Payroll Processing is the periodical (monthly, weekly or daily) calculation of payments to employees – either time based or productivity based. It also includes calculation of mandatory salary components like Basic, DA and HRA. Further, it includes calculation of benefits and statutory deductions. Payroll processing involves pay calculations, disbursal, payslip generation, statutory deductions, managing taxes and mandatory compliances. Payroll processing is a complicated calculation and is to be performed with utmost care to ensure that employees do not get erroneous pay checks and all statutory compliances are met. A faultless payroll management must ensure accurate payroll calculations and meeting statutory compliances.
Facts about Payroll Management
Each company may have its own payroll structure consisting of various payroll components that may be unique to that company. In addition, many location specific laws will affect the payroll calculations.
Payroll deductions are to be made while making payments to meet statutory compliances – benefit and tax related. The benefit related deductions being PF & ESI while the tax related deductions are TDS and Professional Tax.
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