Payroll as a business function is one of the most critical function for an organization and mistakes during this function can affect employee morale as well. Ensuring that all the employees are paid timely by calculating the taxes and other pay policy benefits is a crucial task and it takes a lot of physical and mental work. Payroll module ensures that the payroll management is streamlined and automated leading to process efficiencies. Payroll module helps you to calculate the total amount of money employer pays to the employees. It involves:
- Developing organization pay policy including flexible benefits, leave encashment policy, etc.
- Defining payslip components like basic, variable pay, HRA, and LTA
- Gathering other payroll inputs (e.g., organization’s food vendor may supply information about the amount to be recovered from the employees for meals consumed)
- The actual calculation of gross salary, statutory as well as non-statutory deductions, and arriving at the net pay
- Releasing employee salary
- Depositing dues like TDS, PF, etc. with appropriate authorities and filing returns
In short, we can say that payroll process involves arriving at what is due to the employees also called as ‘net pay’ after adjusting necessary taxes and other deductions.