PAYROLL PROCESSING
Payroll functions encompasses all those process involved with respect to determination, calculation, payment and settlement of employee compensation and benefits.
Step by step process involved in payroll management are
1. Formulating Payroll Policy
Payroll policy refers to procedures and guidelines on that are established by an entity, in line with the law in force, that are to be followed while determining employee compensation package and payroll processing.
2. Developing Employee database:
To Collect relevant employee information that include
a) personal information : identity proof likes aadhar, PAN and emergency contact details of family members, bank account details, health information etc
b) Previous employment Info: Previous employment salary structure, accumulated balance transfer details under Social security schemes, service certificate etc
c) Tax residency certificate, if applicable.
3. Employee timekeeping: Having a proper system in place for accurate timekeeping like biometric attendance system software that tracks employee working hours, leave and overtime in case of work from office jobs and
and Remote employee monitoring software that helps track employee attendance, hours worked, employee productivity etc in case of remote work jobs
4. Salary Calculation: Automisation of payroll calculations using payroll software to accurately calculate gross pay, statutory deductions (income tax, contributions to social security schemes, professional tax) and non-statutory deductions (medical insurance premium, retirement plan contributions)
5. Disbursement: payroll disbursement is transfer of funds by the employer from the company’s bank account to employees on account of salary payment and reimbursements.
Once the payroll computation for the current period is done and salary payment/reimbursement list is approved by the authorised signatories, it is then disbursed through bank transfer advice or cheque modes.
6. Pay slip generation: Salary slip is a document providing break up of various components of salary and along with few other key employment details. Issued every month in the form of a printed hard copy or an electronic copy.
7. Deductions from salary
(a) Tax deductions: Employer has to make deductions on account of TDS from salary (S.192) and also professional tax deductions and remit the same with the concerned tax authorities within the prescribed due date.
(b) Other statutory deductions: deductions from employee’s gross salary on account of employee contributions towards social security schemes like PF, ESI, pension plans along with employer's share of contribution has to be remitted to the statutory authorities concerned within prescribed timelines.
8. Maintaining Accurate Payroll Records
Maintaining proper HR records that includes timesheets, pay slips, tax remittance challans, P.Tax returns, payroll reports etc as part of adherence to compliance requirements and for future reference.