In 2022, India saw some of the most significant changes in payroll statutory compliance since the introduction of the Employees’ Provident Fund and Miscellaneous Provisions Act in 1952. These changes had a major impact on the way employers handle payroll and their obligations to employees.

This blog post will look at the five most significant payroll statutory changes in India in 2022 and how they affect employers and employees.

Statutory compliance: The basics

Under Indian law, employers must comply with statutory requirements such as minimum wages, gratuity, income tax and other deductions, provident fund, and employee stock options. In 2022, the government made major changes in the statutory compliance rules. These changes affected payroll and taxation processes for organizations of all sizes, from startups to multinationals. Let’s look at the three most significant changes that were implemented in 2022. (Read More: Role of liquidity in financial planning)

• The new compliance standards for foreign nationals

The Indian government has implemented new compliance standards for foreign nationals working in the country. Companies need to consider the tax implications of hiring non-resident foreign employees and ensure they follow all applicable laws. Employers must adhere to different work permits, visas, and taxes regulations.

Furthermore, they must be aware of new rules regarding international payroll processes and social security contributions for these employees. It is essential to keep updated on these changes to avoid any potential penalties or legal issues.

• New guidelines for employees working from home

The Indian government has enacted new compliance standards for employees working from home. These standards are designed to ensure that employees have the necessary resources and support to work safely and effectively from home. This includes:

1. Ensuring that employers provide the adequate technological infrastructure
2. Providing remote access to relevant data and software and ensuring that employees receive sufficient training on using such technology.
3. Additionally, employers must ensure that employees receive adequate work compensation, regardless of location.
4. Furthermore, employers must provide regular feedback to employees regarding their work performance.
5. The government also ensures that employees are given appropriate rest periods and receive sufficient remuneration for their work.

• Taxation modifications for employee stock options

The Indian government recently introduced changes to how employee stock options are taxed. The main goal of this change is to ensure that employees are not only incentivized for their performance but also to help them pay taxes fairly and equitably.

As per the new rules, employee stock options are taxed in a two-part system: upfront tax at the time of exercise and deferred tax on the sale of the underlying shares. The new system will apply to any options granted on or after April 1st, 2022. Companies should ensure they are familiar with the new rules and regulations to comply with the new tax code.

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.