What Is Statutory Compliance?
Statutory compliance, in HR, refers to the legal outline within which organizations should run, in the treatment of their employees.
Each country has various hundreds of central as well as state labor laws that companies require to align with. This list is forever being added to.
A lot of your company’s effort and bucks goes into making sure compliance to these laws that can deal with a series of issues; from the payment of fewer wages to maternity advantages or professional taxes.
Thus, dealing with statutory compliance needs for companies to be well-versed with the several labor rules and regulations in their country of operation.
What Is The Need For Statutory Compliance?
Adhering to the statutory compliances is essential for all petite and large companies in the world to keep their businesses secure from the legal difficulty. A profound knowledge of statutory compliances is needed to lessen the risk linked with the noncompliance of statutory needs.
In today’s competitive as well as legal business realm, it is very demanding for employers to handle statutory compliances without a support of good payroll management system. Every country has many types of compliance needs. This blog/article discusses the statutory needs for Indian payroll system.
There are a number of statutory needs for Indian companies and companies have to invest an important amount of time in their payroll management to make sure that they are perfectly compliant with the legal rules & regulations. If companies do not succeed to adhere to the statutory compliances, they might have to pay more penalties, which are several times more than complying with legal guidelines.
The Statutory Compliances Required For Indian Payroll
Several common statutory requirements, which companies have to chase for their payroll management in India are:
Statutory Requirements For Minimum Wages
This act offers for fixing minimal prices of wages for skilled as well as unskilled laborers. It not only guarantees bucks for bare minimal survival needs of workers but also takes care of education, medical needs, and few level of comfort of workers.
The Minimum Wages Act being a state subject, the statutory compliance of a federalized payroll management is to serve for the payment of minimum wages to an organization’s workers spread out all across numerous states. Megasoft payroll has the provision to map this difficult need.
Along with this, payment of ‘Overtime’ wages to workers is a statutory need as per the Factory Act & Payment of Wages Act. It affects industries like manufacturing & construction.
TDS Deduction
Every single employer who is giving salary to employees has to subtract TDS under section 192 of the Income-tax Act, 1961, if the salary is over higher amount exempt from tax. The employers also need to make Form 24Q and Form 16 in time. Few of the salary components that affect TDS deduction are Medical Allowance, Special Allowance, HRA, Children Education Allowance, Leave Travel Allowance, and Investments.
Statutory Compliances For ESI Fund And PF Deduction
ESI fund, maintained by ESIC is applicable to employees earning Rs 15,000 or less per month to provide the cash and medical benefits to them and their families.
PF is a compulsory contributory fund for the future of employees after their retirement or for their dependents in case of their early death.
Professional Taxes
Professional tax or employment tax is a state-based tax. It is one of the statutory deductions from the gross income before computing the tax.
Gratuity
Gratuity is the amount given to employees by an employer when they leave the job after completing five years in service. Gratuity is calculated as Basic + DA divided by 26 * No of years of service *15.
EDLI
The EDLI (Employees’ Deposit Linked Insurance Scheme) provides assurance benefit (death insurance cover) to employees along with PF benefit. The employees do not contribute anything towards EDLI. The employers contribute 0.5% of the total wages of employees subject to a maximum of Rs 6500/-. EDLI applies to all the organizations where EPF Scheme applies.
The Megasoft payroll system takes care of all the above-given compliance requirements and statutory deductions required in India. It allows you to manage your PF and ESI preferences, manage professional tax, select the salary heads applicable to you, manage TDS through investment declarations and automatically calculate salaries after TDS deduction while processing payroll. In addition, it allows you to capture Challans and generate form 16 and form 24Q to manage all your statutory compliances with ease and efficiency.
Disclaimer: This Blog/Information/News Item/Press Release has been Posted/Reposted by Megasoft Solutions India.
