Category Archives: Provident Fund

Online Payroll Software & Statutory Compliances in India (ESI, PF, PT, TDS)

By | ESI, Payroll, Provident Fund | 2 Comments

Payroll is one of the key functions of an organization. Payroll processing involves many complex tasks such as entering the details of the new inductees, updating leave records, submission and approval of timesheets for accurate computation, and dispensing off the salaries after making statutory (PF, ESI, PT, TDS)and non-statutory deductions.

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Income Tax

The statutory compliances relating to payroll in India include health benefits covered under ESI, bonus, maternity benefits for women employees and superannuation benefits – Provident Fund, Gratuity and Tax Deduction at Source (TDS). TDS is deducted on the ‘cost to company’ (CTC) if the salary comes under the income tax slab. It is the total cost incurred by the employer inclusive of all the allowances, benefits and perquisites. Professional tax (PT) is another statutory deduction made from the gross salary of the employees. Women employees are also entitled for maternity benefits. The employees who put in extra hours at work are entitled to get overtime payment which is again a statutory requirement and is applicable primarily in manufacturing companies.

Initially, computation of these statutory compliances was done manually, involving lot of paperwork. Doing these complex calculations took up a lot of time and efforts of the concerned department employees. It also increased the probability of committing errors in salary and leave calculations.

These difficulties were somewhat minimised with the advent of computers. The Microsoft Excel spreadsheets eased the problems of the employees of the respective human resource and finance departments to some extent. They could enable faster calculations with the help of formulas in the spreadsheets. However, it did not free them of the hassles they faced in the computation of statutory compliances for all the employees of an organization. For example, let us consider that 15 employees in the production department of a manufacturing company are drawing CTC in the slab of 3 LPA to 6 LPA. The calculation of statutory deductions will not be the same for all the employees as they are drawing different CTC. Further, when an employee gets a raise or an increment in salary, the human resource division employees have to do the statutory deductions all over again as per the new compensation package. This is a tedious and time-taking exercise with the possibility of committing errors being high.

The employee grievances over the deductions made in their salary also increase due to lack of transparency. The respective employees flock to the human resource department with their escalations, which consumes a lot of time of the employees.

This is when the companies realise the importance of migrating to online payroll system to put an end to these complex issues faced during payroll processing. Moreover, it would minimise the chances of committing errors, leading to 100 percent accurate computation of salary. With all the salary details of the respective employees at one place inclusive of the statutory deductions, it will lend transparency to the whole system. This would, in turn, increase the efficiency and productivity of the employees. The human resource and finance department employees of an organization who were otherwise involved in working out long calculations can utilise their time in productive assignments. This enhances the overall profitability of the enterprise as the efficiency of the employees goes up.

With the cloud-based online payroll system, the computation of statutory compliances has become very easy and simple for the respective employees involved in the same. Further, the employees can also generate PF, ESI and bonus reports with full accuracy.

Online Payroll Software – Tax Deducted at Source (TDS) for salaries

  • Keep track of monthly TDS Challans paid
  • Generate FVU file for quarterly filing of TDS returns 24Q
  • Generate Digitally signed Form 16 with Part A and Part B

Online Payroll Software – Provident Fund (PF)

  • Generate KYC File
  • Generate monthly ECR File Electronic Return cum Challan File

Online Payroll Software – Employee State Insurance (ESI) for salaries

  • Generate Monthly Contribution File
  • Generate New Insured Person’s IP File

Online Payroll Software – Professional Tax (PT) for salaries

  • Generate Professional Tax Reports for respective states
  • Generate Professional Tax deduction reports for online filing

Organizations operating in different sectors, be it manufacturing, information technology, real estate, banking and finance, to name a few are governed by various legal provisions for safeguarding the interests of both, the company and its workforce. It prevents the ill-treatment of workers at the hands of their employers working at different tiers in the organization. All the organizations, whether small and medium enterprises or large corporate houses are mandated to strictly adhere by the provisions laid down in these labour legislations for the smooth running of their businesses. The company can get into serious trouble if found violating the provisions mentioned under the labour laws.

Statutory compliances play an important role in the payroll processing therefore they need to be implemented with great care and precision. Online payroll systems such as Brio’s Online Payroll application, have simplified the complex calculations involved in processing of payroll. Moving to an online payroll has helped the organizations to work within the provisions of the legal framework in a time and cost-effective manner with highest degree of accuracy. It’s time you switched over too if you are still maintaining your payroll on spreadsheets.

What is CTC? What is Take home Salary?

By | Employee Attendance, Leave Management, Payroll, Provident Fund | No Comments
What-is-CTC

Business organizations are bound by an obligation to pay their employees a particular sum of money in return for employees’ services to the company. For the employers, this sum of money, called salary, can be described as the cost of acquiring and retaining human resources for running business operations. From the point of view of the employees, salary can be viewed as the money and/or benefits earned under the employer-employee relationship to meet their personal expenses.

Usually, the salary for all employees performing similar work in similar industries in the same region is in a particular range. They are governed by the market pay rates and the minimum permissible wages according to the laws and regulations governing the area of operations. But, it should be understood that specific skills, competency and certifications are factors that may result in difference in salary structures.

It is common knowledge that salary consists of basic pay, housing allowance, dearness allowances, and others. While some allowances are taxable, others are either fully or partially exempt. New entrants of the corporate world may be fascinated at first by the astronomical salaries that they are hired at. But they are often disappointed when their first salaries turn out to be lower than their expected calculations.

So, what makes up for this difference? It is necessary to understand that the take home salary is not what is mentioned on your appointment letters. Let us discuss some aspects of the break-up of your salary structures to be able to make out the difference between similar sounding technical terms related to salary.

What is CTC?

Cost to Company (CTC) is in fact the salary package that is offered to an employee. What most employees do not understand in their first jobs is the fact that the CTC is an indicator of the total amount of expense that an organization is incurring for an employee in a year, including all the facilities an employee is getting during the service period.

This means that the CTC is not the actual salary of an employee, but a sum total of all the costs associated with an employment contract. It signifies the cost that a company would incur on you as an employee. Quite surprisingly, a major part of CTC comprises of compulsory deductibles, including those for provident fund, medical insurance etc.
It is to be noted that the salary and other perquisites that your company pays you, actually translate to some cost for them and hence the term. So, they form a part of your compensation structure but you do not get them as a part of in-hand salary. In other words, benefits increase your CTC, but they do not increment your net salary.

What constitutes your CTC?

Your basic salary, Dearness Allowance (DA), HRA, Medical Allowance, Conveyance Allowance, Medical Allowance, Incentives and bonus all come under the direct benefits that you get from your employer. These direct benefits coupled with indirect benefits such as Interest free loans, Food Coupons, Medical and Life Insurance premiums paid by company, Income tax savings, and Company Leased Accommodation and saving contributions such as Superannuation benefits, Employer Provident fund Contribution, and gratuity form your total CTC.

As a rule of thumb, CTC = Direct benefits + Indirect benefits + Saving Contributions

What is Take Home Salary?

Take home salary is the amount of money that an individual actually receives after the employment taxes and the cost of benefits and retirement contributions are deducted. While your gross salary is the CTC minus other benefits, your net salary can be calculated by making deductions such as income tax, Social Security and Medicare taxes, contribution to provident fund and so on from your gross salary.

Your take home salary is usually the net salary unless there are some personal deductions like loan or bond repayments, in which case, it becomes even lesser than your net salary.

Take Home pay = Direct Benefits – Income tax – Employee PF – Other deductions, if any

Why is there a difference in CTC and take home salary?

A common reason for difference in the CTC and take home salary is that some portions of your CTC, such as Gratuity, Employer provident fund and Superannuation benefits are added to your long term savings account but do not add up to your monthly take home pay. The other reason of reduced take-home salary is that the income tax is deducted at source by your employer, generally referred to as Tax Deduction at Source (TDS).

So, before being taken away by some seemingly lucrative new job offer, or when considering a salary appraisal or promotion raise, employees should look at what their take home salary will be and not their plump CTCs. Employees should also ensure that they have calculated their tax liabilities with the new income in accordance with the tax policies to figure out the amount they will receive in their paychecks.

We hope this post clears the doubts around understanding the salary break-ups and jargons. All the best for exciting new job offers and pay raises!

Benefits of an Online Payroll Software.

By | Business, Cloud Computing, ESI, Human Resource, Leave Management, Payroll, Provident Fund | No Comments

An increasing number of companies and businesses are transiting from the traditional payroll system to online payroll software. The online payroll software offers many benefits over the traditional method and results in simplified, time saving payroll processes. In business, time is the essence related to productivity and development resulting in modernization of processes for maximum benefits. Online payroll software is one such modern tool that brings the required benefits. Here are some of the benefits of an online payroll system.

Payroll Benefits

1. Cost benefits: There are many cost benefits of using an online system for payroll such as you don’t have to pay huge fees or license cost upfront. You pay for only as much as you make use of. On the other hand, buying costly payroll software considering the future scaling-up-needs may just not be required in this case.

2. Easier to use: Data entry is much simpler in an online system. The traditional method involves tedious inputs under various heads for numerous employees and long calculations and deductions in various spreadsheets. Under an online payroll, data entry is simplified and easier, resulting in time saving.

3. Reduces the chance of errors: The online system is automated to quite an extent, hence chances of errors are reduced drastically. Traditional payroll system or the in house payroll may have errors and rectifying them can be very time consuming with reprinting checks or delayed payroll that may result in disgruntled employees.

4. Tax calculation and payment reminders: Online payrolls auto-calculate and deduct taxes according to the requirements under labor law and compute the income tax efficiently for all employees ensuring labor law compliances. Latest online payroll update you with the amendments in concerned taxations and make calculations accordingly, thus eliminating the stress of tax compliances.

5. Easy accessibility: With an online payroll, you can easily access the data from across the world with help of the internet. Thus, computing and processing salaries can be done from anywhere in the world and if your business requires travelling, you can process the payments from across the globe. You can access and amend information globally without the need of your office desk.

6. Simplified sharing: With a modernized online process, employees can access their salary slips, leave and attendance information from anywhere. The process of claiming reimbursements or declaring investments becomes a streamlined task without wastage of HR time. Moreover, all information is stored in one location giving you better control over it. In an online payroll system, there is lesser likelihood of any errors in attendance records, leave adjustments and salary calculations as the data is shared with the employees through the month.

7. Government reporting becomes easier: Government compliances related to employees is a massive task and it becomes much easier with automated online payroll system such as filing of PF, ESI returns with accuracy and on time.

8. Lesser maintenance than in-house payroll system: Online payroll system saves the cost of setting up and maintaining your own in house payroll computer system. Configuration, testing, maintenance will require IT staff and manpower – the online system eliminates the entire process and spares a lot of trouble. The online payroll system comes with technical support and help and in the event you may face any issue, it gets promptly answered by the support staff of the vendor.

9. Easy portability: Some cloud solutions providers might trap their customers through what is known as vendor lock-in where the customer can’t move the data to another service provider because of the proprietary software used by the first vendor. It is important to ensure that there is no vendor lock-in in your cloud services subscription.

The online approach to payroll processing has numerous advantages like time savings, meeting deadlines more easily, quick access to data, efficiency, error-free calculation and cost effectiveness. With improved processes, both the employer and the employee feel satisfied and productivity is augmented. A big headache of payroll and compliances can now be easily handled leaving HR with more quality time for efficiency without having to spend hours on data entry and calculations and numerous spreadsheets. If your company hasn’t already adapted to the new payroll way, it is about time to change the old ways!

The Benefits of Online Payroll for Business

By | Cloud Computing, Human Resource, Leave Management, Payroll, Provident Fund | No Comments

The increased use of technology in business, has urged many companies to outsource their payroll component to payroll service providers for efficient processing and staying focused on core business. It may become quite complex when payroll processing is outsourced by companies with a large number of employees and many work options such as part-timers, hourly paid workers, temporary staff, full time workers, work from home employees, skilled employees, administrators and managerial level employees.

OnlinePayrollA major concern for small businesses is to ensure that employees are paid in a timely and accurate way. In this age of technology, when there are digital systems to track almost everything you can think of, from bank transactions to parcels, and patient records to inventory levels, it is indeed a good decision to move to automated online payroll processing.

Online payroll systems are convenient for small enterprises who wish to expand their horizons in the near future without having to worry about system upgrades or maintenance. While manual processing of payrolls would mean more chances of human errors, slow work progress, and more costs to the company, these services are offered with optimum cost-efficiencies if outsourced to reliable service providers.

Let us have a look at the advantages of moving to an online payroll service provider.

Better resource utilization: Switching to online payroll processing helps save a lot of time and effort. It also helps in minimizing the risk of human error in calculation. Manual processing takes a lot of time for whoever is doing it to calculate the number of hours and days that employees put in, special pay for overtime, vacation, sick pay, leaves, and bonuses. Companies using automated payroll systems can channelize their human resource budget effectively on critical activities such as business development and delivering quality work.

Integration: Payroll systems also help to integrate an employee’s personal data with the rest of the company’s financials. Data about all the employees’ annual leave, sick leave, performance records and correspondence if integrated with the company’s financial liabilities and tax filings can save the company the cost of a separate software package for recording additional types of information.

Sharing Information: Online Payroll enables you to share critical information without any efforts. Employees can access the payslips, leave and attendance information from any where any time. Having a transparent payroll system which both employees and employers trust is critical for any organization of any size.

Easy tax payments: This can be said to be one of the major advantage of using an online tax payroll system. These service providers are not just about the reminders and calculation part of a company’s taxation liabilities but also provide signature-ready forms with the required data extracted and filled in.

Simplify other company operations: Automated payroll processing can also help to manage other organizational operations efficiently. Such operations may include:

  • global changes to employee data from anywhere
  • hassle free electronic fund transfers
  • manage employee loans in a periodic manner
  • calculate staff costs and budgets online

Cut down the Cost to the Company: If done manually, employee payrolls can incur hidden costs that can be easily avoided by using an efficient and effective system. The time that some employees will spend to manually prepare employee payrolls can be used to help build your business. This will eventually result into increased employee productivity and profits for the company even after accounting for the money spent to automate the process of payroll management.

Reminders for all sorts of Deadlines: Automated payroll processing service providers help to keep track of all the deadlines as an add-on advantage. Investing in one such service means that no tax deadlines are missed and no laws are violated as a result of changing government regulations.

Leverage outside Payroll Expertise: By investing in online payroll service providers, even small businesses can take advantage of expertise to help them keep up with constantly changing regulations, withholding rates, and government forms—an advantage that was previously available only to big players of the market.

Looking at these benefits of moving to online payroll automation providers can be said to be a wise management decision in terms of absolute return on investment to the company in terms of money, time, effort, taxation penalties and employee leave management.

 

Provident Fund – Employee

By | Provident Fund | One Comment

For Employees
For New Entrants:

  • Enrolment: An employee is eligible for membership from the day he joins the covered establishment.
  • If the employee’s emoluments exceed Rs. 6,500/- per month, he has the option to join the Scheme(s)  with the consent of employer.
  • Declare previous employment details, if any, in  Form No. 11  to the employer.
  • On becoming a member of the Schemes file details in Form No. 2 ( family particulars/ nominations) through the employer.
  • Rate of contribution payable by a member shall be @ 12% of his emoluments.
  • A member can contribute statutarily over and above the prescribed rate.

For Existing Members:

  • Enrolment:
  • Any change in the family status, such as, –
    • marriage of the member.
    • additions / deletion in the family.
    • Legal adoption of the children.
    • Change of nominee, is to be filed in Form No. 2 through the employer.
  • In the event the member is holding a Scheme Certificate (under EPS, 95), he should surrender the same to the concerned EPFO office, through his employer.
  • A member is entitled to various benefits & facilities such as withdrawals, advances, pensions, death insurance etc.

For more details visit Provident Fund India Website