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Payroll Related Compliance
Managing Payroll Compliance: Challenges and Solutions
Payroll Related Compliance – A lot of your business’s time, effort, and money goes into ensuring that payroll is compliant through a statutory audit. From employees’ fair treatment of labor to protecting the company from unreasonable wage or benefit demands from trade unions or aggressive employees, every company faces many potential legal issues relating to compliance. It may never be the company’s intent to break these laws, but without the necessary protection, it may easily slip through the cracks.
So how can you avoid the risk of non-compliance? We help in understanding the applicability of Statutory compliances for your establishment and help you to manage these Compliances.
Payroll or Statutory Compliance Payroll or statutory compliance refers to the legal framework adhered to by companies or establishments concerning the welfare of their employees.
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Here are some Payroll Regulations:-
Shop and Establishment Act (SE)
Child Labour Prohibitions and Regulations Act, 1986
Professional Tax Act (PT)
Employee Provident Fund (EPF) and Miscellaneous Provisions Act, 1952
Employee State Insurance Act (ESI), 1948
Labour Welfare Act
Equal Remuneration Act, 1976
Minimum Wage Act, 1948
Payment Of Gratuity Act, 1972
Payment of Bonus Act, 1965
Maternity Benefit Act, 1961
Payment of Wages Act, 1936
Tax Deducted at Source (TDS)
Timely amendments are made to the laws by the State or the Central Government. Employers should abide by these compliances to avoid legal and monetary penalties and save their brand reputation from being tarnished. To ensure a systematic follow-up of the statutory compliance following steps should be taken:-
Generating Statutory reports like PF, ESI, PT and LWF
Provident Fund (PF) is a social security scheme that enables employees to set aside a small amount from their wages for future benefits (after retirement or employee termination). EPF applies to an establishment employing 20 or more employees.
Employee State Insurance Scheme (ESI) is a multidimensional security scheme governed by ESIC and applies to employees earning Rs.21,000 or less per month. It ensures socio-economic protection to the employees in the organised sector against sickness, maternity, disablement, employment injury or death, and medical care to the insured employee and their families.
PT or Employment Tax is a state-based tax, a statutory deduction from the gross income before computing the tax. Union territories are exempt from this tax.
Labour Welfare Fund is a statutory contribution managed by the state government. It helps the labourers to improve their working conditions, provides social security and raises their living standards. The State Labour Welfare Board decides the amount and frequency of contribution.
Remittance of taxes
Taxes deducted from employee salary (under different government schemes) and the taxes levied on the employer are deposited on various government forms, like PF, PT, TDS, etc. Monetary penalties and even criminal punishments are imposed by the Central or State government in case of the failure of deposition of such taxes.
Preparing and submitting ESI wages and assisting with audits or inspections
ESI applies to employees drawing a salary of Rs. 21,000 or less and to employers employing more than ten employees. An employee record is to be maintained in a format provided by the government, while an inspection of the following documents is to be done regularly:-
Although, it is not required to keep the records in the custody of the Payroll Consultant.
Azalea Advisors team is incorporated with eminent Income Tax consultants and proficient Chartered Accountants in Pune to cater for the needs of an organisation’s payroll management.
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