Payroll Outsourcing Services Can Save Money and Insure Compliance

Complications in payroll management grow when the number of employees in a company goes up. Companies may employ people on monthly salary, contract and on daily or weekly wage basis and these further add to the burden. Payroll is not just calculation of money to be paid for work done. There are additions and deductions to be considered as well as compliance with myriad government regulations that keep changing from time to time. The HR department has to be competent but the entire process easily can be outsourced.

Deductions and allowances

Employees, according to their classification, may be eligible for allowances such as travel, leave travel, children education, medical allowances, overtime and other perquisites and these too have applicable rules.

  • Travel allowance of Rs 800 is tax free
  • Children’s education allowance is exempt up to Rs 100 per month.
  • Medical allowance is tax-free up to Rs 15000
  • Investments in approved schemes are eligible for tax exemptions.
  • Employees are eligible for provident fund and gratuity benefits.

At the same time, in cases where it is applicable, income tax must be deducted at source according to section 192 of the IT Act 1961 if salary exceeds prescribed limit and form 16 and 24Q must be filed.

PF and similar deductions must be accounted for and forms submitted with authorities in a timely manner.

These and others need to be considered for payroll preparation. Leave it to payroll outsourcing services and you have no worries about these and about statutory compliances.

Statutory compliances

Payroll outsourcing also ensures that your company stays fully compliant with all the myriad applicable laws, rules and regulations.

  • Minimum wages: It is obligatory that skilled and unskilled labourers be paid the prescribed minimum rate and stay compliant with the Minimum Wages Act.
  • Overtime: This is mandatory payment tow workers according to the Factory Act and Payment of Wages Act.
  • Income tax: tax must be deducted when salaries exceed the prescribed limit to stay compliant with Section 192 of the Income tax Act.
  • ESI and PF: Employees with salary below Rs 15000 are eligible to ESI benefits. PF is compulsory deduction with matching contribution from employer according to EPF & MP Act and Employees Provident Fund Scheme 1952.
  • Professional tax is applicable and computed on gross income.

Gratuity must be paid to employees when they leave the job after completing five years of service according to rules. There may be fresh amendments and rules from time to time and it becomes difficult for HR employees to stay current. Payroll outsourcing services have a legal cell to assist them and ensure full compliance.

What payroll outsourcing does for your business

Outsource the entire payroll and compliance process to a payroll outsourcing agency and you notice immediate benefits.

  • Your company stays fully compliant with all applicable Acts and Rules and you need have no apprehensions about receiving notices and paying penalties.
  • Your payroll is processed fast and you can disburse salaries right on time thereby assuring employee satisfaction.
  • Payroll outsourcing takes care of preparation and printing of salary slips, leave, attendance and all related matters including provision of employee self service portal.
  • All forms to various government agencies are submitted on time along with remittances.
  • You receive printed records along with analytics and reports if so desired to help you manage employees and improve efficiency.
  • You save on salaries you pay to HR employees and you also save office space. This more than compensates the fees you pay for payroll outsourcing services. There is continuity of services.

One concern is confidentiality and security of data and in this regard you can trust outsourcing services like Alp Consulting to keep your data fully secured.


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May 2019