India based Neobanking Fintech Razorpay Explains how RazorpayX Payroll Automates All Things Payroll

Indian neobank Razorpay recently shared payroll compliance mistakes that businesses should try to avoid.

The RazorPay team explains that payroll compliance is one of the “most important” processes a business performs so that it can maintain operations. All businesses in India and globally have to follow statutory compliance requirements related to fair monetary disbursements to their workers, registration for Provident Fund and ESI, statutory tax deductions, calculation and payment of gratuity, bonus, pension, etc.

However, payroll compliance tends to be quite complicated, which is why RazorPay has shared the common mistakes businesses should avoid.

As mentioned in a blog post by Razorpay, businesses or companies should improve their data / documentation processes. As noted by the Indian Fintech firm, inaccurate and manual recording of data, and documenting incorrect employee information are among some of the most common mistakes.

Razorpay adds that businesses also “make the mistake of wrongly classifying their employees, leading to lapses in legal requirements (audit and taxation) of their salary structure.” For instance, recording part-time workers as temporary employees or full-time employees as independent contractors. These mistakes may “lead to audit litigations and tax penalties for the business,” the Fintech firm notes.

The company also mentions that the Payment of Wages Act, 1936, requires firms “to disburse timely remuneration to their employees.” Despite statutory compliance, “delay in making payments is the most common payroll mistake that companies make,” Razorpay reveals. This may be due to reasons like “the non-availability of timesheets, work records or reports of the employees, or hold-ups with banks,” the company explains.

Razorpay further notes that businesses can also make mistakes such as “not reporting the fringe benefits or perks they give to their employees as a part of payroll.” The Fintech firm points out that these “could be company-provided transport and accommodation, stock options, gift cards, healthcare, vacation pay, etc.”

Razorpay adds that businesses have “to register and file reports with the concerned authorities on the ESI and EPF contributions to the employee salaries.” The company clarifies that in the absence of an automated payroll processing tool, they “often miss the submission deadlines resulting in either a delay or failure in filing these reports, and consequently pay hefty penalties.”

Razorpay confirms that businesses “need to adhere to two crucial statutory payroll compliance [requirements.]” Their credibility “goes downhill if they do not accurately calculate and pay PT, deduct TDS from their employees’ salaries, and not file the tax returns & TDS report with the tax authorities timely.” They “face the legal and financial implications of missing the tax filing deadlines in the form of hefty late payment penalties,” the Fintech firm noted.

Razorpay adds:

“Security lapses occur due to manual processing and management of payroll data. It exposes businesses to probable payroll frauds, such as the theft of confidential information of their employees (details of their salaries, taxes, bank account, PAN, Aadhar Card, rent agreements, etc.), misappropriation of payroll funds, and unauthorised issuance of salary and TDS certificates. Even if the payroll data is stored on spreadsheets, hacking the system passwords makes it vulnerable to misuse.”

According to Razorpay, an automated payroll solution is “the way to go to avoid all these payroll and compliance mistakes.” The neobank also noted that an automated solution is able to store all payroll data and records at a centralized location and in a more organized way, “right from the employee onboarding.”

As explained by the Fintech company, this approach “automates the process of recording up-to-date employee data, performing complex and time-consuming salary and tax calculations, reminding the tax, EPF, and ESI filing deadlines, and generating error-free reports of employees’ salary structure and payroll disbursements.”

The company also mentions that RazorpayX Payroll has been developed to “automate all things payroll right from employee onboarding to salary disbursals and tax payments” and the “specifically designed features meet the payroll requirements of SMEs and startups.”

The software takes care of payroll payments and filings of compliance guidelines such as TDS, PF, ESI, and PT. It also “empowers your employees to access their own account, where they can easily declare investments, view/download payslips, apply leaves,” the company adds. (Note: to learn more about these products, check here.)



Sponsored Links by DQ Promote

 

 

Send this to a friend