HR & Payroll company compliance process in India:

I. Initial Setup & Registrations (One-Time / As Applicable)

This is the foundational step when a company starts operations or crosses specific employee thresholds.

1. Company & Establishment Registration:

   • MCA Registration: Register the company with the Ministry of Corporate Affairs (MCA) as a Private Limited, Public Limited, LLP, etc.

   • Shop & Establishment Act Registration: Register the business under the respective State Shops and Establishments Act. This is mandatory for commercial establishments and regulates working hours, holidays, leaves, etc.

   • Factory Act Registration (if applicable): If the establishment qualifies as a 'factory' (e.g., 10+ workers with power, 20+ without power), register it under the Factories Act, 1948, with the Chief Inspector of Factories of the state.

2. Tax Registrations:

   • PAN (Permanent Account Number): Obtain for the company.

   • TAN (Tax Deduction and Collection Account Number): Obtain for deducting and remitting TDS (Tax Deducted at Source). This is crucial for payroll.

   • GST Registration: (If applicable) While primarily for goods/services, it's a general business registration.

3. Social Security Registrations:

   • EPFO Registration (Provident Fund):

     • Applicability: Mandatory for establishments employing 20 or more persons. Voluntary for fewer than 20.

     • Process:

       1. Visit the Unified Shram Suvidha Portal (USSP) (https://unifiedportal-emp.epfindia.gov.in/epfo/).

       2. Sign up and create an employer account.

       3. Log in and select "Registration For EPFO-ESIC".

       4. Choose "Employees' Provident Fund and Miscellaneous Provision Act, 1952" and fill out the online registration form (Form 5A).

       5. Upload required documents (PAN of establishment/directors, address proof, cancelled cheque, incorporation certificate, etc.).

       6. Attach Digital Signature Certificate (DSC).

       7. Upon successful verification, EPFO issues a PF Code Number (15-digit unique ID).

   • ESIC Registration (Employees' State Insurance Corporation):

     • Applicability: Mandatory for establishments employing 10 or more persons (in most states) where wages are up to ₹21,000 per month (₹25,000 for persons with disability).

     • Process:

       1. Visit the ESIC Portal (https://www.esic.gov.in/).

       2. Sign up under the employer login section and create an employer account.

       3. Fill out the employer registration form, providing establishment and employee details.

       4. Upload required documents (similar to EPFO: PAN, address proof, list of employees, bank details, etc.).

       5. Upon successful verification, ESIC issues a 17-digit ESI Code Number.

   • Professional Tax (PT) Registration:

     • Applicability: State-specific. Applicable in states like Maharashtra, Karnataka, West Bengal, Tamil Nadu, etc.

     • Process: Register with the respective state's Professional Tax Department (e.g., Commercial Tax Department, Municipal Corporation). The process is typically online through the state's tax portal.

II. Ongoing Monthly Compliance Process (Payroll Cycle)

This is the core operational process that runs every month.

1. Input Data Collection (HR's role):

   • Attendance & Leave Data: Collect and verify attendance records, regularize leaves (sick, casual, privileged, maternity), and track overtime.

   • New Joinees & Exits: Get updated details for new employees (joining date, salary, PAN, Aadhaar, UAN, ESI details, bank account) and exit dates for relieved employees.

   • Salary Revisions & Variable Pay: Receive notifications for promotions, increments, bonuses, incentives, and performance-based pay.

   • Reimbursements & Deductions: Collect claims for reimbursements (e.g., travel, medical) and details of any loan recoveries or other voluntary deductions.

   • Investment Declarations (for TDS): Collect investment declarations from employees at the beginning of the financial year and proofs of investment periodically (e.g., December/January) for accurate TDS calculation.

2. Payroll Processing (Payroll team's role):

   • Validate Data: Cross-verify all inputs from HR and other departments for accuracy and consistency.

   • Gross Salary Calculation: Calculate gross earnings for each employee based on their salary structure, attendance, and variable pay.

   • Statutory Deductions Calculation:

     • TDS: Calculate based on estimated annual income, declared investments, and chosen tax regime (Old vs. New).

     • PF: 12% of Basic + DA from employee.

     • ESI: 0.75% of gross wages from employee (if applicable).

     • Professional Tax: As per state-specific slabs.

     • LWF (Labour Welfare Fund): As per state-specific rates.

   • Other Deductions: Apply deductions for loans, advances, or voluntary contributions.

   • Net Salary Calculation: Arrive at the net payable amount for each employee.

   • Full & Final (F&F) Settlement: For exited employees, calculate final dues including remaining salary, leave encashment, gratuity (if eligible), bonus, and adjust for any outstanding loans or company property.

3. Salary Disbursement & Payslip Generation:

   • Bank Advice File: Generate a bank advice file (or payroll statement) containing net pay amounts for each employee, suitable for bank transfer.

   • Disbursement: Transfer salaries to employee bank accounts, usually by the 7th or 10th of the succeeding month (as per Payment of Wages Act).

   • Payslip Generation: Generate and distribute detailed payslips (physical or via self-service portal) to each employee by the payment date, showing all earnings and deductions.

4. Statutory Remittances (Payroll team's responsibility):

   • TDS: Deposit deducted TDS with the Income Tax Department by the 7th of the succeeding month (30th April for March's TDS).

   • EPF: Deposit employee and employer PF contributions by the 15th of the succeeding month.

   • ESI: Deposit employee and employer ESI contributions by the 15th of the succeeding month.

   • Professional Tax: Deposit as per state-specific due dates (often monthly by 10th or 15th).

   • LWF: Deposit as per state-specific due dates (monthly, half-yearly, or annually).

   • Maintain Challans: Keep records of all payment challans.

III. Periodic Filings & Reporting (Quarterly / Half-Yearly / Annual)

Beyond monthly payments, there are specific returns to be filed.

1. Quarterly Compliances:

   • TDS Returns (Form 24Q): File quarterly statements of TDS on salaries.

     • Q1 (Apr-Jun): By July 31st

     • Q2 (Jul-Sep): By Oct 31st

     • Q3 (Oct-Dec): By Jan 31st

     • Q4 (Jan-Mar): By May 31st

2. Half-Yearly Compliances:

   • ESI Returns: File half-yearly returns (Form 6 and Form 01A) detailing employee contributions.

     • For Apr-Sep period: By November 11th

     • For Oct-Mar period: By May 11th

   • Labour Welfare Fund (LWF) Returns: In some states, LWF returns are half-yearly. (e.g., Punjab, Haryana)

3. Annual Compliances:

   • EPF Annual Returns:

     • Form 3A (Employee-wise Annual Account Statement) & Form 6A (Consolidated Annual Statement): By April 30th of the next financial year.

     • Some states may have annual forms under Shops & Establishments Act.

   • TDS Certificate (Form 16): Issue to employees by June 15th annually, detailing salary earned and TDS deducted.

   • POSH Annual Report: File with the District Officer/Collector by January 31st (or as per state rules), summarizing sexual harassment complaints received and action taken.

   • Bonus Act Returns: File annual returns under the Payment of Bonus Act (if applicable).

   • Minimum Wages Act Returns: File annual returns with the Labour Department.

   • Payment of Wages Act Returns: File annual returns.

   • Factories Act Returns (if applicable): Annual returns related to working conditions, safety, and health.

   • Shops & Establishments Act Returns: Annual returns as per state rules.

   • Professional Tax Returns: In some states, professional tax returns are annual.

   • Renewal of Licenses: Renew registrations/licenses under Shops & Establishments Act, Factories Act, Contract Labour Act, etc., as required.

IV. Event-Based Compliances:

These compliances are triggered by specific events.

• Gratuity Payment: Within 30 days of an eligible employee's separation (after 5 years of continuous service).

• Maternity Benefit: Payment to eligible female employees as per the Maternity Benefit Act.

• PF Withdrawal/Transfer: Processing requests from employees for PF withdrawal or transfer (Form 19, Form 10C, Form 13).

• ESI Claims: Facilitating employee claims for medical, sickness, disablement, or maternity benefits.

• Accident/Incident Reporting: Report workplace accidents to relevant authorities (e.g., ESI, Factories Inspector).

• Amendment in Particulars: Notify authorities of any changes in company address, management, or other registered particulars.

• Internal Complaints Committee (ICC) Changes: Update the District Officer about any changes in ICC members (POSH Act).

V. Automation and Best Practices:

• HRMS/Payroll Software: Implement a robust HRMS/Payroll software that automates calculations, deductions, payslip generation, and generates compliance-ready reports and challans. Most modern software platforms integrate with EPFO and ESIC portals for seamless filing.

• Compliance Calendar: Maintain a detailed compliance calendar with all due dates for various acts, ensuring no deadlines are missed.

• Dedicated Team/Consultant: Assign a dedicated internal team or engage external HR/Payroll compliance consultants to manage the complexities and ensure timely and accurate adherence.

• Documentation & Record Keeping: Maintain all statutory registers (e.g., wage register, attendance register, leave register, loan register), employee records, challans, and return acknowledgments meticulously for audits and future reference.

• Internal Audits: Conduct periodic internal audits to review compliance processes and identify any potential gaps or areas of non-compliance.

• Communication: Clearly communicate HR policies and benefits to employees, including changes in regulations or benefits.

• Legal Updates: Continuously monitor amendments to existing labor laws and the notification of new codes (like the four Labour Codes) to adapt processes proactively.