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Statutory Compliance in Indian payroll management system and regulation systems lay down the rules and regulations that are implemented for the smooth functioning of business organizations. It safeguards the interests of the workers and employees. If companies do not follow these norms, they will be penalized monetarily by legal authorities.
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Statutory Compliances In Indian Payroll Management System Statutory Compliance in Indian payroll management system and regulation systems lay down the rules and regulations that are implemented for the smooth functioning of business organizations. It safeguards the interests of the workers and employees. If companies do not follow these norms, they will be penalized monetarily by legal authorities. An organization needs to streamline, organize, and have proper rules and regulations to ensure smooth functioning. There are statutory guidelines to be followed for every aspect, including interactions with its labor and employees. A company or enterprise needs to strictly adhere to these because failure in doing so can jeopardize the health and wealth of the company. These legal requirements or framework, within an organization, needs to function on day to day basis, in connection to its treatment of employees, is what termed as statutory compliance. Therefore companies must be well versed with various labor laws of the country from where they operate. Regulatory compliance refers to laws, regulations, guidelines, and specifications that an organization needs to adhere to concerning its business processes, failing which can result in legal punishment, including federal fines. Both statutory and regulatory
compliance are non-negotiable and are required by law. Failing any of these may result in a fine, penalty, or custodial sentence for the person(s) responsible. Where statutory laws refer to laws passed by a state or central government, regulatory laws are issued by a regulatory body appointed by a state or central government. Statutory requirements are enacted bypassing the law in the legislative assembly or parliament, while a regulatory requirement constitutes rights and allocates responsibilities on legal administration. There are several federal and state labor laws for every country that companies need to align with, and this list only keeps increasing. A lot of these issues can be dealt with by getting compliance done for these laws. Companies spend a lot of money and effort to get these compliance is done, which range from minimum wages to be paid to maternity benefits to be given or even professional taxes to be levied. Pertaining to Statutory compliance's in the Indian Payroll Management system, there are several standard statutory requirements that should be chased by companies for their payroll management. They are as follows:
•A statutory requirement for minimum wages This 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 Deduction As 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 Deduction Employees 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 taxes Employment tax or professional tax is a state-based tax that constitutes a statutory deduction from the gross income before calculating tax. •Gratuity The amount given by an employer to the employee on leaving the job after completion of five years is Gratuity. •EDLI Along 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. Conclusion 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.