Payroll is the process by which a business calculates and distributes salaries, wages, bonuses, and deductions to its employees.
| Component | Description |
|---|---|
| Gross Salary | Total salary before deductions |
| Allowances | HRA, Conveyance, Medical, etc. |
| Deductions | Tax (TDS), PF, ESI, Professional Tax, Loans |
| Net Salary | Salary paid to employee after deductions |
| Employer Contributions | PF, ESI, Gratuity paid by employer |
Employee Information Collection
Salary structure, bank details, tax declarations
Calculate Gross Salary
Basic + Allowances + Incentives
Calculate Deductions
Tax deductions (TDS), Provident Fund (PF), Employee State Insurance (ESI), professional tax, etc.
Compute Net Salary
Gross salary – Deductions
Salary Disbursement
Transfer to employee bank accounts
Compliance and Reporting
Filing TDS returns, PF/ESI returns, generating Form 16, etc.
| Compliance | Frequency | Responsible Authority |
|---|---|---|
| Provident Fund (PF) | Monthly | Employees’ Provident Fund Organization (EPFO) |
| Employee State Insurance (ESI) | Monthly | Employees’ State Insurance Corporation (ESIC) |
| Professional Tax | Monthly/Quarterly (varies by state) | State Government |
| TDS on Salary | Quarterly | Income Tax Department |
| Salary Slips & Form 16 | Annually | Employer to Employee |
Ensures timely and accurate payment to employees
Maintains compliance with labor and tax laws
Helps in proper record-keeping for audits and returns
Boosts employee morale and trust
