Companies are accountable for effecting deductions on account of EPF, ESI, Profession Tax, Income Tax and Labor Welfare Fund from employees earnings based on prevailing rules and depositing the same with respective agencies within a specific time frame. Apart from this, Payroll Processor has to prepare returns and reports and submit on a monthly, quarterly, half-yearly, or annual basis as specified by the concerned agencies. There are five very important statutory compliance commitments as far as Payroll is concerned.
HR is to ensure that the organization is compliant (adheres) to all the relevant laws of the region (State/Country). The various activities that are part of the statutory compliance are:
- Ensure all relevant employee and labor-related licenses and permissions are obtained.
- Onboard all current and new employees in to various schemes as applicable to the organization.
- Calculate various Payroll-related deductions from the employee salary based on the applicable laws.
- Ensure timely reports are submitted to the relevant authorities as per the mandated schedule. Report submission may be online or through filing of hard-copy.
- Ensure that when an employee leaves the organization all relevant statutory forms and certificates are issued.
- Some of the most common statutory requirements that HR needs to handle includes PF, ESI and Income Tax. Apart from these, there are state-specific laws in the areas of Factories Act, Shops and Establishments Act and Profession Tax
- Employee Provident Fund (EPF)
- Employees State Insurance (ESI)
- Income Tax (IT)
- Labor Welfare Fund
- Profession Tax