#payrollservicesinindia

[talentproindia]

Struggling with payroll complexities? Let our experts simplify it for you with our Payroll Outsourcing Services.

Best-in-class Payroll Outsourcing Services in India for your business. Call us today for a free quote or demo on our Payroll Solutions.

[tokyoconsultingfirm-blog]

Payroll Service in India

The payroll of a company is one of the most crucial and complicated part of its many operations. It is the net amount a business must pay to its employees for a set period of time. Payroll is managed by either the owner or an associate directly in the case of a small scale industry, or by a dedicated human resources department in large firm.

However, the process of employee compensation management, or payroll, is not that easygoing. In fact, Payroll is usually a firm’s highest business expense and for that matter, each company has its own unique payroll structure. Generally, there are four major components in the CTC breakup of an employee:

1.      Fixed Salary: This constitutes of the major portion of the salary promised to an employee. It is an amalgamation of the following constituents:

a.      Basic: It is the amount which is paid to an employee for rendering his/her services to the company. It is taxable and defines the core salary of the employee.

b.      Dearness Allowance (DA): This fixed part of the salary is aimed at compensating inflation. It is taxable and differs on the basis of employee’s location.

c.       House Rent Allowance (HRA): This is a non-taxable component of the salary structure paid to the employees to meet the expenses against paying the rent of accommodation. It is 50% of the basic salary in case the employee resides in a metropolitan city and 40% in case of a non-metropolitan city.

d.      Other Allowances: Various other allowances are offered by the companies to their employees like medical allowance, transport allowance, uniform allowance, leave travel allowance etc. These are provided as a representation of the relationship between the employee and the employer and to ensure employee satisfaction.

2.      Variable Salary: There is a dedicated ‘Performance Management System’ in companies which provides performance based incentives to the employees in order to motivate them. This is a taxable component of the salary and can also include leave encasement.

3.      Reimbursement: Employees in each company are entitled to several reimbursements like medical treatments, phone bills, etc. in their salary structure. These are non-taxable and are refunded by the company on submission of a declaration (bills, certificates, etc.).

4.      Contributions: There are various long term employee savings or social benefit schemes according to the statutory compliance, which deducts a part of salary as contribution. These are:

a.      Provident Fund: 10-12% of basic salary is deducted every month against the employee’s PF account which is received in case of retirement or resignation of the employee.

b.      Employee’s State Insurance Corporation:A type of social security scheme for the employees working in the organized sector,ESIC oversees medical and cash benefits to the employee and his/her family. 1.75% of it is paid by the employee while 4.75% of it is paid by the employer every month.

c.       Installments against loans: A part of employee’s salary is deducted in order to pay for the monthly/quarterly/half-yearly installment against any loans taken by the employee.

With the progress in corporate sector, there are several payroll management services available in India today which handle the whole process outsourced to them by other companies.Check out our payroll services here.