penalties. That is why you need to be up to date on all tax and payroll statutory changes. To make sure that your employees are happy and you are law compliant, you need to have a proper understanding of what payroll is and how to run payroll effectively.
It is mandatory for low-income workers and is paid as a percentage of their annual salary. The overtime rate is regulated by the employment contract and is generally paid at twice the employee’s regular rate of pay. In every organization, employees are entitled to take a certain number of leaves such as privilege or annual leave, casual leave, sick leave, holiday, etc. Statutory compliance in HR refers to the lawful structure and regulations within which organizations must operate while dealing with their employees. This is the time when accumulated payroll data (Leave & Attendance data, shift wise calculations, Tax and Deductions, Expenses, Incentives) during pre-payroll should run.
What are the different stages in the Payroll Process?
For most employees, the EPF contribution rate is 12 % of basic salary, excluding HRA. The employer also needs to contribute equally to the EPF account.Under certain circumstances, a 10% rate is applicable if the company meets the following criteria. The EPF scheme is mandatory for all organizations that have employed a minimum of 20 employees. Within one month of attaining the employee strength, an employer must obtain EPF registration. Sick leaveSick leaves allow employees to recover from an illness and take care of their health.
Step 7: Document & Store Your Payroll Records
These payments should be made to the appropriate government departments within the respective due dates. The deductions must be reported to the government departments by filing the respective forms prescribed by each department. Compliance with payroll laws according to Payroll Compliance in India is crucial for businesses to ensure fair treatment of employees, avoid legal issues, and delinquent account credit card definition maintain a positive work environment.
These are fringe benefits or non-cash benefits that some employees enjoy due to their official position. Some examples are permitted to inventory turnover ratio: what is it how to maintain a good ratio use the official vehicle for personal use, rent-free accommodation, and a premium on personal accident policy. The monetary value of perquisites gets added to the salary, and the employee pays tax on them.
Below Listed Are The Most Common Type of Leaves in the Indian Payroll System
Statutory compliance involves adhering to the specific rules and regulations set by the state in which a business operates. It encompasses all labor and taxation laws applicable to that particular region. In India, companies must comply with both national and state-level laws, making it crucial to understand and adhere to the diverse labor regulations in the country.
In some cases, Indian employment law goes further than US labor laws, providing additional protections to workers. Payroll calculation in India involves several components, and the formula to calculate an employee’s net salary may vary depending on the specific organization’s policies and procedures. Companies need a reliable and scalable payroll system that can handle all salary-related operations to manage the process effectively. This guide provides a comprehensive breakdown of the payroll process in India, covering its significance, basics, how much to pay yourself statutory compliance, and more. The on-premise software solutions have become obsolete and businesses are going for cloud-based solutions due to their advantages. As organization size increases your software also need to serve you appropriately.
To keep track of employee’s leaves and attendance, gathering leave and attendance data are very important. The most significant challenge managers have to face is managing the time of employees successfully so that the resources in the company are productive. Employee attendance and leave management involve keeping records of sick leaves and holidays and ensuring that the payroll gets done in an error-free manner and on time. Payroll compliance in India involves adhering to minimum wage laws set by federal, state, and local authorities.
- So as to run an accurate payroll, data inputs are assembled from multiple sources in the company.
- Employees rely on the company’s process to get paid without delays, irrespective of the organisation’s size.
- The employees use this form 16 as proof of tax deducted at the time of filing their individual income tax return.
- Since payroll is a crucial function and businesses want to have full transparency and control over it, they often hesitate in outsourcing payroll.
As a payroll officer, it becomes your responsibility to dig into the data and extract the required information and share the reports. These reports are automatically created by the professional payroll software whereas; some organizations invest a lot of time in creating those reports manually. Payroll means the company’s financial record of payments made by the employer to the employees, including wages, bonuses, salaries, incentives, etc. The company must prepare an employee’s payroll for all its employees from the time they are hired till retirement/resignation. Processing payroll without delays in accordance with various statutory compliances is a significant activity of a company. Payroll calculationAfter completing the pre-payroll activities, the actual work towards reaching the employees’ net pay takes place in this stage.