Managing Payroll Across Multiple States: How Do We Handle Different Rules and Regulations?

Happy Ganeshotsav to all! I am seeking advice on the following issue. We are a third-party payroll management firm in Mumbai. Recently, we have been offered to manage the payroll function for the entire Western region, comprising five states, by one of our clients.

Concerns Regarding Payroll Management

My concerns are as follows:

1. Are we supposed to process payroll according to Maharashtra rules or rules specific to the work locations?
2. What are the components that change with different locations?
3. How can PF, ESIC, and PT be managed for these locations?
4. Are there any other implications we should consider?

I kindly request your insights on the above-mentioned issues. Thank you in advance.

Regards,

State-Specific Payroll Management

The payroll in different states, in my view, has to be run according to the laws applicable to that state. Though P.F. and ESI are central Acts, the Professional Tax Act, the Labour Welfare Fund Act, etc., are State Acts, and the provisions may be different from state to state. You also need to verify whether there exists any other State Act calling for deductions from employees' side towards any state welfare schemes.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Payroll Management Across States

PF/ESI remains the same throughout, and you can take central processing in Bombay HO. For P-tax, Company tax, and LWF, slabs prescribed by the respective corporation have to be followed in every state. Yes, it varies from state to state. Each branch outside HO has to remit a cheque/DD to the labor license officer based on the average of six months' gross salary of employees of that branch every half-yearly. Please refer to the respective state government labor site for income range and tax slabs. Otherwise, you may end up paying P-tax for all employees under the Maharashtra slab plus P-tax of those in branches to respective corporations. Double remittance indeed..!!

Regards, Chandru