India, being the largest country by population, hosts the largest workforce. It is a union of 28 states and 8 union territories. Each state has its own labour laws and tax systems besides the central government regime which is commonly followed across. So, practically there is a dual tax system in place.
Therefore when processing payroll for the employees, companies are required not just to comply with the federal mandate but must also take into consideration state-specific regulations. This variability in the tax system mostly affects small businesses for the fact that they don’t have a dedicated team for payroll processing. Most of the time, it is a few HR staff who are burdened with all these additional compliance management challenges.