Payroll System in India

By January 5, 2015 January 9th, 2020 Employee Attendance, Leave Management, Payroll
Simplify Payroll

Payroll System is one of the core functions of a business enterprise. It entails working out all the details pertaining to the compensation of the employees which include attendance management, leave management, advances, taxable deductions, and statutory compliance in accordance with the company policies. Payroll System in India could become complex due to many laws enforced on organizations.

Payroll is a crucial human resource function as a slight discrepancy in salary processing might generate dissatisfaction among the employees, resulting in decreased productivity, efficiency, and also high turnover rate.

Earlier, payroll management in India, was done involving a lot of paperwork which was a cumbersome procedure to follow for the employees of the human resource and finance department. Apart from documenting and managing files, the chances of committing errors were high. This procedure was time-consuming and impacted the overall productivity of the company.

Apart from disseminating paychecks to the employees, a lot of time went into other areas of payroll management such as calculating tax deductions, statutory compliances, and working out employee benefits.

This system of payroll management was also not very convenient from the employees’ perspective. Since this system did not lend much transparency to the employees with respect to their attendance and leave details, deductions from the salary by way of taxes and absenteeism, they had to depend on the HR and finance department employees for information. Flipping through numerous files to respond to the employee queries was again a time-taking task.

With the advent of information technology, the companies in their endeavour to make the payroll less tedious and to avoid paperwork, switched to spreadsheet applications such as Microsoft Excel. The employees of the concerned department were able to process payroll in a better way and it consumed less of their time. The spreadsheet made calculations simpler and quicker for the employees as it features formulas and other essential tools such as VLOOKUP and pivot tables for managing large amounts of data.  It also brought down the chances of making mistakes to some extent.

Payroll management on an Excel spreadsheet allowed the employees to get all the information they want with regard to their salary processing, deductions, attendance and leave management faster and with more accuracy. Though, payroll management done on an excel spreadsheet somewhat simplified the procedure, it still remained a time-taking and slow process.

This was the time when the companies felt the need to automate their payroll system in an attempt to resolve the day-to-day issues faced by the employees as well as the business enterprise.

The advancement in the sphere of information technology led to the development of online payroll software which helped the companies streamline their payroll management. The payroll software made computation of salary and recording other financial details very easy for the employees in the human resource and finance departments.

A payroll software helps the employees in the HR department to process salaries of the employees faster as compared to the earlier traditional methods deployed for payroll management. This system is more reliable and consistent with 100 percent accuracy. Hence, the chances of committing errors are negligible.

An online payroll software imparts more clarity in salary processing as it classifies salary under different heads such as deductions and gross earnings and leaves no scope for any sort of confusion. It does not require the employees to enter the ad-hoc earnings manually every month as the payroll software considers the same, prior to salary computation. It also efficiently calculates all the deductions pertaining to statutory compliances such as Provident Fund, ESI, and Professional Tax as well as TDS. The data from an Excel spreadsheet can also be imported directly into the payroll software.

With payroll software, it is easier to lend transparency to the employees with respect to their salary computation. The automated payroll management helps them to track their compensation details in terms of deductions that have been made or the ad-hoc earnings that have been added. It also gives the employees the flexibility to view their salary slips online and also take a print of it, if they so desire.

Upgrading to payroll software offers ample benefits to the company not just in terms of saving time, energy and finances, but also in computing deductions, loans, and advances apart from leave and attendance management.

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