Who Should Handle Payroll Calculations: HR or Accounts? Seeking Insights from Experienced Professionals

Dear Seniors,

I have come across companies where payroll processing is entirely a part of the HR department only. It also includes calculating TDS, professional taxes on salary, and other taxes on various heads as per the declaration done by employees. On the other hand, there are companies where the HR department only provides payroll inputs such as effective working days, LWP, and other payments/reimbursements to accounts, and calculations are done by account people only, following which they deduct various taxes.

Which is the Best Approach?

Though it entirely depends on the company and its policies, which option is good and why? I would appreciate it if seniors can shed light on this subject.

Thanks!

I would vouch for the entire payroll to be done by HR, of course with full responsibility. I have worked in companies where the Accounts department comes into the picture only for the payment of TDS and generation of Form 16, while all other payroll-related operations are handled by HR with the help of some kind of ERP system.

With this setup, HR becomes accountable for the confidentiality of employee data as well. Due to the availability of good HRIS cum payroll software, it is no longer difficult for HR professionals to manage payroll.

It is most advisable that payroll should be under HR and Admin. They can get the input from the respective units or departments and process the payroll. As HRD is the sole responsible department that controls employees' profiles, wage structures, increments, performance reviews, and wage revisions, they should also have control over EPF and other statutory deductions. After the processing of payroll, they can advise the accounts department to effect the payments to the statutory authorities and salary disbursements. This is what I was maintaining during my service tenure in the well-organized sector in the state of Goa.

Regards,
Adoni Suguresh
Sr. Executive (Pers, Admin, and Ind. Rels)
Labour Laws Consultant