Statutory Compliance Management with Spine Software


While most of us are clueless about what Statutory Compliance is, in HR, it simply is the legal framework which organizations must abide by, as regards to the treatment of their employees. It is an integral part of an organization that takes care of the practical concepts of legal implications, and the application of these concepts is essential in all business organizations. In India, these compliances or rules are very complex. In-depth knowledge of statutory compliances is required to minimize the risk associated with the noncompliance of statutory requirements. Without an absolute expertise, this all becomes a challenge! In today's competitive and legal business world, Human Resource Department ensure compliance with the legal regulations with the help of good payroll management software. Without that, if they fail to adhere to this, they may have to face heavy penalties.

But is your payroll software 'Statutory Compliant'? Here is a checklist of several compliance functions that Spine Payroll Software simplifies for you:

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Statutory Compliances for ESI Fund, PF and TDS Deduction

1) ESI Fund:

The ESIC fund brings affordable healthcare benefits to employees as well as their dependent family members. As per the Employees' State Insurance Corporation Act, ESIC is applicable to employees earning Rs. 21,000 or less per month.

2) PF:

Any company that has 20 employees or more is required to be registered for Provident Fund. Failure to comply with EPFO's norms, the company has to bear heavy penalties. A minimum of 12% is calculated from the basic salary of the employee and contributed as PF is deducted from the CTC.

3) Professional Taxes:

Professional Tax is collected by the employers from the employees' salaries every month and failure in the collection or failing to pay professional taxes results in penalties. Professional Tax Professional tax or employment tax is a state-based tax; hence it set state wise in our Statutory Compliance Systems.

4) Gratuity:

Gratuity is applicable to all organizations including NGOs, hospitals and educational institutes with an employee count of 10 or more. As per the Payment of the Gratuity Act, 1972, it is an amount given to employees by the employer, paid at the time of retirement after completing five years in service. The calculation of gratuity goes as Basic + DA divided by 26 * No of years of service *15.

5) TDS:

According to the Income Tax Act, 1961 TDS (Tax Deducted at Source) is deducted is a means of indirect tax collection, only if the employee falls under the Income Tax Slab. Under this rule, the employers deduct a certain amount of tax before paying salary to the employee. TDS rule is applicable. Income tax calculations are fully automated in compliance management systems and reports such as Form 24Q are auto-generated stating all the required details.

Statutory Requirements for Minimum Wages

As the name suggests, the act concerns about the minimum wages that must be paid to skilled and unskilled labors. The wage rates are determined by both the Central Government & State Government which not only covers the money for bare minimum survival but also takes care of education, medical requirements, and some level of comfort of workers.

The Minimum Wages Act being a 'state' subject, the role of Payroll management in the statutory compliance is to distribute minimum wages of an organization's workers across different states.

Other Statutory Acts

'Overtime' wages payable to workers is also a statutory requirement as per the Factory Act & Payment of Wages Act.

The EDLI (Employees' Deposit Linked Insurance Scheme) provides assurance benefit (death insurance cover) to employees along with PF benefit. The employers contribute 0.5% of the total wage.

Labor Welfare Fund takes care of various benefits and facilities offered by the employer to the employee. The rate of contribution of employer-employee may differ from state to state.


All the above mentioned statutory compliance functions are met by Spine Payroll. Our software guarantees a holistic approach to the compliance framework and the adherence.