Payroll Management

The process of calculating and distributing employee salaries, taxes, and benefits in compliance with labor laws and company policies.

HR teams manage payroll using specialized software to ensure accuracy, timely payments, and tax compliance. Effective payroll management prevents financial discrepancies and enhances employee satisfaction.

The 5 basic steps in payroll processing are:

1. Collect Employee Information – Gather details like employee bank accounts, PAN, tax declarations, attendance, and leaves.
2. Calculate Gross Pay – This includes basic salary, HRA, bonuses, allowances, and incentives.
3. Deduct Statutory & Voluntary Deductions – Subtract taxes (TDS), PF, ESI, professional tax, and any loan repayments.
4. Disburse Net Salary – Transfer the final amount to employee bank accounts and generate pay slips.

Maintain Records & File Compliance – Store payroll records and submit required reports to government bodies (EPFO, Income Tax Dept., etc.).

Payroll is calculated using this basic formula:

‍Net Salary = Gross Salary – (Taxes + Deductions)

Here’s how it works:

• Gross Salary includes basic pay, HRA, bonuses, etc.
• Deductions include:
  
  • Statutory: PF (12%), ESI, TDS, professional tax
  • Voluntary: Insurance premiums, advance loans, etc.
• The remaining amount is the net pay employees receive.
  
  

Payroll software automates this by factoring in attendance, tax rules, and company policies.

Payroll in salary refers to the entire process of compensating employees for their work. It includes:

• Calculating salaries based on attendance or hours worked
• Managing tax and benefit deductions
• Disbursing net salary
• Ensuring legal compliance

In short, payroll ensures employees are paid accurately, on time, and as per company and legal norms.