What does a payroll outsourcing service typically cover?
A typical payroll service covers monthly payroll computation, payslip generation, statutory deductions and challans (PF, ESIC, PT, TDS), filing of related returns, Form 16 issuance, full-and-final settlements, and an employee helpdesk for payroll-related queries.
How are statutory contributions like PF and ESIC calculated?
PF is generally calculated on basic salary plus dearness allowance at prescribed rates contributed by both employer and employee. ESIC applies to employees below a wage threshold and is computed at applicable percentages on gross wages. Exact rates and limits are governed by EPFO and ESIC notifications.
How is TDS on salary computed?
TDS on salary is computed on estimated annual income after considering exemptions (HRA, LTA, etc.), deductions (80C, 80D, 80CCD, etc.), and applicable tax regime — old or new. The annual liability is divided over the remaining months of the year and adjusted for actual proofs at year-end.
How is data shared and kept secure?
Payroll data is shared through encrypted channels and stored in access-controlled systems. Service providers typically sign confidentiality and data protection agreements, and use role-based access, audit logs, and secure backups to protect sensitive employee information.
How are full-and-final settlements handled?
F&F includes salary up to the last working day, leave encashment, notice pay (recovery or payment), bonus, and gratuity if eligible, less any recoveries and applicable TDS. We compute F&F per policy, share it with HR for approval, and process the final pay-out and clearance.
Can payroll be integrated with our HRMS or attendance system?
Yes. Most modern payroll systems can integrate with HRMS, biometric, leave, and attendance tools using APIs, file imports, or scheduled exports. This reduces manual data entry, errors, and improves overall accuracy and turnaround time.
Is outsourced payroll suitable for small companies?
Especially so. Smaller companies often face the same statutory complexity as larger ones but lack in-house expertise. Outsourcing gives them access to experienced professionals, secure tools, and statutory updates at a predictable monthly cost without the overheads of a full payroll team.