A statutory requirement for minimum wagesThis act fixes minimal wages to be paid to both skilled as well as unskilled laborers, their education, medical needs, and other comforts. This Minimum Wages Act is a state subject, and it also includes regulations for payment of overtime wages, which is a statutory need as per the Factory Act and Payment of Wages Act and refers to industries like construction and manufacturing.
TDS DeductionAs per section 192 of the Income Tax Act 1961, every employer needs to deduct TDS from the salaries of the employees before paying them, if the salary bracket exceeds the tax exemption limit.
Statutory Compliance's for ESI Fund and PF DeductionEmployees with a salary of 15,000 or less per month are given cash and medical benefits through a special fund called ESI Fund, which is maintained by ESIC. PF or Provident Fund is a compulsory contributory fund that secures the future of employees for a better life after their retirement or for their dependents in case of their death.
Professional taxesEmployment tax or professional tax is a state-based tax that constitutes a statutory deduction from the gross income before calculating tax.
GratuityThe amount given by an employer to the employee on leaving the job after completion of five years is Gratuity.
EDLIAlong with PF benefit, the death insurance cover given to employees is EDLI (Employees Deposit Linked Insurance Scheme). Under this scheme, employees do not contribute anything, only the employers contribute 0.5% of the total wages of employees, up to a maximum of Rs 6,500 towards building this fund. However, EDLI applies only to organizations where the EPF scheme is applicable.
What Is the Need for Statutory Compliance?
Adhering to Statutory Compliance is compulsory for all big and small companies across the globe, to ensure employee's interests are protected, and their employers do not exploit them in any manner, which, in turn, assists in establishing employee loyalty. Legal issues are faced by companies that fail to adhere to these specified rules and regulations, who, at the bottom line of their business, end up facing huge implications instead of this.
Organizations that willfully fail to oblige to the pre-formulated guidelines are slapped with penal actions. So, in connection to Statutory Compliances in Indian Payroll management system, or compliance guidelines and systems pertaining to any other country, companies that have a proactive approach to statutory compliance always have the upper hand in maintaining an efficient, safe, and trustworthy working environment.
From the company's interest point of view too, Statutory Compliance is highly essential for every company, whether small or big, as it keeps their businesses safe from legal complexities. However, to minimize the risk associated with non-compliance of statutory requirements, an in-depth knowledge regarding Statutory compliance is of the utmost importance. Every country has a separate set of formalities relating to Statutory compliance. Pertaining to the country from where the business is being carried out, companies need to implement all of them to ensure the successful running of their business activities.
For ensuring complete adherence to Statutory Compliance's in Indian Payroll Management system by Indian companies, the best thing to do is to have a task-force team having comprehensive legal knowledge in place. It should be the responsibility of this team to determine and execute the applicable statutory and regulatory requirements needed, pertaining to the products and services offered by the company.
This team, with assistance from the internal audit team, should report directly to the top management and keep complete check and control over decisions and actions to be undertaken concerning Statutory and Regulatory compliance's.