Payroll is the very important part of every company and business as without payroll a company or
industries is not able to perform the business in the company .Before the company have different
department for the payroll process ,the company incurs huge cost for the management of payroll there
are different department established in the company the company like HR. department , accounts
department, tax and accruals department to see the process of payroll and this is creating the huge cost
for the company to manage the payroll and now most of the company merge the department of
accounts and others in H.R department for payroll process
A human resources department is responsible for managing most aspects of a company's relationship
with its employees, from hiring and firing to benefit structures. Human resources manages payroll by
calculating pay check amounts, writing pay-checks and managing employee benefit accounts. Payroll
falls under human resources in the sense that the department takes care of the ongoing tasks associated
with paying employees. Companies also sometimes maintain separate bank accounts dedicated to
writing employee pay-checks, and these accounts are managed by their human resources department
poly cab India limited the payroll process is handled by only H.R department starting from the
attendance of the employees and till the salary making all activities comes in between is handled by the
H.R department of the company ,they maintain both the manual and electronic data of the employee
working in the company for the payroll process because as per my learning in hr. department for a
moment if we think about the employees and workers for whom monthly salary and wages is the only
source of income and if the salary is not paid accurately or there is a delay in releasing salary such
irregularities can take a toll on the morale of the employees ,and ultimately affects the business
productivity .
So, the hr. department plays a very important role in salary making of the employee they have to
maintain and realise all the information regarding employee attendance, in time and out time, leave data
of the employees, increment sheet, benefits data, and several deductions of the employee for making the
salary sheet of the employee so that the employee get there salary timely without delay so that they can
perform well and fulfil there requirements accordingly.
SEVERAL BASIC TERMS RELATED TO PAYROLL:
In poly cab during training my HR. trainer told about the many basic terms which is very important for
every payroll manager to know and work accordingly as per our discussions
there are the terms that every HR. must know and specially the person who is working in payroll
management because while making salary the meaning is not important, how the person salary is
making and what are to be included and deducted in the salary sheet is most important task that every
h,.r working in payroll must be aware so the terms which the company is using basically for HR. payroll
management is:
1 . CTC (Cost to company)-is a term for the total salary package of an employee, used in countries
such as India and South Africa. It indicates the total amount of expenses an employer (organization)
spends on an employee during one year. It is calculated by adding salary to the cost of all additional
benefits an employee receives during the service period. If an employee's salary is ₹50,000 and the
company pays an additional ₹5,000 for their health insurance, the CC is ₹55,000. Employees may not
directly receive the CC amount. CC contains all the monetary and non monetary benefits which a
company is expending on there employees in general terms CC is total package which the company
offers to the employees.
What is included in a CTC (Cost to Company)?
CTC = Direct benefits + Indirect benefits + Saving Contributions
in-Hand Salary = Direct Benefits – Income tax – Employee OF – Other deductions, if any
Saving
Direct Benefits Indirect Benefits*
Contributions*
Basic Salary Interest free loans, if any Super – Annulation
Employer Provident
Dearness Allowance (DA) Food Coupons / Subsidized meals
fund
Conveyance allowance Company Leased Accomodation Gratuity
Medical/Life Insurance premiums
House Rent Allowance (HRA)
paid by employer
Medical allowance Income tax savings
Leave Travel Allowance (LTA) Office Space Rent
Vehicle Allowance
Telephone / Mobile Phone
Allowance
Incentives or bonuses
Special / City Compensatory
allowance etc.
Cost to Company Direct benefits
Paid to employee monthly and form part of your take home (in-hand salary) after deducting income tax
plus any additional state taxes.
CTC Indirect Benefits
Benefits (also called Perquisites in legal Indian government terms) that an employee enjoys without
paying for them. Your company takes care of them but add their monetary value to your CTC.
Off-course it is an expense for the company and hence, could be added to CTC.
1. Interest free loans, if any in CTC
Cost to Company Direct benefits
Paid to employee monthly and form part of your take home (in-hand salary) after deducting income tax plus
any additional state taxes.
CTC Indirect Benefits
Benefits (also called Perquisites in legal Indian government terms) that an employee enjoys without
paying for them. The company's
Off-course it is an expense for the company and hence, could be added to CTC.
1. Interest free loans/nominal rate loan (if in ctc)
Polycab allow their employees to get car / home loans at highly subsidized rates and then add the
amount equal to the difference between the market and subsidized interest rate to employee’s CTC. The
interest that employee did not pay (actually saved using subsidized rate) is a perquisite for employee
and it depends upon company policy.
pycab offer free lunch and evening snacks at workplace. No lunch is free in this world.
On the other hand, the meal vouchers (or food coupons) help the employee to save there income tax too.
NOTE: Normally, you may not get this amount in-hand (as cash) even if you opt-out of
eating in employer’s cafeteria.
3. Company Leased Accommodation (CLA) in Salary package
Polycab india limited is also providing the accommodation or pay rent to landlord directly facility for
the employee so that dont waste time and remain tension free for finding home and negotiating on a rent
deals
The monetary value of CLA , thats taxable is added to the employee CTC ,which is nomally to the rent
and furniture cost.
4. Medical, Life Insurance premiums paid by company
Group medical and life insurance policies by the employer to its employee gave much better and
comprehensive cover over the individual one this,cost is added in CTC and the employee can claim it
for income tax rebate while filing ITR.
Employee retirement Saving Contributions
Payments made to your long term savings account by your employer.
1. Super Annuation
A pre-defined amount is contributed every month in employees superannuation accounts ,which the
employee can use after getting retirement for his/her benefits. Superannuation accounts can be
converted into some kind insurance policy also.
2. Employer Provident fund Contribution
Most employers contribute 12% (called PF) of basic salary every month to employee’s Provident fund
account, shown in CTC. Employee also contributes 12% (called VPF.\
Employer p.f is a part of CTC,which is not shown in salary slip it is not counted as a part of employee
earning and hence not taxed.
3. Gratuity is part of CTC
Paid @4.81% of total yearly basic salary, per Indian tax law, with no withdrawal allowed before 5 years.
If you leave the organization anytime before 5 years, you lose your Gratuity accumulation.
2- GROSS PAY
is the total paid to an employee each pay period, and it is determined in different ways for salaried and
hourly employees.
For salaried employees, gross pay is stated as an annual amount. To determine gross pay for a pay
period, the annual salary is divided by the number of pay periods in the year.
For hourly employees, gross pay is the worker's hourly rate times the number of hours worked in that pay
period; overtime is included in gross pay, too.
Gross pay is the amount reported to the IRS and is the amount the employee pays income taxes on.
3-NET PAY:
Net pay is the amount of pay an employee receives after all withholding and deductions from gross
pay. In other words, net pay is the amount of the employee's paycheck.
The calculation for net pay begins with gross pay. Then withholding for federal and state income taxes
are taken out, as well as deductions for FICA tax (Social Security and Medicare). Finally, discretionary
deductions like health plan and retirement plan amounts are taken out.
4-WITHHOLDING
Withholding refers to amounts taken from an employee's paycheck for federal and state income
taxes. Withholding is determined for federal income tax by a Form W-4 completed by the employee at
hire, and for state income tax by a state W-4 or other tax form.
The calculation for withholding includes:
• The employee's gross pay for the pay period
• Information on the employee's status as salaried or hourly
• Information on marital status from the W-4 form
• And information on any additional withholding amounts the employee directs on the W-4 form
5-OVERTIME:
Overtime is the additional amounts paid to hourly employees who work over 40 hours in a week, who
work on weekends, or other additional amounts. The federal minimum overtime requirement is that
overtime must be paid at 11/2 times pay rate for employees who work more than 40 hours in a work
week. Of course, you can pay overtime at higher rates overtime is calculated
differently for hourly and salaried employees. Most salaried employees are exempt from overtime, but
your business may be required to pay overtime to some lower paid exempt employees.
6- WORK WEEK AND PAY PERIOD.
A work week is considered as 168 consecutive hours of work in a seven-day period. This term is used
in calculating overtime for hourly and some salaried employees.
A pay period is a recurring length of time over which employee pay is recorded and paid. Some
common pay periods are monthly, weekly, bi-weekly (every other week) and semi-monthly (twice a
month).
A weekly pay period results in 52 pay periods in a year.
A bi-weekly pay period results in 26 pay periods in a year, while semi-monthly pay results in 24 pay
periods in a year. The difference is important in computing total pay for employees for a year.
In some years, there could be an extra 27th pay period, because of the way the weeks fall at the end of
the year.
7- COMPENSATION.
Compensation is a term that is often , used instead of using the term “pay”, but it is more general terms
that includes , other payments to employees In polycab india limited there are several type of employee
compensation that are taxable to the employee include:-
1- Tip income
2-Benefits of using a company car.
3- Stock / shares option
4-Bonuses,awards and gifts to employees unless they are very small.
5-Some commuting and transportation benefits.
6- some educational benefits( for employee children)
7- other benefits like meals ,may or may not be taxable to employees depending on the circumstances.
SYSTEM TO MANAGE PAYROLL :
In today times payroll management is important for every business when anyone runs a business than
he/she has to see all the aspects related to business and work on it accordingly
From keeping track of business functions to keeping employees happy, it takes a lot to maintain the
smooth running of business. One factor which highly affects the happiness of employees is how well
you manage their payroll. Apart from maintaining a basic record of the salary given to your employees,
there is a comprehensive system that each business needs to have in place for a well-managed payroll
so to handle the payroll there are various system ,this system is decided by company according to there
needs and work and most important the budget so, there are many system to manage payroll these are:
1-INTERNALLY MANAGED PAYROLL SYSTEM
An internally managed payroll system is a method which is feasible for a company which has a less
number of employees. With limited employees, it is easier to maintain and manage payroll records
without major discrepencies managing your payroll is something you can do by yourself, or you can
hire a resource specifically for this purpose. The base requirement is the knowledge of maintaining
payroll records and awareness about the various laws and taxes applicable.
2- PROFESSIONALLY MANAGED PAYROLL SYSTEM
professionally managed payroll systems, that’s where the bookkeepers and the certified public
accountants (CPA) walk in. If you feel you lack the expert proficiency in managing your company’s
payroll, you can opt for outsourcing it to a bookkeeper or CPA. You could also hire an expert on a
contractual basis from a reputed accounting firm. Do keep in mind though, that these professionals will
only help you manage your payroll records and may not complete the process of making transactions,
bank deposits and deductions .
3-PAYROLL SERVICES MANAGED BY PAYROLL SYSTEM AGENCIES
Another way of maintaining the accuracy of your payroll system is to hire a payroll service agency these
agency manage the complete payroll responsibilities of your company along with making salary
deposits and deductions for every month. Such payroll service agencies often give assurance of total
accuracy and ensure that late payments are avoided.
4- SOFTWARE MANAGED PAYROLL SYSTEMS:
software managed payroll systems are not widely in use but are gaining popularity slowly. Many
software and online portals are now available for you to manage your payroll without going through the
tedious process of calculating anything. You simply need to put in the details and these digital platforms
record and maintain them for you. When it comes to managing your payroll efficiently, you have
multiple options. If you have a base knowledge of payroll management, you can manage it on your own
or with the help a software However, having a professional providing payroll services in Edmonton with
the expertise of the field to work on your payroll is always advisable as it decreases the chances of
inconsistencies considerably.
MEANING OF PAYROLL HISTORY:
MEANING: Past payroll records of a employee is payroll history. payroll history contains summary
information about employee compensation including.
1 Earning
2 Taxes
3 Time cards
4 Accurals
5 payment information
Use of payroll history in polycab:
payroll history of the employee plays a most important role in the h.r department as
payroll history might seems like a compliation of old records, but it can be very important because it
contains records of the employee might occasionally have questions about there previous pay or any
other question related to there salary sheet ,they might want to know about the taxes a company have so
far ,for this the payroll manager see the old records or payroll history of the employee and for this the
polycab also set up the employee self service portals in gurukul software so that they can log into their
personal accounts and get all the answer they need. For the query related to p.f the payroll manager use
the payroll history so that if any employee comes for the query of p.f they can see the old records and
than gave the employee information related to there p.f, they also maintain the payroll history in register
to avoid accounting errors .
