Who Should Own Payroll Inputs in India: HR or Finance? Seeking Your Insights

Dear Friend,

I request your valuable inputs on the roles of HR and Finance teams in Payroll. Please try to connect the inputs from a statutory and ownership standpoint rather than relying solely on industry practices. All I want to know is, what is the best practice that should be followed.

In my view, since HR is responsible for employee payroll, all inputs, except for TDS (Income Tax), should be provided by HR to finance or a third party for preparing the payroll. HR should have complete ownership of the inputs as well as all payroll components (earnings/deductions, excluding TDS).

I am looking forward to prompt and solid inputs to implement.

Cheers,
KK

Greetings,

Common practice is that HR provides inputs as per the monthly payroll calendar, and Finance processes it. As you have explained, this is exactly how it can be done. HR provides the following details in Excel sheets to Finance by the 20th or 25th of every month:

1. New employee details
2. Incentives for the month
3. Hike (if issued)
4. Attendance
5. Variable pay
6. Stop payment (It is recommended that stop payments are treated as the highest priority, and there should be no cutoff time period for this. Finance should accept the information until the last minute. For example, if an employee resigns on the 31st evening and the salary is to be disbursed by the 1st evening, Finance should accept the information from HR and process it promptly).
7. Any other amounts mentioned in the salary structure in the Appointment letter, such as Car Maintenance, Cell phone reimbursement, etc.

Please do revert if you have any further queries.

Regards,
(Cite Contribution)