The legal framework under which organizations must function with regard to the treatment of their employees can be termed at Statutory Compliance in HR. Maintaining these customary laws and frameworks take a toll on companies. Statutory Compliance in India comprises of payment of minimum wages to provident fund (PF) or maternity benefits, professional tax (PT), tax deduction at source (TDS) etc. Companies need to implement Statutory Compliance Management systems to deal with this complex legal frame works, laws and regulations. In today’s fiercely competitive business scenarios it is challenging for companies to manage statutory compliances without good payroll management software.
Provident Fund or PF is a compulsory contributory fund for the future of employees. It works as a corpus fund generated through regular and monthly contributions made by an employee and employer. A minimum of 12% is calculated from the basic component of employee’s salary and contributed as PF is deducted from the CTC. The cumulative contribution of employer and employee will be added to the PF account of employee, which can be en-cashed for future purposes. Companies will have to stay EPFO complaint once they have 20 or more employees.
ESI fund, maintained by ESIC is a social security scheme which is applicable to employees earning Rs 21,000 or less per month to provide cash and medical benefits to them and their families. ESI is calculated at 4.75% from employer side and 1.75% from employee’s side. These amounts will be calculated on monthly gross salary and a limit is setup. If gross amount is less than the setup limit amount then those employees will be eligible for ESI. The cumulative contribution from employer and employee will be deducted from the CTC every month. To ensure the hassle free operation of Statutory Compliances for PF Deduction and ESI Fund a robust payroll management software is much required.
Tax Deducted at Source or TDS is deducted as a means of indirect tax collection as per the Income Tax Act, 1961. TDS rule directs employers to deduct a certain amount of tax before full payment is made to the receiver. TDS is calculated on CTC slabs. It is mandatory to have TDS deductions before payroll is run. . User can check declaration forms multiple times in our payroll management software before the final one is submitted to the management towards filing of Income Tax.
Professional Tax is collected by the employers from the monthly salaries of the employees and penalties are charged if there is failure in collecting or failing to pay professional taxes. Professional Tax amount varies from state to state; hence it set state wise in our Statutory Compliance Management Systems.