HR & Payroll Management

HR and payroll services handle employee salary processing, statutory deductions (PF, ESI, TDS, professional tax), payslips, and compliance filings. Accurate payroll keeps a business compliant with labour and tax laws and ensures employees are paid correctly and on time.

Who needs this: Any business with employees benefits; statutory registrations (EPF above 20 employees, ESI above 10 in most states) trigger mandatory payroll compliance.

Government portal: EPFO (epfindia.gov.in), ESIC (esic.gov.in), Income Tax TRACES, and state professional-tax portals.

Indicative fees: ₹100–₹300 per employee per month, or a fixed monthly retainer for smaller teams.

Timeline: Monthly payroll cycle; statutory filings on their respective due dates.

Documents required

Employee master data (PAN, Aadhaar, bank, UAN)
Salary structure / CTC breakup
Attendance and leave records
PF/ESI registration numbers
Investment declarations for TDS

Step-by-step process

Define salary structures and CTC breakups for each role
Onboard employees with PAN, Aadhaar, bank and UAN details
Capture monthly attendance, leave and variable inputs
Compute gross pay, statutory deductions (PF, ESI, PT) and TDS
Generate payslips and process salary disbursement
Deposit PF, ESI and TDS by their due dates and file returns
Issue Form 16 to employees after year-end
Maintain records for labour and tax inspections

Penalty for non-compliance

Late PF/ESI deposit attracts interest plus damages up to 25% p.a.; non-deposit of deducted TDS can trigger prosecution under section 276B.

Payroll is three statutory systems running at once

Provident fund, ESI and TDS on salary each have their own base, their own rate, their own due date and their own return. PF and ESI contributions are due by the 15th of the following month. TDS deducted must be deposited by the 7th of the next month, with March allowed until 30 April, and reported quarterly in Form 24Q. Professional tax adds a fourth cycle in the states that levy it. Treating payroll as a single monthly task is how one of the four gets missed.

The basic-to-gross split has consequences beyond this month

Basic salary drives provident fund, gratuity and the HRA exemption. A structure with a very low basic raises immediate take-home but reduces PF accumulation, future gratuity entitlement and the HRA an employee can claim. Neither a high nor a low basic is universally correct, but the choice should be deliberate and explained to employees, because it compounds across a career and is difficult to unwind retrospectively.

Professional tax follows the employee's state

Liability attaches to where the employee works, not to where the company is registered — so distributed teams create registrations and payment cycles in several states, each with its own slabs and dates. Several states, including Delhi, Uttar Pradesh, Haryana and Rajasthan, do not levy it at all. Remote working has made this one of the more common payroll oversights, and the penalty typically exceeds the tax, which is capped at ₹2,500 a year per person.

TDS on salary is an estimate, and estimates need managing

Under section 192 tax is deducted on a projection of each employee's annual liability spread across the year, built from their declared investments and chosen regime. When proofs are not submitted, the deduction is recomputed and the shortfall recovered from the remaining months — which is why February and March take-home falls sharply. Collect declarations in April, proofs by a stated deadline, and Form 12B from mid-year joiners so their previous salary is included.

Records, payslips and the things that surface later

Issue payslips every month rather than on request; employees need them for loans, visas and rent agreements, and in covered establishments it is a statutory obligation. Preserve wage registers for the prescribed period. At year end, TDS across twelve payslips must agree with Form 16 and Form 16 with Form 26AS. And when someone leaves, record the exit date in the EPF portal promptly — only the employer can do it, and its absence blocks the employee's PF claim more often than any other single cause.

📘 Income tax in India AY 2026-27 — full guide

Frequently asked questions

When is PF registration mandatory?

Employees' Provident Fund registration is mandatory once a business employs 20 or more people; smaller businesses can register voluntarily.

When is ESI applicable?

ESI applies to establishments with 10 or more employees (20 in some states) earning up to ₹21,000 per month, providing medical and cash benefits.

What statutory deductions are part of payroll?

Provident Fund (PF), Employees' State Insurance (ESI), Professional Tax (in applicable states), and TDS on salary under section 192.

When must PF and ESI be deposited?

PF and ESI contributions are due by the 15th of the following month; late deposit attracts interest and damages.

Is a payslip legally required?

Yes. Wage and payslip transparency is required under labour codes; payslips also serve as proof of income for employees' loans and visas.