Payroll Outsourcing
Payroll Outsourcing Service Specially Designed For New Entrepreneurs.
Services Covered :
What Is Private Limited Company ?
A private limited company in India is incorporated under the Companies Act, 2013. This Act states that it should have at least two members and can have a maximum of two hundred members. It is the most popular legal structure globally as it gives more credibility to your company.
Further, the Act also specifies certain compliance that is mandatory for a private limited company to safeguard the interest of all the stakeholders. A private limited company in India has more credibility due to more stringent compliance it has to follow.
As per the law, for such legal entities, both directors and members of a private limited company in India have limited liability to creditors of the company. Directors can only sell assets of the company, excluding their personal assets in the case of default, financial institutions or creditors.
Most of the startups and new generation entrepreneurs are opting for private limited companies because of their ease of funding. We can guide and help you with your private limited company registration in India. The process and compliances are the same all over India.
Services Covered
- DIN & DSC of 2 Directors
- 1 copy of MOA & AOA
- Certificate of Incorporation
- Government Fees*
- PAN & TAN card
- Name Search & Approval
Why Choose Us
Work Handled by Experienced Professionals
We provide an affordable service for Private limited company registration in India with almost nil professional fees. This helps you to save nearly 60% of the total cost without compromising the quality of work.
Most Competitive & Transparent Rates
Our team of trained and experienced graduates takes care of your registration process. Independent qualified professionals further verify the process. We follow a strict concept of Maker and Checker.
Legal Compliance
Dashboard
We provide a Legal Compliance Dashboard that acts as your secretary for legal work. It intimates you about the upcoming compliances and hence makes sure that you do not miss any of it.
Results in Numbers
Payroll Compliance in India
Payroll compliance in India consists of the calculations of Income Tax Compliance (TDS), Reimbursements, Provident Fund Compliance, Professional Compliance, ESI Compliance, Gratuity Compliance and various other laws.
Let’s check which compliance applies to your business.
For Income Tax (TDS)
TDS on the salary is deducted u/s 192 of the Income Tax Act, 1961 and it states that “All persons paying salary are responsible to deduct TDS on income chargeable under the head “Salaryâ€â€.
- Applicability of Section 192.
- TDS u/s 192 is to be deducted by every person paying salary whether to resident or non- resident employee. In other words none of the payer of Salary is excluded; Individual, HUF, Partnership firms, companies, cooperative societies, Trust and other artificial judicial persons have to deduct TDS on Salary.
- However no tax is required to be deducted if the estimated income under salary of employee is less than basic exemption limits.
- Rate of Tax for TDS.
- Rate of TDS is based on the slab rate of the Individual. i.e Amount of TDS is equal to Tax on income under the head salary reduced by the deductions claimed under chapter VI A and losses under the head house property.
- Tax rate structure for Individual:
| Income Tax Slab | Individuals Below Age of 60 Years |
|---|---|
| Up to 2,50,000. | Nil |
| 2,50,001 to 5,00,000 | 5 % |
| 5,00,001 to 10,00,000 | 12,500 + 20% of total income exceeding 5,00,000 |
| Above 10,00,000 | 1,12,500 + 30% of total income exceeding 10,00,000 |
- Compliance to be done under TDS u/s 192.
- Filling of TDS return: Form 24Q : TDS returns has to be filled every quarterly till last date of month following the quarter.
- TDS Payment due date:
- TDS is to be paid by 7th of every month however in case of month of March, TDS is payable till 30th of April.
- Issuance of Form 16
- Every employer is liable to issue Form 16 part A and B to each and every employee who’s TDS has been deducted.
Proof For Registered Office In India
- Applicability of Employees’ Provident Funds & Miscellaneous Provisions Act, 1952
- Any business or establishment within these industries (Industry List) or any activity notified by Central Government in the Official Gazette.
- Employs 20 or more employees (including contract workers).
- Applicable to cinema theaters with over 5 employees.
- Once registered, a business will continue be applicable and liable under the Act even if the employee count falls below 20 persons.
- Business that do not meet the criteria above can choose to voluntarily register with the EPFO under Section 1(4) if the employer and employees are both willing.
- Applicability of an employee:
- An employee is applicable to the EPF Act if his/her wages (Basic + DA) are under INR 15,000. However, in the future, the wages might include HRA along with basic pay and DA, and the government might raise the limit.
- However it is advisable to opt for PF even is the salary exceeds INR 15,000/- as it a good Investment option and deduction for the same is available u/s 80 C.
- Rate of EPF
- The Employees contribution is matched by the Employer till 12%. PF and EPS (Employees’ Pension scheme) are calculated on basic salary, dearness allowance (DA), cash value of food concession and retaining allowances if any. Most companies base it of (Basic + DA).
- However based on the recent Supreme Court Judgment the salary shall include Basic + Monthly allowance also.
- However in case if the salary is more than 15,000 P.M then contribution is restricted up to INR 1800 Per Month based on the employee discretion.
| Contribution | Employee | Employer |
|---|---|---|
| Provident Fund | 12% | 3.67% |
| Employee Pension Scheme | 0 % | 8.33% |
| Exemptions | (I) Not tax exempt Eligible for deduction under 80C | Tax exempt |
- Compliance to be done:
- Payment of PF amount is to be made on 15th of next month and return for the same is to be filled till 25th of the next month.
- Form 2 : At the time of joining employee should fill form 2. It contains his personal details and nomination.
- Form 5 : Form 5 is a monthly report which contains details pertaining to the employees who have been newly enrolled into the provident fund scheme.
- Form 10 : is a monthly report that provides the details of the employees exiting from the Provident Fund scheme during the given month.
- Form 12A : along with Triplicate copy challan, PF Form 12A monthly report that provides the details of the PF Payments made to the respective PF Accounts of the Employees during the given month.
- Annual Returns:
- Form 3A : Known as a member’s annual contribution card, Form 3A depicts the month-wise contributions made by the subscriber/member and employer towards E.P.F and Pension Fund in a particular year.
- Form 6A : is a consolidated annual contribution statement that contains details about the annual contributions of each member of the establishment.
Bookkeeping For Professional Tax
- Applicability of Professional Tax:
- Professional tax is applicable in the following states and union territories: Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Meghalaya, Odisha, Sikkim, Tamil Nadu, Telangana, Tripura, Punjab, Bihar, GOA, Jharkhand, Manipur, Pondicherry and West Bengal.
- Professional tax is payable by each employer based on the monthly salary; in most of the states, the same is maximum INR 200 per month.
- Further professional tax is also payable for individuals, including self-employed, providing specified services.
Proof For Registered Office In India
- Applicability of ESIC Act:
- The ESI scheme applies to all factories and other establishments, as defined in the ESIC Act. Ten or more people employed in such an establishment with beneficiaries’ monthly wage that does not exceed Rs 21,000 fall under this scheme. Whether the employer has hired ten or more employees, all employees agnostic of the salary are reckoned.
- Other establishment includes shops, hotels, restaurants, cinemas, including preview theatres, road-motor transport undertakings, newspaper establishments, establishments engaged in Insurance Business, Non-Banking Financial Companies, Port Trust, Airport Authorities, Warehousing Private, Medical and Educational institutions employing ten or more persons.
- The threshold for coverage of establishment is 20 employees in Maharashtra and Chandigarh.
- Rate of ESIC:
- Currently contribution rate for ESIC for employer is 4% and that for employee is 1 % of the wages.
- ESIC Compliance:
- PaymentThe total amount of contribution i.e. employee’s share and employer’s share is to be deposited with the authorized bank through a challan in the prescribed form in on or before 15th of the month following the calendar month in which the wages fall due.
- Annual Return:
- Annual ESI filingsThe ESI returns are filed half-yearly, and can be done through their online portal.
Advantages
Separate Legal Entity
A private limited company is a separate legal entity and a juristic person established under the Companies Act, 2013. A member of a company has no personal liability to the creditors of the company for companies’ debts. Hence the distinct legal entity assures that personal interest of members is safeguarded.
Easy to get funding in the form of Loan or Investment.
Most of the companies vouch for the funds in a year or two to expand its magnitude. Since private limited company has more transparency due to mandatory reporting and audits, results in higher credibility. Due to which all the banks and venture capital are more likely to assist a private limited company.
Limited liability of Members
Being a separate legal entity in the eye of law liabilities of the members is limited to their share capital only. Hence it protects the personal assets and income of shareholders at times of any financial crisis faced by the company.
Perpetual existence of business.
Since a company is an artificial judicial person in the eye of law, its existence is not affected by removal or leaving of its shareholder and directors. Directors of the company are merely an agent of the company and do not affect the company if they leave.
Tax Benefit
Against the most of the organization that is being taxed at the rate of at least 30% in India, the Private limited company is taxed at a rate of 25% if the turnover is less than Rs 400 crores.
Tax Benefit
Against the most of the organization that is being taxed at the rate of at least 30% in India, the Private limited company is taxed at a rate of 25% if the turnover is less than Rs 400 crores.
Frequently Asked Questions
Payroll processing involves accurate payroll calculations, payslip generation, disbursal, and managing payroll taxes.
Yes, compliance like Income Tax TDS deduction and Professional Tax are to be complied even if there is a single employee.
If you want to issue form 16 to your employees, then it is mandatory to file TDS return. This form 16 can act as evidence of Income to your employees, and he can avail loan based on the same.
No, PF is not required if the salary is above basic limit, but the same is advisable to secure future of employees.
The assessee will be liable to pay fine and may go to imprisonment for the noncompliance under the Income Tax Act for TDS and labour court for PF and ESIC noncompliances.
CTC stands for Cost to Company. It includes all the costs that a company incurred for a particular employee such as PF, ESIC, Gratuity contribution of employer. These deductibles are part of your compensation structure, but you do not get them as a part of the in-hand salary.
No, we have a team of professionals that includes chartered account and company secretary who will take care of your registration process. You have to only provide us with the documents as per the list sent by the Legal Workmate team.
- A small company where the owner is managing payroll.
- You don’t come across last minute compliance change that frequently
- You don’t want to invest in in-house system and infrastructure
- You have to pay at multiple locations
- Wage record, Muster roll, and books of Account maintained under other laws.
- Accident Register in new Form-11 and
- An inspection book.
- The immediate employer is required to maintain the Employees’ Register for the employees deployed to the principal employer.
Every employer who has deducted TDS of the employee has to issue Form 16 to his employee. The form consists of all the data of salary and deductions that one can claim.
Legal Workmate follows the necessary and best practice of maintaining confidentiality and data protection. The data provided by you will not be shared with anyone and will not be mailed to any person, including government authorities, without your exclusive written permission.
An Employment agreement is an agreement executed between the employee and the employer consisting of all the details regarding data privacy needed to be maintained, non-sharing of any information, resignation and notice period, etc.
CTC refers to the total expense that an employer incurs under the contract with the employer. It contains an amount of PF, ESIC and Gratuity contributed by both employee and employer.
Gross Salary means salary receivable on hand before TDS deduction by the employer. Net salary means the salary received on hand.
Gross Salary = Net Salary + TDS amount deducted.