Help Category: Payroll Configuration

A refined payroll workflow ensures accuracy, transparency, and compliance at every stage of the payroll cycle.

Workflow Sequence

Employee Data Setup → Salary Template Assignment → Attendance & Leave Integration → Payroll Calculation → Submit for Approval → Statutory Compliance Check → HR & Finance Approval → Payslip Generation → Bank Disbursement

Workflow Explanation

1. Employee Data Setup

Employee profiles, statutory details, and salary assignments are completed. Correct data ensures seamless downstream payroll processes.

2. Salary Template Assignment

The predefined salary template is applied to the employee, ensuring standardization and eliminating manual miscalculations.

3. Attendance & Leave Integration

Attendance, overtime, leaves, and holiday data syncs with payroll to ensure accurate pay for present, absent, or extra working hours.

4. Payroll Calculation

INDPayroll’s automated engine calculates all components—earnings, reimbursements, deductions, statutory contributions, and net pay.

5. Submit for Approval (New)

Once payroll is computed, it is submitted for verification.

• HR reviews salary changes, attendance anomalies, and deductions.
• Finance reviews payout amounts, statutory liabilities, and bank disbursement totals.
• Any discrepancies trigger automated review cycles.

This step establishes a formal control mechanism, ensuring payroll accuracy before locking and finalizing.

6. Statutory Compliance Check

The system automatically cross-verifies PF, ESI, PT, TDS calculations with current laws and employee eligibility.

7. HR & Finance Approval

The payroll is dual-approved:

• HR: Verifies employee-level correctness
• Finance: Confirms financial accuracy and fund allocation

8. Payslip Generation

Payslips are generated instantly and made available through:

• Employee Self-Service Portal (ESS)
• Secure email delivery (optional)

9. Bank Disbursement

Final approved payroll is pushed to banking channels via:

• NEFT / RTGS / IMPS
• Bank API integrations (if enabled)
• Automated salary advice and disbursement files

INDPayroll makes statutory compliance effortless by automating complex calculations and ensuring every payroll run follows the latest Indian labor and tax laws.

Configuration Steps

• Navigate to Payroll Settings → Statutory Rules
• Configure EPF and ESI contribution percentages
• Set up state-wise PT slabs and thresholds
• Enable TDS calculation rules under Old or New Tax Regime
• Define salary-based eligibility conditions (PF ceiling, ESI limits, etc.)
• Turn on compliance alerts for deadlines, anomalies, and threshold breaches
  

Best Practices

• Review statutory slabs at the start of every fiscal year
• Validate employee statutory registrations (UAN, ESIC number, PAN, etc.)
• Keep automated reminders enabled for PF, ESI, PT, and TDS deadlines

Salary templates are pre-defined structures that streamline payroll processing and ensure consistent salary composition across similar roles or grades. They eliminate manual entry, reduce calculation errors, and maintain uniformity across departments.

Key Features of Salary Templates

• Role-, grade-, or department-based predefined salary architectures
• Automatic mapping during employee onboarding
• Supports all earnings, deductions, reimbursements, and statutory components
• Full version control and change tracking for audit purposes
  

Use Case Example

A company may define a “Software Engineer (SE) Grade Template” with:

• Basic: 40% of CTC
• HRA: 20% of Basic
• Conveyance: ₹1,600 per month
• Special Allowance: Remaining balance of the CTC
  
• PF/ESI: Auto-applied based on eligibility

This ensures every Software Engineer hired receives a uniform compensation structure.

INDPayroll provides a comprehensive and flexible framework to configure all salary components—earnings, deductions, reimbursements, and statutory obligations. Each component can be customized to match company policy, industry standards, and Indian statutory requirements.

Key Salary Components

Component	Type	Description	Calculation Notes / Best Practices
Basic	Earning	The core fixed wage component forming the foundation of salary structure.	Ideally 40–50% of CTC; the primary basis for PF, ESI, HRA, Gratuity, and statutory calculations.
HRA	Earning	House Rent Allowance with conditional tax exemptions.	Tax benefit: 50% of Basic for metro cities, 40% for non-metro; employee must submit rent proofs.
Conveyance	Earning	Transport allowance for daily commute to office.	Exempt up to ₹1,600 per month as per IT rules.
Special Allowances	Earning	Flexible allowance zone covering medical, meal, telecom, or custom benefits.	Can be structured as taxable or partially exempt based on company rules.
Bonus / Incentives	Earning	Performance-based or statutory bonus payouts.	May be monthly, quarterly, or annual; ensure minimum bonus rules if applicable.
Overtime (OT)	Earning	Compensation for extra hours worked beyond standard duty.	Calculated hourly or daily using Basic + DA. Ensure OT approval workflow is enabled.
PF	Deduction	Employee’s contribution to EPF.	Standard 12% of Basic + DA; ensure wage ceiling and voluntary PF are configured correctly.
ESI	Deduction	Employee State Insurance contribution.	Applicable if Gross ≤ ₹21,000; auto-calculates 0.75% employee contribution.
TDS	Deduction	Tax deducted at source based on income tax laws.	Uses real-time projections, exemptions, and declarations for monthly accuracy.
PT	Deduction	State-wise Professional Tax.	INDPayroll auto-applies correct slabs based on location.
Other Deductions	Deduction	Includes loan EMIs, salary advances, penalties, or custom deductions.	Ensure proper approval trail is documented.

Tip:

Always validate statutory components at the beginning of every financial year to reflect new government updates.