Payroll Processing Services

1. WAGE PAYMENT TIMELINES — PAYMENT OF WAGES ACT, 1936 (Sections 4, 5, 7)

Section 4(1)-(2) requires every employer to fix a wage period not exceeding one month. Section 5(1)(a) mandates payment of wages within 7 days of the end of the wage period for establishments employing fewer than 1,000 persons, while Section 5(1)(b) extends this to 10 days for establishments employing 1,000 or more persons. Section 5(4) requires that wages be paid on a working day. Section 7(1) permits only authorised deductions from wages; Section 7(3)(i) caps deductions for payments to a cooperative society at 75% of wages, and Section 7(3)(ii) caps all other permissible deductions at 50% of wages.

2. EPF LATE-PAYMENT CONSEQUENCES — EPF ACT, 1952 AND EPF SCHEME, 1952

Delayed remittance of Provident Fund contributions attracts damages under Section 14B of the EPF Act, up to 100% of the arrears, on a graduated scale set out in Paragraph 32A of the EPF Scheme (5% p.a. for delay up to 2 months, 10% p.a. for 2-4 months, 15% p.a. for 4-6 months, and 25% p.a. beyond 6 months). Separately, Section 7Q levies simple interest at 12% p.a. on the delayed amount, payable in addition to — not in lieu of — the Section 14B damages.

3. EPF WAGE CEILING

The statutory wage ceiling for mandatory EPF coverage is ₹15,000 per month, fixed by Notification G.S.R. 609(E) dated 22 August 2014, effective 1 September 2014. The corresponding maximum monthly pension contribution under the Employees' Pension Scheme is capped at ₹1,250. Payroll processing engagements apply this ceiling when determining statutory PF/EPS contribution bases, subject to any employer opt-in for contribution on full wages above the ceiling.

Payroll processing is the running of a business's salary cycle — the computation of the gross pay, the statutory deductions of the TDS under the Income-tax Act 1961 and the Employees' Provident Funds Act 1952 and the ESI Act 1948, the professional tax under the state laws, the net pay disbursed, the payslips and the registers, and the statutory payments and the filings — the TDS returns, the PF and the ESI challans, the Form 16 and the Form 12B. The payroll is the intersection of the employee, the tax and the social security, and its accuracy decides the employee's take-home and the employer's compliance.

The payroll is the most frequent and the most visible compliance of the employment relationship — every month, for every employee, the gross-to-net computation must be right and the statutory deductions must be deposited and reported. The TDS under Section 192 on the salary, the PF and the ESI at the statutory rates, the professional tax — each is a deduction the employer collects and remits, and each is checked by the employee's own returns and the department's records.

The cost of a broken payroll is the compounding statutory exposure: the TDS short-deducted and the disallowance under Section 40(a)(ia), the PF and the ESI contributions delayed and the interest, the returns filed wrong and the demands — each a leak that runs monthly until the audit finds it.

This service is for businesses running payroll. We compute the salary cycle — the gross-to-net, the statutory deductions, the reimbursements — process the monthly payroll with the payslips and the registers, deposit and file the TDS, the PF and the ESI within the prescribed timelines, issue the Form 16 and the certificates, and manage the year-end — the returns, the reconciliations — so the payroll is accurate and compliant every month.