Employees who believe that management is concerned about them as a whole person – not just an employee – are more productive, more satisfied, more fulfilled. Satisfied employees mean satisfied customers, which leads to profitability. – Anne M. Mulcah
Payroll processing is a concept that defines the execution and management of payroll data. Payroll data comprises of employee-related data that is utilized to keep methodical tracks of individualistic salaries, wages, allowances, bonuses, taxes etc. Payroll administration is theoretically an ambidextrous & elastic procedure.
As a well-functioning and an established organization, a company abstains expenses like personal income taxes & social security as separate from the salary of an employee. Similarly, there are companies that offer certain beneficial plans like health insurance, etc.
As the procedure of payroll management and processing elevates – the system has been enhanced so as to understand the privilege-architecture better:-
Allowances
This section under payroll processing comprises of the various sublets of expenditure in India that cannot be particularly categorized under taxable. This amount should be up to the specified limit and abide on by given terms.
Allowances commonly offered in India are;
Health / Medical
The dispensations & privileges of health allowance is as mentioned below-
- Indemnification of about INR 15,000 for the purpose of medical hospitalization & cure of the employee & his/her immediate family.
- Reimbursement of all the expenses commenced by an individual employee takes occurrence in registered and approved hospitals.
- Whilst traveling & housing abroad (for the employee and his family); one attendant accompanies the patient undergoing medical treatment – at all times!
- Cutting down or no expense of treatment of the employee or their immediate family in any medical centre or hospital perpetuated by the employer
Education
This allowance offers a fixed amount of INR 50 for each individualistic child; INR 150 for special cases – for about two children as an average to immune the tax and save on expenditure..
Residence / House Rent
The House Rent Allowance liberates from taxes under the following conditions-
- When the entire and total rent is paid timely as over 10 percent of salary
- About 50 percent of salaries in Metropolitan Areas
- When HRA is received.
Conveyance / Transport
This allowance offers a transport payment of INR 800 per month for employees commuting to and fro from work to their residence from their taxes.
Meals
Within an organization – refreshments and luncheon as provided by the employer is often free of cost or possess feasible rates that do not an add-on to the taxes.
Special Allowance
In-office materials purchase prices.
Cost of travel whilst transfers & tours.
Periodicals and books, etc.
Outsourcing
Some organizations opt for distinctive departments for specific management of payroll. This is often done via outsourcing the payroll content of the company to a third-party service company. This often helps reduce overhead expenses as well. It also scales down and abridges the costs on upgrading technologies required in lieu of third-party involvement; like payroll software, etc.
Following are the numerous benefits of Outsourcing the Payroll Procedure:-
Increased Efficiency
Outsourcing helps catch hold of experienced and enthusiastic workforce helps prevent error-based executions at job or otherwise.
Elevated Confidentiality
In an organization, when the employees are aware of all the salary and monetary details; the risk of knowledge becoming public increases; cumulating intruding of privacy for an individual and creating chaos. Here, outsourcing helps protect personal payroll details for each employee, ensuring that only a handful of senior members of the organization are wholly aware.
Reduction of Liability
Outsourcing payroll for an organization is like giving it into the hands of an expert in that field. This ensures the processes to be law-abiding, reducing the risks of passing incorrect or false information onto the tax bureau.
Minimization of Costs
When you process payroll management within the organization, it requires a distinctive department and organized authority for proper functioning & administration. Hence, to avoid overhead and miscellaneous expenses it is advisory to outsource for division of responsibility. It also helps increase focus by dividing responsibilities and formulation of strategies.
Enhanced Transparency
Outsourcing ensures determined focus that follows up an updated report-submission for proclamation and execution. It also warrants inter-departmental updating and intensification of structures.
Henceforth, it is essential that you understand the way your organization should function as it will help you integrate plans to form a budget to tackle & further on. Also, understanding of how a payroll process serves your organization in particular is vital as it is absolutely individualistic, depending on the company and the way it operates.
For more information related to Payroll processing & outsourcing or to speak to our salary management Consultants, write to us on helpdesk@edkmonline.com or speak to our representatives on +91 11 42597777