This is an informative article that explains in brief the tax responsibilities of an employer towards his employee in order to generate timely and accurate payroll.
Payroll related tax involves a good understanding of a typical compensation structure in an organization.
An employer has 2 parties that he has to consider when computing and remitting payroll taxes.
a. Basic Salary
d. Retirement benefits
(For more information on the details of each aspect of the compensation structure, please refer to my article titled “Devising a simple compensation structure. “)
The components mentioned above are instrumental in computing the taxes owed by the employee to the government. The company will withhold these taxes on the generation of each payroll (depending on the payroll cycle) so that the tax burden at the end of the year is reduced.
a. Provident fund
b. ESI (Employee state Insurance)
c. Labour Welfare Fund
The employer should be aware of and take necessary action for payment of the above components on or before the mentioned dates
|Remittance item||Full form||Deadlines|
|TDS||Tax deducted at source||On or before 7th of the following month|
|PT||Professional tax||Deadlines vary according to each state|
|PF||Provident Fund||15th of the following month|
|ESI||Employees State Insurance||21ST of the following month|
The Income Tax Journey
From the point of view of the employer, it is important to understand the Payroll tax process thoroughly so that the organization can be fully compliant and avoid any mishaps. The following points describe the Income tax journey from the beginning to end.
The above points explain clearly the Employer tax responsibilities involved and the importance of filing these according to the regulations.
It is critical that every employer fully understands the concept of devising a salary structure and also the various regulatory requirements that allows the company to be a fully compliant enterprises .
(The author, Stella Lauren has contributed this post, who writes on organization growth and sustained development in the competitive business environment. Automatic Data Processing – ADP is a pioneer and a leading company in India, reckoned by its various customers as a reliable partner who offers unique innovative and simple to use HCM Solutions.)