Navigating Taxes and Regulations for Payroll Compliance

Is gratuity deductible from salary? Is there an employers’ contribution to the Voluntary Provident Fund? How can organizations keep payroll information confidential? Is there a compliance website that provides updates on labor laws? If such questions pique your interest, read on. 👇

In a service-driven country like India, payroll compliance is critical for averting legal issues and building enduring relationships with employees.

The core objectives of payroll compliance are to protect the employee’s interest, ensure all payments are being made in time, and convey that the social security benefits are in safe hands. 🧑‍⚖️

During a Parichay webinar, Shilpi Jain, a chartered accountant and an alumnus of Delhi School of Economics, decoded the essentials and shared best practices for navigating tax and payroll compliance landscape.

The hour-long webinar touched upon the key payroll regulations, payroll compliance stages, common mistakes in payroll compliance, best practices for payroll management, and penalties for non-compliance.

Here are a few takeaways from this insightful session: 👇

Key Payroll Regulations

Employers have to abide by multiple regulations, including several central and state-level labor and taxation laws. Although Indian payroll compliance is complex, every employer must
have an understanding of the regulations.📖These are a few key regulations no employer should overlook:

• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
• Employees’ State Insurance Act, 1948
• Payment of Gratuity Act, 1972
• Payment of Wages Act, 1936
• Payment of Bonus Act, 1965
• Maternity Benefit Act, 1961
• Factories Act, 1948
• Shops and Commercial Establishments Act (State level)
• Professional Tax (State level)
• Labour Welfare Fund (State level)
• Income Tax Act, 1961

Payroll Compliance Stages

Common Mistakes in Payroll Compliance

• Inadequate documentation and record-keeping
• Lack of clearly defined policies
• Incorrect calculation and deduction of taxes
• Late payment of statutory dues
• Lack of internal controls and regular software audits
• Mismatch in deductions and reporting

6 Best Practices for Payroll Management

1. Secure sensitive data
2. Automate payroll processes
3. Handle benefits and deductions correctly
4. Stay up-to-date with regulations
5. Employee training and query resolution
6. Consult with experts

Penalty for Non-compliance

Non-compliance can happen in different scenarios, including a shortfall in tax deductions recoverable from the employer and delays in deposits, reporting, form submission, payments, etc. The failure to comply can result in hefty fines or imprisonment of the employer.

Watch the full webinar recording to hear the speaker cover the above key topics in detail. Also, don’t miss the Q&A session at the end.

Watch the Webinar Recording

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