Compensation, payroll, and provident fund (PF) specialists are in high demand due to companies' increasing need to comply with changing labor laws and regulations. Their roles involve designing compensation packages, ensuring accurate and timely salary payments, and managing statutory deductions and benefits. Payroll is a critical HR function as it involves directly paying employees' salaries, bonuses, and incentives. Compensation and payroll require deep specialized knowledge of calculations, compliance, and software. The document provides an overview of compensation structures, payroll processes, income tax slabs, and allowances to help HR professionals better understand these important areas.
Compensation, payroll, and provident fund (PF) specialists are in high demand due to companies' increasing need to comply with changing labor laws and regulations. Their roles involve designing compensation packages, ensuring accurate and timely salary payments, and managing statutory deductions and benefits. Payroll is a critical HR function as it involves directly paying employees' salaries, bonuses, and incentives. Compensation and payroll require deep specialized knowledge of calculations, compliance, and software. The document provides an overview of compensation structures, payroll processes, income tax slabs, and allowances to help HR professionals better understand these important areas.
Compensation, payroll, and provident fund (PF) specialists are in high demand due to companies' increasing need to comply with changing labor laws and regulations. Their roles involve designing compensation packages, ensuring accurate and timely salary payments, and managing statutory deductions and benefits. Payroll is a critical HR function as it involves directly paying employees' salaries, bonuses, and incentives. Compensation and payroll require deep specialized knowledge of calculations, compliance, and software. The document provides an overview of compensation structures, payroll processes, income tax slabs, and allowances to help HR professionals better understand these important areas.
Compensation, payroll, and provident fund (PF) specialists are in high demand due to companies' increasing need to comply with changing labor laws and regulations. Their roles involve designing compensation packages, ensuring accurate and timely salary payments, and managing statutory deductions and benefits. Payroll is a critical HR function as it involves directly paying employees' salaries, bonuses, and incentives. Compensation and payroll require deep specialized knowledge of calculations, compliance, and software. The document provides an overview of compensation structures, payroll processes, income tax slabs, and allowances to help HR professionals better understand these important areas.
Why Compensation Payroll Specialists are in-demand What does a Compensation & Benefits Manager/Specialist do? Designing fair and attractive bonus programs. Implementing appealing rewards. Tailoring benefit programs based on staff needs. Evaluating how 1 effective the benefit packages are in terms of employee satisfaction. Ensuring compensation plans comply with the relevant statutory legislations. Tracks Compensation and Benefits benchmarking data. Know-how of Compensation, Benefits, Payroll and Statutory Compliances is very much essential.
What does a Payroll Manager/Specialist do?
A Payroll Specialist calculates employees' compensation, ensures timely payments and updates internal payroll databases. The ultimate goal is helping the payroll process of a company run smoothly, efficiently and accurately. 2 Know-how of Compensation, Benefits, Payroll Systems, Calculations, Excel, Payroll soft wares (SAP/Tally/Excel, etc.) are essential.
Why Payroll is the most important and critical part of HR?
In most organizations, payroll is considered as important part of the Human Resource Management department because they deal directly with the people being recruited and are also responsible for deciding the salary, bonus, 3 and incentives of all employees. In few companies, Payroll department reports to Finance department. However for most HR Generalist and Executives, minimum know-how of Compensation, Benefits and Payroll is essential. In other small companies, HR Generalist will take care of entire compensation and payroll management.
Why Compensation Payroll Specialists are in-demand?
Compensation and Payroll are specializations which requires deep knowledge, unlike other functions of HR which can be handled with some knowledge. 4 Many companies continue to grow and are consequently hiring more employees. This results in an increasing demand for Payroll Specialists. Changing Labour Laws and Compliances, makes it even more important to have dedicated payroll specialists to stay compliant with laws. NEXTGEN HR TOP HR SKILLS What is Payroll?
Intro to Payroll Components
Compensation is total of Cash and Non-cash payments that employees gets in exchange for the work they do for a business Payroll is the system employer uses to process and manage salary payments to all employees Salary Components includes Earning & Deduction Heads Earnings heads Ex: Basic, HRA, Conveyance, LTA, Medical Reimbursement, Other Allowance, Etc. Deduction Heads: Statutory Deduction & Non Statutory Deductions
Payroll Head Categorisation
Earning Heads: 4 categories 1. Master Heads - Basic, HRA, Conveyance, Other Allowances 2. One Time Payment - Bonus, Gratuity, Leave Encashment, Night Shift Allowance, OT hours,Gratuity, etc 3. Reimbursements - Books & Periodicals Reimbursement, LTA, Telephone Reimbursement, etc.
Deduction Heads: 3 categories
1. Statutory Deductions are those which are mandatory as per Law. Ex: PF, ESIC, Professional Tax, Income Tax, Labor Welfare Fund, etc.
2. Non Statutory Deductions : Master / One Time - Loan, Salary Advance, Notice Pay Recovery, Canteen Deduction, Telephone Deduction, etc 3. Third Party Deduction - LIC, Loan etc which are paid from salary to third party FUNCTIONS OF PAYROLL DEPT PRE DISBURSEMENT FUNCTIONS • GATHER DATA & PREPARE INPUT: NEW JOINERS, EXIT, ONE TIME PAYMENTS, ADJUSTMENTS, ETC.
SALARY DISBURSEMENT FUNCTIONS
• PREPARE JV & SEND TO FINANCE DEPT • JV ENTERED IN ERP SW & BANK FILE PREPARED
POST DISBURSEMENT FUNCTIONS
• DISTRIBUTE PAYSLIPS, REIMBURSEMENT SLIPS, DISTRIBUTION THROUGH INTRANET / EMAIL
POST DISBURSEMENT FUNCTIONS
•FILING RETURNS: •ANSWERING EMPLOYEE
•MAKING PAYMENTS & QUERIES SUBMITTING REPORTS
1 2
4 3 •GENERATING MIS: FOR •ANSWERING FUTURE PLANNING AND GOVERNMENT QUERIES: IN FOR REPORTING FORM OF REPORTS/ RETURNS FILING TYPES OF COMPENSATION STRUCTURES
These structures are used commonly in most organizations. Management can decide on type of structure they would like to adopt and which salary components to be given. Consolidated Pay/ Gross Pay is not a well-defined method of payment.
Allowances/Reimbursements payable to an employee for a month, before deducting employee side contributions/deductions like Employee PF, Income Tax, Etc.
Net Salary : Gross Salary – Total of all Employee side
Allowances/Reimbursements Exemption Limit Actual HRA or Rent paid - 10% of B+DA or 40% of B+DA for Non metro & 50% HRA of B+DA for Metro Rs. 100 per day.Rs.2200 per month or Meal Voucher Rs. 2400 per month Telephone & Internet Reimbursement Actuals / As per Invoice Child Education Allowance Rs. 100 per child Max.2 children Hostel Fees Rs. 300 per child Max. 2 children Petrol Reimbursment 2400 if vehicle above 1600 cc Driver Allowance Max 900 pm Superannuation Fund Max upto 15% of B+DA NPS Employer Contribution 10% of B+DA Purchase of Laptop/Mobile/ Computer No Limit / As per Invoice Performance Development Allowance No Limit / As per Invoice Books & Periodicals No Limit / As per Invoice Actuals / As per Reimbursement. Leave Travel Allowance Amount limited to CTC component
Reimbursements are those components which
require bill submission in order to get Income Tax
“ exemption; However, the maximum limit of reimbursement as well as IT Exemption is limited to the Master (fixed) amount set by your employer in your CTC. Present Income Tax Slab (2021-22) OLD REGIME
NEW REGIME
Income Tax is calculated on the Annual Taxable Income of the employee and then deducted on monthly basis from the salary and remitted to IT department by employer.
Amount deducted from salary is called TDS : Tax Deduction at Source
Annual Taxable Income Calculation : Total Income for the year (-) All exemptions / deductions from all eligible sections
Knowledge of Income Tax sections and which components of salary helps
employees save their taxes is essential to structure the Compensation Packages for employees.
Perquisites or Perks are non-cash elements such as Company Leased
Accommodation, Furniture, Employer to Employee Loan at concession rates, Car and Fuel, etc. These are indirect benefits for employee, which can be given to avoid taxes, but yes, there are limits and conditions for these perquisites as well. When it crosses defined limits, the excess benefits are taxable in the hands of employee. TOP HR SKILLS COURSE For complete guide on Compensation, Payroll and Provident Fund along with Employee On-boarding Techniques, Salary Negotiation Techniques, Individual SWOT Analysis, HR Career Roadmap, etc. go through the complete course “Top HR Skills and Compensation, Payroll and PF” NEXTGEN HR WWW.NEXTGENHR.CO.IN HTTPS://NEXTGENHR.PROCTUR.COM
