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Indian Payroll Compliance

An important aspect of payroll management is to ensure that the company is compliant with all state and central government laws and rules.

Every employer who hires employees and pays salaries must comply with the labor laws enacted by the Indian central and state governments. These laws ensure that the employees are paid and treated fairly. Compliance helps employers avoid legal penalties and unreasonable employee demands.

Compliances

There are five important statutory compliance commitments as far as Indian payroll is concerned.

  • ESI
  • Professional Tax (PT)
  • TDS

All these compliances require employers to calculate an amount, deduct it from the employee's salary and then remit that amount to the government organization. These are also referred to as statutory dues. Timely payment of these dues will help avert hardship for employees and penal actions against employers.

Once the remittance is made, a report also needs to be filed with the concerned department as per law.

Key Activities

The following activities are part of statutory compliance work:

  • Registration: Ensure all relevant employee and labor-related licenses and permissions are obtained.
  • Onboarding: All current and new employees are enrolled on various schemes as applicable to the organization.
  • Deductions: Calculate, withhold and remit various payroll deductions from the employee salary based on the applicable laws.
  • Reporting: Ensure timely reports are submitted to the relevant authorities as per the compliance calendar. Report submission may be online or through the filing of hard copy.
  • Ensure that all relevant statutory forms and certificates are issued when an employee leaves the organization.
Referred in
Indian Payroll Compliance