What is the payroll management?

·        Payroll management is by which an employer manages the salaries the or wages of the employee.

·        It includes salary, wages, allowances, deduction and net payable to the employees. It also deals with the generation of pay slips.

·        Company must deduct statutory deductions from employees and contribute its part too. Pay these liabilities to government department and file return in prescribed format.

Terminologies of payroll

·        Employees earning

·        Employees deductions

·        Employer’s statutory contributions

Employee’s earnings: An employee earn by way of Fixed or variable salary component.

 E.g.-Basic Salary, House Rent Allowance conveyance, wages, uniform allowance Bonus, etc.

Employee’s deduction: - Mandatory statutory deduction from on employee’s salary and something non- statutory deduction too.

E.g. - provident Fund, Professional tax (state specific), Employee state insurance (ESI), Income tax, canteen Deduction etc.

Employee’s Statutory contributions: - An Employer must contribute mandatary statutory contributions towards an employee.

E.g. - Provident Fund, pension scheme and PF employee state insurance

Earnings & deduction calculation

Total Earnings: This is the sum of all employee’s earnings.

E.g.- Basic salary + HRA + Conveyance

Total Deduction: This is the sum of all employee’s deduction.

E.g.-Employee PFT professional tax + employee EST + Income Tax

Net salary: - This is the net of total

E.g.- Total earning total - deduction = net salary

Cost of company (CTC)

Cost of company (CTC): CTC is the total amount of expense on employee spends on on employee spends on an employee for a year. It is calculated by adding salary to the cost of all additional benefits an employee receives during the year.

E.g.- If an employee’s salary is 5,00,000 per year and the company pays an additional 10,000 For their health insurance the CTC is 5,10,000 such benefits and privileges given apart prom salary is included for CTC calculation.