There are hundreds, or even thousands, of payroll service providing companies in India. A company that exclusively provides payroll management services saves the time and resources of the organizations that utilize these offerings. Payroll deals with the payment of salaries to employees and taxes to the Government, which requires them to be accustomed to the tax and labour laws in India.
What do payroll services in India include?
The legal framework that defines all HR and payroll practices is known as statutory compliance. It is the structure that organizations must follow with respect to the treatment of their employees. Statutory compliance spans over everything related to the monetary compensation of the employees working with the organization.
To know whether your organization is compliant to statutory norms with regard to payroll and HR, here are a few items you should tick off your checklist:
This comes under the Minimum Wages Act of 1948 that states that all employees, consultants, workers, etc. must be paid a minimum wage for the nature of their work. Wages must be paid either daily, weekly, fortnightly or monthly, but the payment must not be missed.
The minimum wage rates are decided by the Central and State Governments and must be adhered to. It may differ from State to State. You should check the same for yours.
Provident fund is established as a means of savings for an employee. Both the employer and the employee together contribute a fixed percentage each month. This has to be paid to the employee at the end of his tenure whether by resignation or retirement. Any company that hires more than 20 employees has to create an EPF account.
The Payment of Gratuity Act, 1972 makes it mandatory for employers of all establishments to pay a fixed sum of gratuity to their employees at the end of tenure. Gratuity is a part of salary that is set aside. It is calculated while fixing the annual cost to company (CTC).
Employees’ State Insurance
The ESIC scheme is meant for ensuring the social security of employees who earn below a fixed amount in gross monthly wages. Any company with more than 20 employees must participate in the ESIC scheme. It aims to bring affordable healthcare to employees and their dependent family members. Organizations that fall under ESIC must make provisions for it in their employees’ CTC.
You need to make the mandatory tax deductions such as TDS and professional tax under the Income Tax Act of 1961. The amount of tax deducted depends on the bracket under which the employee falls. The amount needs to be minused from the salary before payment. If there are any mistakes in tax payment, it attracts heavy penalties.
Finding a payroll service provider isn’t difficult. However, you need to remember the compliances and ensure that the company is an expert in the field. Whether you are a small business, multinational, or Indian company, there are tons of online payroll service companies that will cater to your requirements.
Statutory compliance is a must for staying within the accepted legal framework. Hence, you should find yourself a payroll services company that knows its work well.