1. Prepared by : Nutan kumari Poorvi Shrivastava

2. According to section 17(1) of the ‘Income Tax Act’, Salary is defined to include the following: - Wages, - Any annuity or pension, - Any gratuity, - Any fees, commission, perquisites or profits in lieu of or addition to salary, - Any advance of salary, - Any payment received in respect of any period of leave not availed by the concerned person.

3. Disbursement of salary means is the dividing or spending of the money or the expenditure. It is the act of disbursing or paying out. It is the amounts paid for goods and services that may be currently tax deductible.

4. Recording of Arrival and Departure The recording of time of arrival and departure should be carefully controlled. Time recording clock should be installed & adequate supervision is necessary so that jobs card are not punched before the completion of work so as to earn more bonus. System for piece – Rate Workers Where piece work and bonus systems are in operation, the qualities produced should be certified by a competent inspector, and records should be countersigned by the responsible foreman. Extra allowances and payment for lost time should be recorded.

5. Terms of Remuneration and Bonus The terms of remuneration and bonus schemes should be clearly defined in writing so that no doubt can exist as to the method of payment. Overtime Overtime work should be properly authorised, and the authorised overtime forms should be passed on to the payroll department for verification of overtime bookings.

6. Wage rate schedules Wage rate schedules must be kept in personnel department as well as in the payroll department. All alterations in wage rate should be made on proper forms and be approved by a responsible official. Preparation of Wage Sheets Suitable Internal control should be instituted while preparing wage sheets. All wages and bonus calculations should be worked out by one clerk and be checked by another, and the totalling and cross addition of the sheets should be done by ‘comptometer’ or accounting – machine’, wherever possible.

7. No Role of Cashier and Clerks Cashier should not have any hand in preparing sheets. Similarly, the clerk who prepares wage sheets should not take any part in the preparation of the wages envelopes. Scrutiny of wage Sheets The wage sheet should occasionally be scrutinised by the personnel officer or works managers to guard against the inclusion of ‘dummy persons’ on the wage sheets.

8. Analysis by the Cashier The cashier should then analysis the net wages column for the notes & coins required, agreeing his total analysis with the payroll summary sheet. Wage packets will be filled with required notes and coins. There should not be any surplus or shortage of amount. It should be correct then the packets should be sealed. Payment of wages to proper person only Wages should not be handed over to any person other than the worker himself, with proper identification except on receipt of a duly authorised letter in exceptional circumstances, e.g. Sickness, disablement etc.

9. Identification of Workers There should be a satisfactory system for ensuring that all the workers are identified before they are handed over with their wage packets. Payment of wages Payment of wages will be made, if possible at one and the same time in all or several departments to prevent any opportunity for a worker to be at two places.

10. Wage Packets of Absentees The wage packets of absentees should be entered in an “undistributed wage book” and greater care should be taken while disbursing these wage packets.

11. 1.Additions, separations, wage rates, salaries and deductions are authorized for all employees. 2.Employees time and attendance dates are properly reviewed, approved, processed, documented and accurately coded for accounting and distribution. 3.Computations for gross pay, deductions and net pay are accurate and based on authorized time and amounts; the recording and summarizing of payments made and costs distributed are accurate and agree with established account classifications. 4.Payments for employee compensation and benefits programs are made to or on behalf of only bona fide employees and for services performed.

12. 5.Employee compensation and benefit costs are properly accumulated, classified and summarized in the accounts. 6.Tax information derived from Payroll activities is accurately and promptly reported. 7.The methods used in accounting and reporting the economic activity are adequate to enable management to make effective business decisions. 8.Operating procedures and internal controls provide adequate assurance that authorized transactions are processed completely and accurately in a timely manner. 9.Corporate and divisional policies and procedures are complied with.