Payroll management done right, every month

Payroll management is the end-to-end process of calculating employee salaries, deducting statutory contributions (PF, ESIC, TDS, PT, LWF), generating payslips, and filing monthly/annual returns with government authorities like EPFO, ESIC, and the Income Tax Department.

The five core statutory deductions are: (1) Provident Fund (PF) - 12% each from employer and employee under the EPF Act, 1952, (2) Employees' State Insurance (ESI) - 4.75% employer + 1.5% employee under the ESIC Act, 1948, (3) Tax Deducted at Source (TDS) under Section 192 of the Income Tax Act, 1961, (4) Professional Tax (PT) - state-dependent, and (5) Labour Welfare Fund (LWF) - applicable in select states.

EPF: Both employer and employee contribute 12% each of basic wages + DA (capped at ₹15,000/month). Of the employer's 12%, 8.33% goes to EPF, 3.67% to EPS (pension scheme), and 0.5% to EDLI (insurance). ESIC: Employer contributes 4.75% and employee 1.5% on gross wages up to ₹21,000/month. Total ESIC: 6.5% of eligible wages.

ESIC is mandatory for employees earning ₹21,000 or less per month. Employees earning above ₹21,000 are exempt from ESIC. The ₹21,000 threshold includes basic pay, dearness allowance, and all allowances paid to employees. It excludes annual bonus, conveyance allowance, and overtime.

Professional Tax (PT) is a state-level tax on salaried employees. It is deducted by the employer and remitted to the state government. Rates vary by state: Karnataka deducts ₹150/month (₹200 from October), Maharashtra deducts ₹200/month (₹300 in February), Tamil Nadu uses slabs (₹1,250-2,500/month). PT is capped at ₹2,500 per year by the Constitution.

EPF challan payment is due by the 15th of every month. This covers both employer and employee contributions. Late payment attracts penal damages: 17% per annum on the delayed amount, plus damages of 0.01% per day. The EPFO can also levy penalties under Section 14A.

ESIC challan payment is due by the 15th of the following month. For example, April contributions must be paid by May 15th. Late payment attracts interest at 12% per annum on the delayed amount under Section 45 of the ESIC Act, 1948.

Form 16 is a certificate issued by the employer to employees showing the tax deducted at source (TDS) on their salary for the financial year. It must be issued by June 15th every year. Form 16 has two parts: Part A (employer-employee details, TDS summary) and Part B (detailed salary, deductions, and tax computation).

Form 16 is issued by your employer to you, showing TDS deducted from your salary. Form 26AS is an annual tax statement generated by the Income Tax Department showing all TDS deducted across all your income sources (salary, interest, rent, etc.) as reported by deductors. Form 16 data should match Form 26AS - any mismatch triggers scrutiny.

Leave encashment is the payment received when an employee encashes unused leave. Under Section 10(10AA) of the Income Tax Act, leave encashment for government employees is fully exempt. For private sector employees, the least of the following is exempt: (1) actual leave encashment received, (2) 10 months' last drawn salary, (3) amount notified by the government. Leave encashment at the time of retirement is taxed more favorably than during service.

Form 10E is required when an employee receives any sum in excess of ₹5 lakh as leave encashment at the time of retirement or resignation. Without Form 10E, the entire leave encashment amount above ₹5 lakh becomes taxable. We file Form 10E on behalf of employees when needed.

The main EPF monthly return is Form 5 (monthly return of contributions), which must be filed by the 15th of each month. Additionally, employers must submit ECR (Electronic Challan & Return) on the EPFO portal every month. Annual returns include Form 3A (monthly contribution details) and Form 6A (annual contribution statement).

Form 5 is the ESIC monthly return of contributions, due by the 15th of the following month. Additionally, Form 6 is the half-yearly return, due by 31st October and 30th April. These returns detail employee count, wages paid, and ESIC contributions deposited for the period.

TDS on salary is calculated under Section 192 based on the employee's estimated annual income. The employer uses the applicable income tax slab rates for the financial year, applies standard deductions (Section 16), Chapter VI-A deductions (Section 80C, 80D, etc.), and calculates the monthly TDS amount. Tax is deducted evenly across 12 months unless there is a mid-year salary revision.

LWF is a statutory contribution in select Indian states for the welfare of workers. Contribution rates vary by state: in Karnataka it is ₹100 (employer) + ₹5 (employee) annually; in Maharashtra ₹100 + ₹5 annually; in Tamil Nadu ₹20 + ₹10 monthly. Not all states have LWF. It is governed by the Labour Welfare Fund Act, 1965.

Late EPF payment attracts penal damages of 17% per annum on the delayed amount plus daily damages of 0.01%. Late ESIC payment attracts 12% interest per annum. Late TDS payment attracts interest of 1.5% per month (18% per annum). Additionally, late filing penalties range from ₹200-₹5,000 per return under respective acts. Accumulated late fees can exceed the original contribution amount.

Yes. We integrate with popular HRMS platforms including Zoho People, greytHR, Keka, Darwinbox, and BambooHR. Integration allows attendance and leave data to flow directly into payroll without manual data entry. For businesses not on a supported HRMS, we accept Excel, CSV, or biometric exports.