Payroll Management

Payroll management is the core monthly job of calculating what each employee should be paid — base salary, allowances, variable pay, reimbursements, and deductions for provident fund, ESI, professional tax and TDS — and producing accurate payslips and disbursement-ready outputs for your bank.

It sounds simple until you factor in changing salary structures, new joiners and exits mid-month, leave and attendance, and four different statutory deductions each with its own rules. Errors here directly hit employee trust and create downstream compliance problems.

We run your payroll accurately every month — correct computation, deductions and payslips — and keep it reconciled with your books, with statutory returns available as an add-on.

The statutory frame changed on 21 November 2025, when all four Labour Codes were brought into force. Provident fund now sits in Chapter III of the Code on Social Security, 2020 and is administered through the Employees' Provident Funds Scheme, 2026 (G.S.R. 525(E), 29 June 2026), which superseded the 1952 Scheme; the pension diversion is governed by the Employees' Pension Scheme, 2026. ESI sits in Chapter IV, with contribution rates now set by rule 19 of the Social Security (Central) Rules, 2026. Payment of wages and the deduction rules come from the Code on Wages, 2019. Salary TDS is section 392 of the Income-tax Act, 2025 — not section 393, which covers payments other than salary. The rates did not change; the instruments did.

Applicability, in one line each. Provident fund applies to an establishment with 20 or more employees, and ESI to one with 10 or more persons (20 in several centrally-governed categories) — and for both, the second proviso to section 2(26) of the Code counts employees above the wage ceiling too, so a twenty-person team all earning ₹80,000 is still covered. The PF wage ceiling is ₹15,000 a month (S.O. 2702(E), 29 May 2026) and the ESI wage limit is ₹21,000 a month (₹25,000 for a person with disability). Professional tax is State law, capped by Article 276(2) of the Constitution at ₹2,500 a year per person. Salary TDS has no headcount threshold. Registration comes first — see PF registration, ESI registration and professional tax registration.

A worked month, so the numbers are concrete. Assumptions: an employee on basic ₹10,000 + HRA ₹5,000 + special allowance ₹5,000 = ₹20,000 gross, at an establishment covered for both PF and ESI, in a State that levies professional tax; no overtime or bonus in the month. Under section 2(y) of the Code on Wages the excluded component (HRA, ₹5,000) is only 25% of total remuneration, so the 50% add-back proviso does not bite and PF wages are ₹15,000 — exactly at the ceiling. Deductions: provident fund ₹1,800 (12% of ₹15,000); ESI ₹150 (0.75% of the ₹20,000 ESI base, which includes HRA, rounded up); professional tax ₹200 (assumed — your State sets this); TDS nil, because the average rate under section 392(1) on an estimated annual salary of ₹2,40,000 is nil. Net pay ₹17,850, and total deductions of ₹2,150 sit comfortably inside the 50%-of-wages cap in section 18(3) of the Code on Wages.

What the same month costs you. On top of ₹20,000 gross: employer provident fund ₹1,800, of which ₹1,250 is diverted to the Pension Fund (8.33% of ₹15,000 under paragraph 4(1) of the EPS 2026) and ₹550 goes to the Provident Fund; employer ESI ₹650 (3.25% of ₹20,000, rounded up); plus EDLI and administrative charges, whose percentages are fixed by Central Government notification rather than stated in the Schemes — at the customary 0.50% each of PF wages (labelled assumption) that is about ₹75 apiece. Monthly cash cost roughly ₹22,600, or about ₹23,300 once you provision gratuity at 15/26 of a month's wages per year of service. The gap between the offer letter and the ledger is around 16%, and it belongs in your hiring plan.

For an employee above the limits the picture flips: at ₹75,000 gross there is no ESI, provident fund stays capped at the ₹15,000 base unless the employee and employer jointly opt in writing under paragraph 9(4) of the EPF Scheme 2026, and salary TDS becomes the largest line — computed at the average rate on estimated annual income, not by applying a slab to one month. The TDS on salary service covers the estimate, the declarations and the certificate, and the payroll compliance checklist sets out the full calendar.