04 · Payroll

The conventions are yours. The arithmetic is ours.

Indian payroll differs between companies less in its statutory rules than in its conventions — how a part month is prorated, what a day is worth, how rounding falls. Every one of those is an explicit setting with a stated default, versioned by effective date.

Proration options: 4bases
1,000 employees, 5 entities: 10min
Reconciliation tolerance: ₹0.00
Run versioning: Full

Settings

The settings that lose other vendors the deal.

These are hard-coded almost everywhere else. Changing one mid-year requires a reason that lands in the audit log.

SET-2

Proration & per-day value

The single most consequential setting in the product. Choose calendar days in the month, a fixed 30, working days, or a standard figure such as 26. It applies uniformly to joiners, leavers, loss of pay and arrears — and the payslip states the basis and day count used, so a disputed figure can be reconstructed without a support ticket.

SET-3

Loss of pay treatment

Which components reduce, whether a weekly off or holiday adjacent to unpaid absence is itself unpaid — the sandwich rule, stated explicitly rather than assumed — and how retrospective loss of pay is handled after a period closes.

SET-4

Rounding

Configurable at component, gross, statutory-deduction and net level, with a rule for absorbing the difference so components always sum to the stated gross. Statutory figures follow their own prescribed rounding, independent of your setting.

SET-1

Calendar & cut-offs

Attendance cut-off, input freeze, processing window and disbursement date. Where your cut-off is not month-end, you decide whether the tail is estimated and trued up or lagged — and that choice applies consistently, including at exit.

SET-5

Statutory configuration

EPF wage ceiling or actual basic, whether employer share sits inside or outside CTC, EPS applicability, admin and EDLI charges, ESIC threshold and rates — all effective-dated, never constants in code.

Compensation

Structures, revisions and the CTC engine.

PAY-2

Pay components

Each component declares its type, calculation method, taxability, and applicability to EPF, ESIC, PT, LWF, bonus and gratuity bases — plus its proration and arrear behaviour. Formulas evaluate with a declared dependency order and cycle detection at save time, not at run time.

CMP-2

CTC build-up, both directions

Give it a target annual CTC and it derives the full break-up including employer PF, ESIC, gratuity provision and insurance loading. Give it a target take-home and it runs in reverse. This is the artefact that goes into the offer letter, so it reproduces exactly at any later date.

CMP-3

Minimum wage check

Validated against the state, skill category and scheduled employment from an effective-dated table. Breaches block the run rather than appearing in a report afterwards.

CMP-4

Revisions, including bulk

Past, present or future effective dates with a reason and approval chain. Future-dated revisions apply in the right period; past-dated ones generate arrears. Bulk appraisal upload with per-employee validation is in scope, because the alternative is a spreadsheet edited outside the system.

PAY-4

Arrears & retrospective recalculation

Any backdated change re-computes each affected closed period on its original settings, diffs against what was actually paid, and books the difference as itemised lines showing the source month. PF and ESIC on arrears follow the month of payment; section 89 relief is available as a declared option.

CMP-6

Gratuity

Fifteen days’ last-drawn wages per completed year on a 26-day divisor, six months or more rounding up, the statutory ceiling applied, and the five-year qualifying period waived on death or disablement. Monthly provisioning exposes the accrued liability to finance.

Flexible benefits

A flexi basket that actually saves tax.

Without one, tax-advantaged components either sit unused or get paid fully taxable. It is a standard expectation in this segment.

Basket defined per company or grade, with per-head minimums and maximums
Fuel, driver, telephone, books, meals, professional development and LTA
Declaration window with live tax impact shown as the employee allocates
Bill-backed claims routed for verification; the outcome decides what is exempt
LTA on its own terms — block years, journey-based claims, fare-only exemption
Unclaimed balance paid out as taxable in a month you choose, not as a March surprise

Regime interaction

Most flexi exemptions are unavailable under the new tax regime. If an employee’s regime election makes their declaration ineffective, we say so at declaration time rather than quietly computing a worse outcome.

Loans & recoveries

Schedules that survive real life.

LOAN-1/2

Schemes & disbursement

Interest-free, flat or reducing balance, with maximum principal by grade and an amortisation schedule the employee can see.

LOAN-3

Life events

Moratorium, hold, part prepayment with schedule rebuild, foreclosure, and the case where loss of pay leaves net pay too small to cover the instalment. Skipped instalments extend the schedule rather than disappearing.

LOAN-4

Concessional loan perquisite

Where your rate is below the prescribed benchmark, the perquisite value computes on the outstanding balance and flows into tax automatically. Customers routinely miss this by hand.

LOAN-5

Recovery register

Excess payments, unreturned assets, notice shortfall and travel advances — each with its own approval, schedule and settlement behaviour, visible to the employee with a running balance.

The run

Eight states, and you can always go back.

Every transition records who, when, and on what version of the inputs. Backward transitions require a reason and always create a new version rather than mutating the last one.

01DraftPeriod open, inputs still arriving
02Inputs lockedAttendance, leave and adjustments frozen
03CalculatedEngine has run, validations reported
04In reviewVariance and exceptions under examination
05ApprovedMaker–checker satisfied, version stamped
06FinalisedPayslips, bank file and statutory output issued
07DisbursedBank response reconciled against instructions
08ClosedPeriod locked; reopening creates a new version

RUN-2

Pre-run validation

Findings are classified blocking or advisory. Blocking: missing bank details, missing PAN where deduction applies, no salary structure, negative net pay, a branch with no PT configuration where PT applies. Advisory: gross variance beyond a threshold, an unusually large arrear, a joiner with no attendance, an employee crossing the ESIC threshold. Every finding links to the record that fixes it.

RUN-3

Explainability

For any employee and any component we show the formula applied, the values substituted, the proration basis and day count, and the configuration version used.

RUN-4

Variance review

Month-on-month movement decomposed into its causes — headcount, revisions, arrears, loss of pay, variable pay, tax. A reviewer should be able to explain the whole delta before approving, rather than sampling payslips.

RUN-5

Maker–checker

Segregation of duties is enforced, not advisory: whoever prepared a run cannot be its sole approver. Approval records the exact version approved, per approver.

RUN-7

Off-cycle runs

Settlements, bonus payouts, arrear-only disbursements and corrections, each with its own approval and bank file, folding into the same year-to-date figures and tax projection.

RUN-8

Hold & stop payment

Hold one employee’s payment with a reason and approver without blocking the run. Held amounts stay a visible liability and release through an authorised action.

Money out, books closed

Banking, GL and settlement.

BANK-1

Bank files

Formats for the major corporate banks plus generic NEFT and RTGS layouts. Generated against an approved run only — regenerating after a version change explicitly invalidates the earlier file.

BANK-3

Payment reconciliation

Import the bank response, mark each payment paid, returned or failed. Failures raise a task and hold the amount as a liability rather than vanishing.

BANK-5

GL & journal export

A balanced journal voucher per run, split by cost centre, department, branch or project, with a stated rule for an employee who moves mid-period.

BANK-6

Accounting integrations

Tally XML and generic journal CSV, plus an API push for cloud ERPs. Every export records what was sent and when.

PAY-19

Settlement tax

Section 10(10AA) on leave encashment, gratuity exemption to the ceiling, and notice pay taxed correctly in both directions — the most common defect in Indian settlement processing.

PAY-20

Negative settlements

Where recoveries exceed payables, the system issues a demand statement, records a receivable, tracks part recovery and supports an authorised write-off. It never silently rounds to zero.

Reconciliation tolerance is zero

The payroll register, the bank file, the journal export and the statutory summaries must agree to the rupee for every run. Disagreement is a blocking finalisation error, not a report someone reads later.

NextCompliance — statutory coverage

Continue →