Companies with payroll obligations in South Asia must be aware of the many laws, regulations, and customs that can be particularly challenging for compliance, a manager with a global payroll and human resources company said May 17.
The countries that generally are considered to be part of South Asia are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, said Guhan Ramanan, head of customer success at Neeyamo Enterprise Solutions, Inc.
Familiarity with the most commonly spoken languages in South Asian countries is critical to successfully completing payroll processes because some business processes are more likely to be conducted verbally than in writing, Ramanan said May 17 at the annual American Payroll Association Congress in National Harbor, Md.
The most commonly spoken languages in South Asian countries, according to the United Nations Terminology Database, are Pashto and Dari in Afghanistan, Bengali in Bangladesh, Dzongkha in Bhutan, Hindi and English in India, Dhivehi in Maldives, Nepali in Nepal, Urdu in Pakistan, and Sinhala and Tamil in Sri Lanka.
In some regions of the world, the ability to electronically submit payroll-related forms and payments to government agencies is commonplace, but in South Asia some governmental authorities prefer paper-based submissions, Ramanan said, adding that some governmental authorities require payroll-related papers to be accompanied by handwritten signatures.
Changes related to payroll laws or regulations sometimes are not published in a sufficiently timely manner on the government websites of some South Asian countries and political subdivisions, although these updates often are included in printed publications and are available to local employers that inquire about them, Ramanan said.
The complexity of interacting with South Asia governments may cause compliance costs that can be comparable to the cost of taxes due to those governments, Ramanan said. The payroll-related compliance cost per pay period for Afghanistan, in particular, often is higher than the amount of payroll-related tax owed to the government for the period, he said.
Some South Asian countries in the past few years have announced payroll-related changes with retroactive applicability, necessitating recalculations, Ramanan said.
For recent retroactive tax changes in Bangladesh, in particular, “you can end up computing taxes and deducting them, but then have to recalculate them, and if there is a higher liability, the employee would need to account for the liability for the individual return, or if there is an excess of tax paid, the employee would seek a refund,” Ramanan said.
Many countries with monthly requirements for paying withheld income tax to the government require the income tax withheld for a month to be paid by the 10th day, 15th day, or 20th day of the following month, but some South Asian countries do not follow this general trend, Ramanan said.
India, for example, requires withheld income tax for a month to be paid to the government by the seventh day of the following month, he said.
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