Payroll processing and statutory deduction workings

Establish the payroll basis

Before the first run, we review the employee master, salary components, joining dates, work locations, attendance rules and statutory membership records. Cost to company, gross salary, deductions, employer contributions and net pay are shown separately so the employee and employer amounts are not confused.

PF and ESI require their respective establishment, membership and wage tests. Professional tax follows the applicable State schedule. Salary tax withholding adds its own declarations and proof cycle. A salary label such as allowance or reimbursement does not by itself determine treatment under every law.

For current-period social-security work, wage components must be reviewed under the applicable Code framework. The Ministry’s FAQ addresses the wage definition and the ₹21,000 monthly ESI coverage ceiling. Previous periods need the rules applicable to those periods, rather than a current template applied retrospectively. Ministry of Labour FAQ dated 16-03-2026.

The monthly calculation and approval

Your team supplies attendance, approved leave, variable pay, salary revisions and joiner or exit details by the agreed cut-off. Each change should include its approval and effective date. We compare the resulting payroll with the previous month and explain material movements before you approve it.

The draft shows earnings, deductions and employer costs employee by employee. Arrears, unpaid leave, bonuses and recoveries are separately identified. Final settlements need the employment terms, last working date and approved leave, recovery and benefit calculations; their scope is agreed rather than assumed to be identical for every exit.

After approval, we produce the payslips and payment summary from the same version of the register. The employer authorises salary release through its banking process. Subsequent corrections are recorded as a revised approved run or a later-period adjustment, according to the agreed payroll procedure.

Statutory workings linked to payroll

The PF member-wise wage and contribution record, ESI calculation and professional-tax deductions must reconcile to the approved register. A change to payroll after those files are prepared triggers a reconciliation before submission. Our tax team also handles salary withholding, the related returns and employee certificates, with the declarations and evidence reviewed before filing.

For Telangana salary and wage earners, the published PT schedule is nil up to ₹15,000 per month, ₹150 from ₹15,001 to ₹20,000 and ₹200 above ₹20,000. Other work locations require their own State test. Telangana PT First Schedule.

We retain the evidence for changes, approved register and connection between payroll and the statutory workings. An employee query can then be answered from the applicable attendance, salary or deduction record.

Deliverables, timetable and professional scope

The monthly outputs are the approved payroll register, payslips, bank-payment summary, deduction and employer-contribution schedules, and an exceptions list. The pack also includes submission records, deposit reconciliation and the status of filing or employee-data corrections.

We agree the input cut-off and processing timetable around the employer’s lawful pay schedule and statutory obligations. Late attendance data or an unapproved revision is escalated as a dependency; it does not remove the employer’s payment or filing duties.

Employee count, States, variable pay, changes and final settlements affect the processing timetable. Our specialists also handle CTC redesign, employment-law advice, historic corrections and software implementation, with the required decisions and implementation steps agreed at the start.

Questions from employers

Can you improve take-home pay by changing salary components? We can model proposed structures, including employer cost and relevant statutory treatment. Changes need management approval and must comply with the applicable rules; relabelling pay cannot promise a lawful reduction in contributions or tax.

Does each joiner need a new PF account identity? Existing member identifiers and previous membership must be checked first. The onboarding process should avoid duplicate identities and connect the employee through the applicable current procedure.

We call some workers consultants. Should they be on payroll? The contract and actual working relationship need assessment. The label alone cannot settle employment classification.

Can you work from our attendance software? We review its exports and approval trail, then agree the monthly handover. Payroll needs the approved result and exceptions, not unrestricted access to every HR record.

See monthly statutory filings, tax deduction reporting and bookkeeping.

Email TheTaxCo, message us on WhatsApp or book a call. Share headcount, workplace States, salary date and which payroll or statutory filing issues need attention.