Payroll Management System for Central Government Offices is cumbersome due to different classes of employees with their respective Grade Pay and Pay Band. One of the integral parts of Drawing and Disbursement Officer (DDO) is Payroll generation with existing payroll system, if any. Timely and accurate salary calculation coupled with Statutory Compliance is automatically expected from DDO. After Sixth Pay Commission, work of DDO became more crucial as 38 Paybands are replaced by 8 Paybands and all the Group D employees not possessing the prescribed qualifications are to be upgraded and placed in Group 'C' running payband PB-1 after they are suitably retrained. Group D employees possessing the minimum prescribed qualifications to be placed in PB-1 payband straightaway.
The task of payroll becomes complicated in today's world due to multiple statutory requirements, MIS requirements, calculations based on slabs and formulas and other policies as per Sixth Pay Commission. After Sixth Pay Commission implementation, Central Government employees are classified in 3 types and they are: Group - A, B and C and they have 4 types of Pay Bands and they are: PB -1,2,3 and 4 as per the Fitment Table below:
The task of payroll becomes complicated in today's world due to multiple statutory requirements, MIS requirements, calculations based on slabs and formulas and other policies as per Sixth Pay Commission. After Sixth Pay Commission implementation, Central Government employees are classified in 3 types and they are: Group - A, B and C and they have 4 types of Pay Bands and they are: PB -1,2,3 and 4 as per the Fitment Table below:
As per the existing payroll system, calculation of gross salaries and deductible amounts is a tedious task which involves risk to the DDO. Some of the departments of Central Government use the traditional manual method of payroll processing and some are using excel sheets or a solution similar to the same which are in fact outdated.
* Manual System - Manual payroll system is the traditional payroll system which involves pen and ink only. The process was very popular when there were no computerized means for payroll processing. Though DDOs feel that they will have full control in their hands, they are not realizing the fact that the process is tedious, time consuming and risky as it is more prone to errors.
* Automated System - This process seems to be automated where calculations will be done through Pen & Ink with the help of spreadsheet, tools developed by internal resources whose capacity is unknown. This process also sometimes lands the DDO in troubled waters as calculations will be more due to various allowances, loans, etc (details of the allowances, loans, etc are enclosed). In this process, DDOs are making use of traditional items like ink, paper, etc instead of computers, software and other computerized aids.
As per the current process, Drawing and Disbursement Officer has to prepare payroll and has to send the same to Pay and Accounts Officer (PAO). PAO in turn pass the bills and send salary cheques to the respective DDO. DDO will do direct deposit or issue individual cheques or cash to the employees towards salary disbursement. As on date, Pay Bills are prepared manually or through Excel Sheets or MS-Access or outdated tools. Due to lack of Data Base, DDOs are finding it difficult to prepare Pay Bills on time. In some cases, organizations are suffering with lack of knowledgeable person(s) who can assist the DDO in preparing Paybill month-on-month. There is no monitoring system for Loans & Advances, Allowances, Annual Increment, etc at DDO level.
Upon conducting a Market Research, some of the DDOs expressed their concerns on some aspects which are time consuming to the DDO. Not only time consumption, some aspects are testing their patience and knowledge on calculation procedures as the aspects are pertaining to Money.
Some of the aspects are listed as below:
1. Annual Increment: As per regulations, Annual Increment is offered to employees who completed Six Months of Service as on June 1st of the Year. Rate-of-Increment is 3% on Pay In Bank + Grade Pay. No individual shall draw less than the minimum Pay Band or maximum of Pay Band. If the employee falls less than the minimum, pay will be elevated to the minimum Pay Band and in case of more, it shall be restricted to maximum Pay Band. DDOs find it difficult to calculate as minute mistake also will be effecting pay of the employee and find below sample calculation on Annual Increment of an employee as per Sixth Pay Commission.
2. Increment on Promotion: This is one more area, where DDOs have to put extra efforts due to the complexity of the calculations. For promotion between 2nd Jan to 30th Jun of the year:-
*Only New grade pay is given from the date of promotion
*One Additional increment is given over and above Annual Increment Increment to be calculated - 3% on Pay In Band + Previous Grade Pay
* Individual opting for fixation of pay on promotion (2nd Jan to 30th Jun) Annual Increment will be July next year
* For promotion effective from 01 July to 01 January of the following year, one Additional Increment on the date of promotion over and above Annual Increment
*One Additional increment is given over and above Annual Increment Increment to be calculated - 3% on Pay In Band + Previous Grade Pay
* Individual opting for fixation of pay on promotion (2nd Jan to 30th Jun) Annual Increment will be July next year
* For promotion effective from 01 July to 01 January of the following year, one Additional Increment on the date of promotion over and above Annual Increment
Sample calculation of employees who are promoted between 2nd January to 30th June of the Year:
Sample calculation of employees who are promoted between 1st July to 1st January of following Year:
DDOs in these two cases have to work hard while calculating manually. This requires lot of patience and it’s a test for their mathematical abilities.
3. Allowances: Allowance means a reserve fund created by a charge against profits in order to provide for changes in the value of a company's services / assets. In other words, Allowance is a permissible difference allowing some freedom to move within limits.
Allowances for Central Government Employees can be divided into two types and they are namely Regular and Fixed Allowances with various sub classifications.
* Regular Allowances are classified as - Non Practicing Allowance, Dearness Allowance (DA), House Rent Allowance (HRA), Transport Allowance (TA), Family Planning Allowance (FPA), etc.
* Fixed Allowances are classified as - Cycle Allowance, Washing Allowance, Child Care Allowance, Split Duty Allowance, Fixed Medical Allowance, Special Sports Allowance, Hindi Pay, Conveyance Allowance, Cash Handling Allowance, Care Taking Allowance, Special Allowance for NE Regions, Hard Area Allowance, Leave Encashment with LTC, etc.
It will be hectic task for any DDO to remember Allowances and applicable cadres in the organization. If some utility is provided to remember all such aspects, it will save lot of time and energy to the DDOs and they can look into other aspects which will strengthen their organization / department.
4. Deductions: This is one more area of pain to the DDO while preparing Pay Bill or Pay Roll month on month. There are certain deductions will be known by the face of it and some other needs calculation. GPF or NPS Subscription, CGEIS, CGHS, PLI, GPF Advance, Professional Tax, Festival Advance, Motor Car Advance, Rent, Computer Loan, Motor Cycle Advance, Flood Advance, Income Tax. In some cases, DDO has to deduct salary against orders issued to Court of Law i.e. Court Attachment. Some of these deductions attracts Interest and some other are Interest Free. Either way DDO has to calculate while preparing Salary Pay Bill for the month.
Following formula is used to compute Interest by using which DDO will be calculating Interest:
Computing Interest for a Loan:
Like any other organizations, Central Government Organizations expects the following from its Finance Departments and DDO plays a major role in meeting such expectations.
Some of the aspects which will be handled by DDO are as follows:
* Regulation of Income Tax, Income Tax Returns, TDS Returns, etc
* Managing Provident Fund, Loans, Withdrawals, Interest, Reports, etc
* Monitoring Interest Free Loans & Refunds
* Monitoring Interest bearing Loans and Refunds
* Regulation of Pay on Promotions
* Generation of Pay Slips
* Auto Remittance of Salaries
* Generation of Pay Bill or Pay Roll or Salary Pay Bill month on month
* Managing Provident Fund, Loans, Withdrawals, Interest, Reports, etc
* Monitoring Interest Free Loans & Refunds
* Monitoring Interest bearing Loans and Refunds
* Regulation of Pay on Promotions
* Generation of Pay Slips
* Auto Remittance of Salaries
* Generation of Pay Bill or Pay Roll or Salary Pay Bill month on month
Printing of Schedules is one more major role of a DDO:
* Bank Remittance
* GPF Subscription
* CGEIS Recovery
* CGHS Recovery
* NPS Recovery
* HBA Recovery
* Motor Car / Cycle Recovery
* Computer Loan Recovery
* Festival Advance Recovery
* PLI/LIC Recovery
* NPF Deductions
* Cash Requisition to DDO
* GPF Subscription
* CGEIS Recovery
* CGHS Recovery
* NPS Recovery
* HBA Recovery
* Motor Car / Cycle Recovery
* Computer Loan Recovery
* Festival Advance Recovery
* PLI/LIC Recovery
* NPF Deductions
* Cash Requisition to DDO
If observed, some of the above are time consuming and needs attention due to their severity. For example, no employee can take submission of IT Returns or issuing TDS Returns. Some of them can be handled through minor softwares or through excel sheets like generation of pay slips. Rest of activities can be handled if dedicated tool is provided which will ease work of a DDO and he can spend more time towards other core areas.
In today’s computerized environment, payroll system has also developed itself into automated software that performs every action needed by the payroll process from time to time. It helps in calculating the payable amounts and deductions very easily. Automated calculations result in no errors. Data is validated automatically by the software. It needs professionals to make use of the software for its efficient working.
By taking flaws which are observed in the current system into consideration, we evolved a solution which will make preparation of Pay Bills an easy task for Central Government Employees complying to Sixth Pay Commission.
With the evolved solution, it makes DDOs to process and generate pay bills complying with the Sixth Pay Commission and printing of various Schedules, printing of TR22 (English and Hindi), Net Salary Summary, Consolidated Employee Pay, Allowances & Deductons, etc. This solution enables the departments of Central Government of India to compute and generate pay bills month on month. The product has been designed to comply with the Sixth Pay Commission and is futuristic in that it can adapt to dynamic changes.