Payroll is the compensation a company should pay to its employees for a specified period of time or on a given date. Payroll is generally managed by the Accounting or Human Resource department of a company. For some small businesses, payroll may be handled by the owner himself.

These days payroll is usually outsourced to third party companies that perform a wide range of payroll functions. The payroll consists of processes such as creating a list of paid employees, tracking their working hours, calculating pay, providing their salary on time, employee benefits, tax withholding.

RazorpayX Payroll is a fully-automated payroll and compliance software that automatically calculates and executes payroll with just 3 clicks every month. RazorpayX Payroll comes with best-in-industry employee self-serve portals, integrations with tools like Slack, Whatsapp, Zoho People and more.

Learn more: Features of RazorpayX Payroll

Functions of Payroll

Payroll as a function encompasses the following:

Payroll policy and process

Defining organisational payroll policy around payslip components like basic & variable pay, HRA, LTA and more

Calculating salary

Calculating gross salary, statutory and non-statutory deductions like PF, taxes, etc

Creating and maintaining records

The payroll function also creates and maintains payroll records such as payslips, time and attendance records, earnings, deductions, etc.

Tax and compliance

Payroll is also responsible for depositing dues like TDS and PF with appropriate authorities to comply with tax and other laws

Issuing salary

The primary duty of the payroll department is to disburse salary to the employees every month or week, depending on the payroll cycle as determined in the payroll policy.

Audit and reporting

Payroll function is also responsible for ensuring that proper documentation and reporting systems are in place for any audits or checks.

Answering queries

Both employees and management constantly have payroll and payslip-related queries. It is up to the payroll department to answer these queries and ensure all stakeholders have all the information they need.

Previously, businesses relied on spreadsheets or manual methods to calculate and disburse salaries. Today, automated payroll software helps businesses manage these complexities effortlessly.

A payroll cycle is the time gap between two salary disbursements. Businesses can opt to pay salaries on a weekly, bi-weekly, or monthly basis. Generally, in India, it is processed every month.

Read more: Payroll Service Provider

Advantages of Payroll

While there are benefits to a manual payroll process, automated payroll is the way to go today. Here’s why:

Reduced costs

Automated systems reduce the risk of payroll errors, which can lead to fewer penalties and fines. They also save time and resources, leading to lower labour costs.

Enhanced compliance

Automated systems can automatically calculate and withhold taxes and generate reports that can be used to verify compliance.

Improved employee satisfaction

Employees appreciate being paid accurately and on time. Automated payroll systems ensure that employees are paid correctly and on time, wh

Error-free calculation

Automated payroll systems reduce the risk of errors in payroll calculations, leading to fewer discrepancies in employee paychecks.

Timely payments

Automated calculations and payment disbursals result in on-time payments with no errors. This results in happy employees and smooth business operations.

Time-saving

Manual payroll processes are time and resource-consuming. With automated payroll, most manual tasks are done automatically in a fraction of the time.

Data security

Robust, trustworthy payroll systems store employee data very securely. Data leaks and privacy issues are a one-in-a-million occurrence. With paper-based payroll, employee records can be stolen, mishandled or lost.

Easy data insights

With all employee data and records available digitally, employers can use analytics tools to forecast trends and employee behaviour.

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Components of Payroll

Payroll Processing in India

Here are the series of steps involved in executing payroll successfully from ground zero. 

Processing payroll is a sensitive task that involves the efforts of multiple departments like HR, finance and legal. This process includes the following functions:

Pre-Payroll Activities

Step 1: Payroll policy structure

Establish a payroll policy as a first step before beginning the payroll process. A good payroll policy should address the following:

Step 2: Consolidating payroll inputs

To process payroll, you need employee information like bank account details, time and attendance data, identity information like PAN and taxation details, etc. Consolidate all these inputs into an easily accessible and secure database in order to be able to process salaries without hassle.

Step 3: Validating inputs

Make sure you validate the employee information collected before using them in your calculations. Data validation can help avoid errors and ensure compliance.

• Verify that data entered matches the expected format (e.g., numbers for SSN, dates for birthdate)
• Match employee identification documents (e.g., driver’s license, passport) with provided information
• Conduct background checks on new employees
• Identify and remove duplicate records

Payroll Activities

Step 4: Calculating payroll

Calculating payroll manually is a tedious and highly complex task thanks to the complex taxes and deductions applicable for salaried employees in India. Automated payroll calculations take a few seconds and are error-free.

For manual calculations, you can calculate gross salary by adding the basic salary, dearness allowance, house rent allowance (HRA), other allowances, and overtime pay (if applicable).

Step 5: Deduct taxes and other statutory compliances

The next step in calculating final salary is to deduct taxes. Calculate deductions like Professional Tax (PT), Provident Fund (PF), Employee State Insurance (ESI), Income Tax (TDS), and other applicable deductions and deduct from the gross salary to arrive at the net take-home salary.

Step 6: Making the actual payment

The final step in the payroll activity is to disburse salaries to the employees. This is also a tricky step, since any errors can have huge negative consequences to both employer and employee. Make sure to double-check all calculations and payments before you make them.

Post-Payroll Activities 

Step 7: Payroll Accounting

Step 9: Payslips and tax computation sheets

A payslip is a detailed document provided to employees outlining their earnings, deductions, and net pay for a specific pay period. It serves as a record of the employee’s income and tax withholdings.

A tax computation sheet is a detailed breakdown of an employee’s income tax liability for a financial year. It outlines the calculations involved in determining the taxable income, tax deductions, and final tax payable.

Methods of Processing Payroll

There are three ways to process payroll: the manual spreadsheet route, the automated route, or outsourcing the entire process.

Depending on the budget, size of the organisation and each business’s special set of circumstances, payroll can be processed in any way.

Manual Route

Many businesses at their initial stage of operations find spreadsheet-based payroll management convenient because they only have a handful of employees to manage. 

This method involves calculations using standard templates that have set mathematical formulas for the salary and compliance payment computations. 

While this is a cost-effective method, it’s not suitable for businesses when their employee count increases. Also, the opportunity cost of using a traditional system over automated methods is very high. 

Automation 

Automated software will do away with all the challenges of using spreadsheets or outsourcing them. There are many automation tools and software available in the market that can reduce manual efforts and increase efficiency. 

Apart from carrying out payroll computations, the software needs to be updated with the latest compliance laws. 

Read more: How to switch to automated software

Outsourcing 

This means entrusting your payroll execution to an agency. A lot of businesses that don’t have dedicated personnel opt for outsourcing. 

Based on their payroll cycle, they provide the agency with salary information and other data such as attendance, leaves, reimbursement details, etc. every month. The agency then calculates dues and is also responsible for complying with statutory compliances.

Current Payroll Landscape in India

To understand the current payroll landscape in India, RazorpayX Payroll commissioned a survey by the International Research Bureau, which spoke with HR executives from 163 organizations across 12 key industries.

Take the Free Payroll Maturity Assessment to unlock actionable insights for your HR functions’ growth.

The findings?

• Payroll automation is the norm. All the businesses IBR spoke to automated their payroll functions with payroll software. Only 37% of Indian businesses perform their payroll functions manually. 
• Current payroll tools being used lack functional prowess. This was clearly indicated in the fact that 31% of organizations say that their payroll accuracy is below 90%. This is an unacceptable number since payroll is a very important function in every organization.
• There is limited insight into ideal payroll solutions. Most organizations today use sub-optimal payroll software that does not provide fundamental features like automated compliance, speedy and accurate processing, data security and more.

Best Payroll Software for Your Business

Out of all the ways to carry out your business’s payroll process, automated payroll is the most popular and economical. What does a good payroll software look like?

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Intuitive & Easy: A good payroll software is intuitive and easy to operate. It should be easy to implement with minimal training for both HR teams and the employees. 

Scalable: As a business grows, so does the size and complexity of its payroll function. A good payroll software should be able to handle payroll for businesses at all stages: small, mid-market and enterprise level.

Read more: Payroll for Enterprise

Robust ESS Mechanism: Payroll software is equally used by the employee to access payslips, submit declarations and other important payroll information. A good employee self-service portal thus becomes very important since it enables employees to be self-reliant.

Integrations

HRMS Integrations: Payroll is only one of the several functions that come under the purview of the HR department and is closely tied with other HRMS functions like time, attendance, and leave management.

A good payroll software should be able to integrate seamlessly with other HRMS software. For example, the RazorpayX Payroll integrates with 45+ HRMS like ZohoPeople, Springverify and more to provide an all-in-one, seamless experience for both HR and employees.

Accounting Integrations: Payroll is an important function of the finance team as well – employee salaries take up a sizeable chunk of most teams’ budgets, and ensuring that this expense is properly and accurately recorded is very important.

For this reason, most payroll software should provide you with integrations with accounting software which will automatically record payments to employees in your books of accounts.

Compliant: The tax regulations and requirements in India are ever-changing, and good payroll software should be able to keep up and stay updated in real time. Compliance includes elements like tax deductions, PF deductions and minimum salary payment requirements.

Not adhering to regulatory requirements can be very costly for a business – it can lead to hefty fines, lawsuits or even criminal punishment.

100% Accurate and Timely: Imagine if you paid the wrong salary to your employees – the consequences of this is immense; right from correcting the error to identifying the source of the error becomes a tedious, time-consuming task.

This is why it is important for payroll software to be 100% accurate right from the start, with no room for error.

Learn more: Timely & Accurate Payroll Software 

Customizable: Every business’s needs are different; good payroll software should accommodate these unique needs with customizations. For example, businesses that pay employees on a shift-wise basis are different from those that pay on an hourly or a monthly basis.

Challenges in Handling Payroll Process

Keeping Up with Compliance 

Businesses in India have to follow a legal framework while disbursing salaries to their employees. This framework is made up of four components. 

Compliance is complicated because each tax is computed differently. Businesses must also periodically file returns on four different portals or risk expensive penalties.

Most businesses use spreadsheets and other manual methods to work on compliance, which is not the most efficient way to be compliant. The computations are lengthy, time-consuming and inaccurate. 

In India, employee laws also change frequently, making it even tougher to stay updated.

Read more: Income Tax Slabs 2023 

Spreadsheet Complications

According to a survey, over 57% of businesses in India still rely on paper or spreadsheet-based payroll management and payroll processing.

Manual payroll is easy and cheap, but also time-consuming and prone to mistakes. Information can also be mishandled and tampered with.

Spreadsheets also cannot be compliant with tax laws as they change.

Data Security 

For processing payroll, employees are required to provide a substantial amount of sensitive data in the form of official documents to the concerned team. These include employee’s bank account details, rental agreements, PAN and Aadhaar details. 

This data can be compromised; failure to protect it can seriously damage the reputation of the business and the personal security of employees. 

Paper-based documents can be misplaced easily. Even if the documents are saved on spreadsheets, they are just a password away from being misused. 

How to Manually Calculate Payroll

Calculating these taxes manually for each and every employee is a tedious task. Learn more about automating your payroll with RazorpayX Payroll.

Automate your Payroll

Payroll Glossary – Important Terms

1. Gross Pay: Gross salary is the total of all the components of the salary package offered to an employee. It is the salary before any mandatory and voluntary deductions such as income tax, provident fund, medical insurance, etc.

2. Net Pay: After calculating gross pay, you must make govt. mandated deductions such as income tax, provident fund, etc. from gross pay. The amount that an employee takes home after all such deductions is termed net pay or net salary.

3. Overtime: Overtime refers to the extra hours worked by an employee in a company than the usual defined as per govt. Law. The extra salary or remuneration that the employee will get depends on the company policies.

4. Pay Period: It is a time frame defined to calculate earned wages and determine when employees receive their payslips. Pay periods are fixed and recurring on a bi-weekly, or monthly basis.

5. Compensation: It involves managing, analysing, and determining the salary, benefits, and incentives paid to the employees for their work.

6. Contractual employees: These are not permanent employees and are usually employed on a temporary basis. Their terms of employment are mentioned in the contract.

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Responsibilities of HR and Payroll

HR focuses on employee well-being, development, and legal compliance, while Payroll handles the financial aspects of employee compensation, ensuring accurate and timely payments.

HR is responsible for attracting, interviewing, and hiring qualified candidates. They also manage the onboarding process, ensuring new hires are equipped and comfortable in their roles. They are responsible for managing benefits, performance and compliances.

Payroll, on the other hand, is a complementary function that manages the calculation and disbursal of employee wages.  It also factors in deductions for taxes, benefits contributions, and garnishments.

In most businesses, payroll and HR coordinate on employee pay, benefits and taxation matters.

FAQs

The heart of most payroll issues lie in the absence of true automation. 

Some of the other key challenges enterprises face with respect to running payroll is the risk of committing errors. Such as getting audit flags, struggling to comply with regulations and spending unnecessary time on arduous tasks. 

RazorpayX Payroll for Enterprise brings forth its exclusive technology of automated compliance to large-size businesses along with newly built advanced systems for integrations and customizations. Having already served over 10,000 startups and SMEs, this new launch marks a significant expansion of RazorpayX Payroll’s capabilities, now catering to businesses of all sizes, ranging from teams of 2 to mammoth workforces exceeding 20,000+ employees.

Let’s look at a few key offerings:

• Universal HRMS
  With open APIs and integrations with 45+ HRMS partners, RazorpayX Payroll integrates seamlessly with all popular HRMS software with Universal HRMS. This powers auto data synchronization, and streamlined workflows that provide unparalleled flexibility to clients. Noteworthy integrations include the likes of DarwinBox, SAP SuccessFactors, Oracle HCM, PeopleStrong, Keka and more.
• Bonus Management

A bonus is a one-time payment to an employee given outside of an employee’s total salary. However, unlike other one-time payments, bonuses must be minutely tracked for clawback. With RazorpayX Payroll, enterprises can provide bonuses, set clawbacks, edit and delete bonuses for your employees right on the dashboard.

• Loans and Advances
  For a good employee experience, enterprises often offer loans and advances. With RazorpayX Payroll, you can effortlessly handle employee loans, EMIs, and perquisites, offering various interest options on a dashboard for your employees. Please note that this feature is an extension of our salary advance module, and loans should be provided by your organization.

Payroll Maturity Index ‘23

RazorpayX Payroll is proud to present the Payroll Maturity Index 2023- an industry-first report offering invaluable insights into the state of payroll processes among India’s leading organizations. And it’s now available for you to explore! 

Access the report to empower your HR team with actionable insights for enhancing business efficiency. Download the Payroll Maturity Index 2023.

RazorpayX Payroll for Enterprise brings forth a comprehensive solution to the challenges faced by businesses in managing payroll. With its advanced technology and customizable features, it aims to streamline the payroll process, reduce errors, and ensure compliance with regulations. Whether you are a small startup or a large enterprise, RazorpayX Payroll has something to offer to help you manage your payroll more efficiently.

Traditionally, HR and finance systems have operated in silos, leading to manual workflows and time-consuming processes. With Universal HRMS, RazorpayX Payroll aims to bridge this gap by seamlessly integrating HRMS platforms like SAP SuccessFactors, Oracle HCM, Darwinbox, Keka, PeopleStrong, BambooHR, and more.

Benefits of Universal HRMS

Along with seamless integration with any existing HRMS platforms, Universal HRMS offers a range of other features, including:

1. Automated employee onboarding and offboarding
2. Real-time syncing of employee data between HRMS and payroll systems
3. Alerts for employee status changes, such as terminations or promotions

Let’s see how these features help us help you.

• Smooth Onboarding and Off-boarding

One of the key benefits of this integration is the ability to manage the entire employee onboarding and offboarding process across platforms without manual effort. This means that organizations can add new employees to their finance systems in minutes, rather than hours, and keep employee information updated and in sync between their HRMS and RazorpayX Payroll.

• Increased Accuracy

Universal HRMS, with its automated data synchronization feature, increases payroll accuracy. By automating the data flow between HRMS and payroll systems, organizations can reduce the risk of errors and ensure that employee data is always up-to-date.

1. Employee Delight
   Universal HRMS also simplifies tasks such as applying time-off and LOP policies and calculating FnF amounts for dismissed employees. These processes, which were previously done manually, can now be automated, saving organizations time and resources.

Overall, Universal HRMS is a game-changer for organizations looking to streamline their payroll and employee finance processes. By integrating HRMS platforms with RazorpayX Payroll, businesses can save time, reduce errors, and improve efficiency.

If you’re already using RazorpayX Payroll, you can easily connect your HRMS to RazorpayX Payroll in minutes. Simply head to the Integrations tab of RazorpayX Payroll to get started.

In conclusion, Universal HRMS is a powerful tool that promises to revolutionize how organizations manage their payroll and employee finance processes. By bridging the gap between HR and finance systems, RazorpayX Payroll is helping businesses save time, reduce errors, and improve efficiency.

Ever since its inception, Aditya and Tanushree have helped thousands of students realise their potential and produced 10,000+ toppers. They provide educational help to students of classes 6th – 12th and enable them to crack the toughest of Indian exams.

When Aditya started Doubtnut seven years ago, their HR & finance team handled employee payroll using legacy systems and Excel spreadsheets. It took them five days monthly and the team would work 24*7 to ensure salary calculations and compliances were accurate. Now, they have only one person in their accounts & HR team, respectively, who take care of the entire payroll function for 300+ employees. In BARELY a few hours in 1 day.

Download the full case study

Challenges

1. Legacy Systems & Inefficient Processes

Before RazorpayX Payroll, Aditya and Tanushree used to manage payroll with legacy systems such as Excel spreadsheets. Information was all over the place, which was inefficient and introduced errors at every step of the process. One extra or missing zero in an employee’s account number on Excel sheets blocked their entire payroll cycle or worse led to inaccurate salary payments to employees.  

We all know salary is a very sensitive topic. Even if there is an inadvertent mistake and employees end up getting inaccurate salaries, it hurts their expectations and further ends up sabotaging your brand reputation. So there has to be absolutely zero chance of error. But we learnt this the hard way.

As we scaled and added more employees, we realised that the traditional banking system that we relied upon for managing employee payroll and expenses was not cutting it anymore. We realised how important it is to have the best, most efficient systems and processes for ourselves and our employees.

2. Managing A Versatile Workforce–Contractors, Freelancers, and Interns

Doubtnut also had different types of employees—contractual, freelancers and interns. The compliances and workflows for them are different, which added complexity to their payroll process as they grew in size. But with RazorpayX Payroll, they were able to streamline salary payments and compliances for all employees, part-time or full-time.    

3. Customised Salary Payments

The salaries of Doubtnut’s sales employees included incentives based on targets achieved. Doubtnut needed payroll software that takes performance-based incentives into account and calculates the PF and TDS accordingly.

Thanks to RazorpayX Payroll, we have been able to customise the pay structure, for our sales team. These things are not easy to achieve, given India’s complex regulatory compliances. But with RazorpayX Payroll, we can manage this easily and we can shift from one form of salary payouts to another.

The Solution

The Doubtnut team was well-integrated with the Razorpay payment gateway and therefore knew of the benefits of expanding their scope to the other stack of products. Therefore, when they were on the lookout for an advanced payroll solution to cater to their growing needs—RazorpayX Payroll was an obvious choice. 

The best part was that collaboration was much easier as Doubtnut was already part of the Razorpay ecosystem.

We got onboarded on RazorpayX Payroll in barely a few hours not even days. We were able to set up the entire payroll management and from the next payroll cycle, everything was extremely smooth,” says Aditya.

Given how painful it was to manage payroll using Excel spreadsheets and traditional banking system, we were overjoyed at RazorpayX Payroll helping us manage payroll, and employee expense management in a few hours. It is all automated. It worked like magic! 

Another good thing about RazorpayX Payroll is, it has given us APIs with which we were able to automate our processes further. It makes our processes simpler, and lives easier.

I’m so thankful to the RazorpayX Payroll team who listens to customers and builds features for us. RazorpayX Payroll has provided us both, speed and accuracy with payroll.” 

“Our processes have become so efficient and we are able to do everything with greater accuracy. We don’t need separate mechanisms or shoot emails to send salary slips to our employees.

RazorpayX Payroll provides everything on dashboards and promotes employee self-service as well. If they have any reimbursements, they can simply raise the request via the portal and the managers vet it and in the next payroll cycle, it is automatically taken care of.”

When asked about Aditya’s favourite feature of RazorpayX Payroll, here’s what he said:

Results

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So this is what he did–he, along with his sister and family, managed to get those locally made fruity bars and set up a booth in Bangalore’s flea market. They got enough candy bars to last for 3 days. But guess what? All the candy bars sold out on Day 1, the first half itself.

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Go Desi’s Vision 

What makes Go Desi unique is they are selling products that remind consumers of their childhood days. They want to make the ‘Desi’ food popular enough that it’s available in every corner of India and one day, even beyond our borders!

“People don’t pick up products like Imli bars, sun-dried lemon snacks, or sweet amla candies until they know how they’re made, what kind of ingredients are used, and who made them. We also wanted to create a brand experience when people ate the local products and provide an experience of the highest quality standards.” –Raksha Kothari, Co-founder of Go Desi.

For the first few months, when Go Desi was in the making, Raksha Kothari and Vinay Kothari had a great support system in the form of their family, as they all would set up booths at flea markets. And their parents even took care of their accounts.

As Go Desi became a hit and scaled, they onboarded more employees. They grew from a team of 20 to 200+ employees, which also included contractors. When this happened, Vinay and Raksha started facing the below challenges.

Challenges

1. Delayed Payslips & Salaries

Prior to RazorpayX Payroll, Vinay and Raksha outsourced their payroll to a third party for salary calculations and payments. This payroll outsourcing agency would share employee payslips a month after making payments. What is worse is that sometimes even the salaries of employees would get delayed due to manual calculations and internal checks after receiving calculation sheets from the agency.

2. Inefficient and Error-Prone Payroll Process

As Go Desi scaled, Vinay and Raksha found that doing accurate TDS calculations and PF deductions on time became more complex. While manual calculations were easy when they were a team of 20, this changed drastically when they crossed 200+ employees. Managing information in one place and calculating TDS & PF for each employee became inefficient and error-prone. 

3. Payment of Contractors 

Along with full-time employees, Go Desi also employs contractual employees. Paying contractors after deducting the right taxes is an arduous process. Furthermore, since sales also relied on offline methods, Go Desi Founders couldn’t track their sales executives’ timesheets to calculate their attendance & salaries accurately.

All in all, the entire payroll process was extremely inefficient and arduous, with no guarantee of accuracy at the end of it.

The Solution

To address these challenges, Go Desi started looking for fully automated payroll software, which could take care of both its payroll process AND tax compliances. Vinay had heard about RazorpayX Payroll in his founder community.

After getting the product demo, Vinay was confident that RazorpayX Payroll was the right solution for them. In fact, they got onboarded within 4 days.

“Since implementing RazorpayX Payroll, we have been able to automate 90% of our manual tasks related to salary disbursals and tax payment and filing at scale. This has not only saved us time and resources but also given us peace of mind knowing that everything is accurate and compliant.” – Vinay Kothari, Founder of Go Desi.

Results

The finance & HR team of Go Desi no longer had to bear the burden of outsourcing payroll to an external agency or manual tax filings such as PF, PT, TDS & ESIC; as a result, the management saved more than 500+ hours annually on payroll. This enabled Go Desi to ensure timely payment to all employees, including contractors and elevate their employee
experience.

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Note: All findings in this report are based on analytics on the RazorpayX Payroll platform between Oct 2022 to March 2023. Growth percentages are a comparison between FY23 and FY22 (unless specified otherwise).

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If you liked the report, feel free to share it on your social channels or with someone who can benefit from it.

Until next time!

Imagine if you could host your common rooms, have some interesting conversations around different rooms, or even play a game of Mafia together remotely. It is exactly what Zo World enables you to do. 

Co-founders Dharamveer and Chetan have also built Zostel, the world’s largest branded backpackers hostel chain and came up with the idea of  Zo World.

With Zostel, we’ve built a strong travel community and become the world’s largest chain of Backpacker Hostels. And now, with Zo World, we are bringing the same ethos to Web3.

As Zo World scaled, the company faced one major roadblock–calculating and processing payroll & reimbursements for its employees manually.

Zo World’s challenges

When I joined Zo World in October 2021, payroll processing, reimbursements, tax filings and generation of payslips were being done manually. It was not only time-consuming but also quite cumbersome. I felt, we have to find a better solution and need to automate things.

– Tanmay Srivastava, AVP – Finance at Zo World.

I first heard about RazorpayX Payroll from a practising CA friend. He gave a brief introduction about the product, after which I searched on the web myself. After going through the website, I felt that the product looks quite promising.” – Tanmay continues. 

I raised a ticket with RazorpayX Payroll’s team. Somebody promptly reached out &  explained every single feature in detail. I was highly impressed. Soon after, the onboarding process was also completed in no time and it was pretty smooth & seamless.

How RazorpayX Payroll helped Zo World

Besides automating our payroll & reimbursements, another major breakthrough arising out of collab with RazorpayX Payroll was TDS (Tax deducted at Source) filings & make required compliance payments within the stipulated timeframe. Previously, we used to manually keep a track of such timelines.

Cut to now–everything is super smooth. Our tax filings (24Q)  have been set on auto-pilot mode and taken care of by the product.

There are so many reports and free letter templates like offer letters, appointment letters, etc., to choose from. Right from the onboarding to salary execution, reimbursements to handling employee full and final settlement during exit– everything is simply flawless.

Happy employees, productive employees

The employees of Zo World are delighted as they don’t have to ping Tanmay anymore for salary slips. Instead, they log into their accounts and access them with just a few clicks. 

I am very happy and thankful to the team for launching such a wonderful product. It makes my life easier.”

Earlier, when we were making payments directly through banks, they would give us a template and every time we had to make a payment, we had to use that bulky template and fill in details manually, each time. Then we had to upload that onto their website. It was complicated and extremely time-consuming.”

Keeping track of who has joined or exited the company manually was also becoming tough for me. But it has all become effortless after RazorpayX Payroll. All I have to do is mark the employee inactive, and automatically the payroll will not happen.” 

Similarly, if a new employee has joined, I just have to create a new profile and put the joining date. His record will be automatically updated during payroll processing.”

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The icing on the cake

“Another feature that stands out for me towards the financial-year closure is the validation of investment proof filed by our employees by the RazorpayX Payroll team. It used to be manually done earlier and was too time-consuming. 

With this amazing product, employees can download their respective Form 16 themselves. 

“Processing reimbursements have become very easy. An employee just has to log in to their accounts, upload supporting documents, and then the manager has to approve. Then it comes to me. If I cannot see the supporting documents or the amount needs to change, I can bypass the approval and change the amount so that the correct amount is reimbursed to the person.”

“Everything about the product is fantastic overall. But for me, validation of investment proofs filed by the employees, automation of TDS payments/filings and processing of reimbursements are the cherries on top of the cake.”

And the best part of using our product for Tanmay is:

I use my newfound free time to spend with my family and learn new skills that would help me grow professionally.”

Don’t take our word for it; try RazorpayX Payroll yourself. We don’t even require your card details.

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It’s that time of the year when employees have to submit investment proofs for tax-saving investments declared at the beginning of the financial year. If you already know about the process and want to directly read the instructions for investment proof submission please find the free PDF below.

As a general notion in India, employers seek investment declaration from their employees twice every year – one at the beginning of the financial year, and another during December-January. 

The first one is just a declaration of tax-saving plans for your employees, and the second is the submission of proof that the tax-saving investments were made as planned. Before diving into the process of submitting investment proofs, let’s talk about tax-saving investment options.

List of tax-saving investment options  

There are various ways for individuals to save tax on their annual income. The Income Tax Act provides several exemptions from the salary while computing taxable income.

In addition to the exemptions, the income tax also has various sections under which individuals can invest their money and save tax by getting tax deductions. Given below is a list of tax-saving investment options-

Tax Saving Fixed Deposit in a bank (up to 5 years): You can invest in a tax-saving fixed deposit for 5 years. It provides deductions up to Rs 1.5 lakh per annum under section 80 C of the Income Tax Act, 1961. You can earn up to 6-7% returns yearly on these deposits. 

Public Provident Fund: Public provident fund is a long-term investment that can be withdrawn fully after 15 years and partially after completing 6 years. You can make an investment in PPF under section 80 C. 

National Savings Certificate (NSC): NSC is a government saving bond aiming to induce small investors to invest in it and save tax under section 80 C. 

National Pension Scheme (NPS): Investment in NPS for up to 10% of salary for salaried individuals and 20% for self-employed individuals is exempt under section 80 CCD (1).

ELSS funds: ELSS is a tax-saving investment scheme that has a lock-in period of 3 years. By investing in ELSS, you can claim a deduction of up to Rs 150000 a year. 

Unit Linked Insurance Plan (ULIP): ULIP is an integrated scheme offering investment and life insurance. Investment up to Rs 150000 can be claimed as a deduction under section 80C. 

Senior Citizen Saving Scheme (SCSS): This investment scheme helps senior citizens (above 60 years) save money for retirement. The amount remains locked in for 5 years. The amount invested in this scheme can be claimed as a deduction up to a maximum of Rs 150000 a year. 

Tax-saving investment sections 

Various sections within the Income Tax Act 1961 allow individuals to save taxes by making investments during a year.

Section 80 C: Section 80 C is a section of the Income Tax Act, 1961 that allows the individuals and HUFs to claim deductions for up to Rs 1.5 lakh for certain investments and expenses made during a year. Here are some of the investments allowed under this section-

• Tax saving Fixed Deposit (5 years)
• Equity Linked Savings Scheme (ELSS)
• Public Provident Fund (PPF)
• National Savings Certificate (NSC)
• National Pension Scheme (NPS)
• Unit Linked Insurance Plan (ULIP)
• Sukanya Samriddhi Yojana (SSY)
• Senior Citizen Savings Scheme (SCSS)

Section 80 CCD: A deduction of Rs 50,000 can be claimed on any investment made in NPS. This deduction can be claimed in addition to the deduction of NPS claimed in section 80 C.

Section 80 EEA: Any interest payment made for purchasing a new house under the affordable housing scheme is eligible for deduction of up to Rs 1,50,000 under Section 80EEA.

Investment Proof Submission Process  

Investment proofs are documents proving that an investment has been made and contains the details. The finance and payroll team need to collect and verify the investment proofs of the employees to calculate the income tax, deduct TDS and then remit the remaining amount as salary. 

There are various steps involved in the collection and verification of investment proofs. Let us look at the 7-step process to collect and verify investment proofs. You can also download this PDF which lists the instructions for submitting the investment proofs in detail and even pass it on to your employees. 

Download PDF instructions for investment proof submission

Planning

It involves mapping out the entire process and deciding the window during which the employees can submit their POIs (Proof Of Investments) and the deadline for submitting the same. 

Collection of Proofs

It is the process of collecting the proofs from your employees either in hard or soft copy. An employee portal can make the process easier as they can upload the proofs and the supporting documents on the portal, and the payroll team can access them easily. 

Resolve Queries

Ensure the employees have all the relevant knowledge about the proof submission process. Resolve their queries and be approachable over email, calls, and texts. 

Verifying the submitted Proof of Investment

This step involves verifying the investment proof submissions with the investment declared by the employee. Based on the verification process results, you can accept or reject the POI. 

Re-collecting POI

If the POI submitted is invalid or does not have the correct information, it can be rejected, and the employees can be asked to re-submit it. 

Re-verifying POI

This step involves re-verifying the POI submitted by the employees.

Computing Payroll

The last step involves computing the payroll using the investment proofs, deducting TDS, and remitting the remaining amount to the employees.

Investment Proof Submission on Behalf of Employees 

Once the employers receive the proof of investment from the employees, they are required to submit the same on their behalf. One of the best ways to make the investment proof submission process easy is to invest in a good employee self-service portal. 

These self-service portals allow the employees to submit their proofs and supporting documents at any time, anywhere. It is also a great way to automate the process of keeping the employees informed about the deadlines of proof submission and whether the proof was accepted or rejected. If your employees fail to submit proofs, a huge chunk from their salary might be deducted as TDS.

One such software or self-service portal is RazorpayX Payroll. 

RazorpayX Payroll simplifies the tedious process of investment declaration and proof submissions for your employees. The software allows employees to calculate their tax liability under the old & new tax regime, helping them plan their taxes, and declare investments. Also, it automatically triggers reminders for investment proof submission around the cut-off date. 

Let’s have a look at the process.  

Your employees can log in to their personal or individual account and upload their investment proofs under ‘Tax Deductions’. Or, they can just click on https://payroll.razorpay.com/taxDeductions, and upload related documents.

We understand that there can be some tax-saving investments where the payments are due in the later months of FY 2022-23.

In such cases, your employees can upload partial or previous year’s investment proofs (if any). The software will validate it accordingly and provide an accurate claim.  Your employees can update the proofs once the actual payments are made. But, these changes will require your approval. 

Once your employees are done with the submission, RazorpayX payroll will validate all the tax-saving investment claims. If the software detects any missing information, the tax deduction will be removed automatically. Such adjustments will affect your employees’ TDS for the remaining months of this financial year and reduce their take-home salary.  

Please ensure to communicate with your employees that any false claim or incorrect information can create trouble in the future. 

What’s in it for employers?

RazorpayX Payroll provides you 100% visibility of the entire payroll process, including employee tax declarations. 

You can login and view the ‘Tax Deduction Report’ under ‘Reports’ column at any time and from anywhere. This report will help you understand whether your employees have declared and submitted their tax-saving investments proofs. 

If you haven’t tried RazorpayX Payroll for your business, sign up now and let it manage all things payroll for you. 

In the spirit of New Year and sudden surge of year-end optimism, we’ve compiled a powerful list of reasons around why the ongoing clouds of layoffs in India and hiring freeze have a silver lining. For everyone, employees, HR professionals, and founders. 

First, let’s talk about employees.

How employees should look at layoffs in India

A catalyst to assess your career path 

Do you know that MS Dhoni, one of the most beloved Indian cricketers, had originally started as a goalkeeper in football before a coach turned his attention to cricket? Imagine if he never gave up football!

The predicament of changing a career path can be a difficult and emotional experience, but it can also be a chance for individuals to reassess their goals and consider new opportunities that may not have been available to them before. This can be especially true for employees involved in a particular role or industry for a long period.

Lesson learnt: Take a long hard look at your career path and where you want to go in the long term. Assess your strengths, competencies, passion as well as growth prospects of various career opportunities available.

A time to learn and grow

Once you assess your career path and if it involves learning and acquiring new skills, make small investments in the form of short-term courses or online training to get skilled in that area. There are a lot of fields such as artificial intelligence, machine learning, network security and more that are ripe with opportunities and will always be relevant.

Of course, the first step towards something completely new is always the hardest. But with determination and strong will, you will be able to start a career in a new field and this in the hindsight might turn out to be the best thing that ever happened to you. 

Lesson learnt: it’s time to adapt and acquire new skills.

Network and make connections

It can be a good time to build relationships with colleagues and other professionals in your industry. This can help you stay informed about potential job openings and opportunities internally and externally. You can also take the help of job coaches to crack interviews and figure out how to have a systematic approach to achieving your goals.

Lesson learnt: Stay abreast of what’s happening around you by networking with people around you and ask for help.

Now, let’s talk about founders and HR professionals. 

Layoffs are hard for founders and HR too. Not only do they go through the emotional strain of telling someone to go home forever but also once the employees are fired, there is a gap that’s created in whatever responsibilities they undertook and an urgent need to fill that gap. Below mentioned are some silver linings for founders and HR departments. 

How founders and HR professionals should deal with layoffs in India in 2023 

Focus on cross-training & multiple roles

Every employee wants growth and learning on the job and this situation could be a golden opportunity for both employers and employees. For instance, if there is a hiring freeze, examine if someone working in the finance department wants to acquire training and skillset to also take care of certain administrative work of the company.

See if one of your employees can be an ‘SEO and growth specialist’ rather than only an SEO expert. The goal is to create a strong workforce whose output becomes greater than the hiring cost so that you can avoid layoffs altogether.  

Lesson learnt: you might not require two resources for a job in the first place. In case, it doesn’t work out long-term, you can always hire later.

Introducing the right tech that lowers manual tasks & costs

There is a lot of work that can be easily automated with the right tech in your company. If you are spending heaps of money on outsourcing manual work to external agencies, replace it with affordable software. This way even employees can focus on more strategic work that directly contributes to business growth.  

One such software for startup founders and HR is RazorpayX Payroll. It automates payroll, salary distribution, and compliance filings such as PF, PT, TDS, Flexi benefit plans, and other administrative tasks in just a few clicks. 

Explore RazorpayX Payroll’s forever free plan

Lesson learnt: you should implement the right tech to reduce outsourcing costs. 

Prioritise retention of your best employees

Believe it or not–even during times of economic downturn and layoffs in India, your best employees are going to have choices. If you are going to give them additional responsibilities, ensure that you have a solid retention strategy in place so that they choose you over anyone else. Acknowledge and appreciate them for the extra mile they are going for you because loyalty is a two-way street!

Lesson learnt: retain your best players!

Support your employees emotionally and financially as much as you can

Rough times don’t last forever. As an employer, you should always try to look after the mental and financial well-being of your employees. If you are a founder, maybe taking less salary home during tough times and ensuring there are no pay cuts or pink slips will build respect and loyalty for your brand in the longer run. Who doesn’t like and advocate a hero? 

Pro tip: If you are a small business and you don’t know where you can get group employee insurance plans, RazorpayX Payroll provides employee insurance to teams as small as 2!

Try everything in your power to avoid layoffs and even if you have to let go of your employees, do it in a manner as graceful as possible. As a founder, you can check within your circle if the laid-off employees can go join other companies. You can also take help from outplacement services. These are professional services that help employees who have been laid off in their transition to new employment. Whatever you do, do it with honesty and transparency–right from the start.

Lesson learnt: Provide emotional and financial support to your employees in times of need and have honest communications. 

Above all, stay positive and focused

It can be easy to get discouraged during layoffs or times of economic downturn but try to stay positive and keep a long-term perspective. Focus on what you can control, and try to stay motivated and engaged in your work.

Stay focused with RazorpayX Payroll

RazorpayX Payroll is an award-winning payroll software that automates tedious administrative HR work of four days’ to barely 3 clicks. It has helped save over 150,000 hours on payroll processing which translates to ~ 6000+ days or 16 years of combined effort across organisations (in just the past year alone!)

Tell me more

• India’s fastest salary disbursals
• India’s only TDS, PF, PT, and other compliance built into the product, complete with TDS filing
• India’s only integrated employee insurance offering
• Is Slack, Whatsapp, Freshteam and other software integrated
• Interface so easy that a 7-year-old could process payroll

Don’t believe us? Check out our wall of love and come back to this blog to give it a free test drive by signing up!

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Many prominent Indian IT companies have framed strict rules around moonlighting and have deemed it ‘unethical.’ In contrast, the startup ecosystem seems supportive of it as long as employee productivity doesn’t take a hit. This blog post details everything about moonlighting in India, the chain of events that led to the debate, and if it’s legal. It also lists practical ways of tracking employee moonlighting.

But first, let’s cover the basics.

What is moonlighting?

Moonlighting, in simple terms, means having a second job in addition to the main one. It could be a side hustle, a night job, or something someone takes up over weekends. 

Historically, most people used to take up a second job at night, hence the name ‘moonlighting.’ Now, let us look at some events of recent months that led to all the discussions around it.

Why has moonlighting become the talk of the town?

During the COVID-19 pandemic, several companies had to shift to a work-from-home model. At that time, several people started working on more than one job at a time. This year, a few startups recognised this and saw this as an opportunity to support the employees and build a culture where they can work on side hustles as long as their productivity doesn’t get affected. But this wasn’t the case with giant IT services companies. 

As you can deduce from above, several traditional IT firms do not see moonlighting as ethical.

Is moonlighting legal in India?

According to Pooja Ramchandani, who heads the labour and employment law practice at Shardul Amarchand Mangaldas & Co, a law firm in India–there is no specific law on moonlighting in India. So, technically, as long as your side hustle or second job or gig doesn’t interfere with your primary job, it is not unethical.

Employers and employees need to be careful of the terms of their contract of employment. If there are clauses, in which working for another employer has been explicitly called out as unethical or non-tolerant, an employee shouldn’t do it and there can be legal implications. For better clarity, employees should talk with the management or HR of the company if they are planning to take up a side hustle.

Tax implications of moonlighting

1. If the amount is received as a salary, 

Then it will be subject to the standard deduction, section 80C deductions, monthly TDS (Tax deducted at source), quarterly PF and tax contributions, if applicable. 

2. If the amount is received as professional fees,

In this case, it is considered taxable income under ‘Profits & gains from business & profession’ after deducting expenses such as–travel, electricity, laptops etc.  

Consider Richa, a software engineer, who draws a salary of Rs. 14 lakh from her primary job. Her taxable income after all the tax deductions will be Rs. 12 lakh, and Rs. 179,400 will be deducted as TDS.

[Suggested Read: How to Calculate Income Tax on Salary With Example]

Now, Richa also got Rs. 9 lakh from another company that outsourced a coding project, for a software app. She received this as professional fees. Now here, the TDS deducted will be 10% of Rs. 9 lakh, which is equal to Rs. 90,000. Richa opts for presumptive taxation, so only Rs. 4.5 lakh will be taxable (50% of gross income u/s 44ADA). Her total taxable income is Rs. 1,650,000 ( Rs. 12 lakh salary + Rs. 4.5 lakh professional income), and the total tax liability would be Rs. 319,800, out of which Rs. 2,69,400 is already deducted as TDS (salary TDS Rs. 179,400 + Rs. 90,000 TDS on professional fees). Hence, the tax payable would be Rs. 50,400.

3. If the amount is received as independent income on a part-time basis,

Then also the income is subject to various taxes under ‘Income from other sources.’ Various professionals, like chartered accountants, assist in bookkeeping and other services part-time or at the end of the financial year. The above would apply to them. 

How to know if employees are moonlighting?

A viral tweet by a stock investor, Rajiv Mehta,  debunked how Wipro employees got caught moonlighting and were subsequently sacked. It was the Provident Fund deductions in the government portal that gave it all away.

[Suggested Read: Everything a Business Needs to Know about the EPF Scheme]

Every employer in India has to register under the EPF scheme on the government portal when their organisation’s employee strength exceeds 20. Each employee is assigned a UAN (Universal Account Number) which is linked to their EPF (Employee Provident Fund). Any employer can access the UAN of an employee to check if more than one PF contribution is made. This automatically means a payment from another employer.

However, this form of moonlighting is only detectable if the income is received as salary from the employer–which is one of the methods mentioned above in the article. If the income is received after doing freelancing or part-time-based work, it might be difficult to track. In that case, companies can outsource this to external agencies that do background checks to identify if the employee is working more than one job. 

Over to you

Whether you want to support your employees in moonlighting, is completely up to you, but it is better to have clearly defined policies around it. The HR should talk with the employees in the organisation and then educate them about these policies. 

If you feel that your customer data and privacy will get compromised if the employees work with direct competitors, have stringent policies. If you are the kind of establishment that doesn’t mind your workers taking up side gigs over weekends, frame policies accordingly and let them know.

Manage employees and tax deductions automatically with RazorpayX Payroll

Since there are innumerable laws and Acts governing companies, tax deductions can become overwhelming. RazorpayX Payroll automatically calculates compliances such as PF, PT, TDS, and ESIC and files them for you. All you have to do is sign up.

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It is India’s only fully automated payroll software, and its features include:

• Automatic salary calculation and disbursement 
• Payroll execution in 3 clicks
• Leave and attendance management
• Insightful reports
• Automatic compliance calculation & filings such as PF, PT, TDS

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