Payroll Is More Than Paying Salaries
Running payroll means calculating each employee’s salary, deducting the right statutory amounts, paying them on time, and filing the related compliances. Get it right and your team is paid correctly and your business stays compliant; get it wrong and you face penalties and unhappy staff. For a small business in India, the core pieces are the same whether you have three employees or thirty — this guide breaks them down.
The Anatomy of a Salary
A salary is split into components, which decide both take-home pay and statutory deductions:
- Basic pay: The foundation; PF and several other calculations are based on it.
- HRA (House Rent Allowance): Often a percentage of basic, with tax benefits.
- Allowances: Conveyance, special allowance, and others.
- Gross salary: The total of all earnings before deductions.
- Net (take-home) pay: Gross minus deductions.
The Statutory Deductions You Must Handle
- Provident Fund (PF): Generally 12% of basic from both employer and employee, on wages up to the ₹15,000 ceiling, filed monthly with EPFO.
- Employee State Insurance (ESI): Applies to employees earning up to ₹21,000 gross, with employer and employee contributions, filed monthly.
- TDS on salary: Deducted based on the employee’s projected annual income and reported quarterly in Form 24Q.
- Professional Tax (PT): A state-specific deduction — rates and applicability vary by state.
Missing these filings is where most small-business payroll penalties come from, so a monthly rhythm matters.
The Salary Slip
Every employee should receive a payslip each month showing employee details, earnings (basic, HRA, allowances), deductions (PF, ESI, TDS, PT), and gross versus net pay. A clear salary slip is both a compliance record and a trust-builder with your team — and employees increasingly expect to download their own.
Watch the New Labour Codes
India’s new Labour Codes bring unified definitions of "wages" and revised rules that affect how PF and other contributions are calculated. As they take effect, the share of "basic" in total pay may need to meet minimum thresholds, changing your PF outgo. Keep an eye on the current rules or ask your consultant, because they directly affect payroll maths.
Doing Payroll Without Losing a Day to It
Manually, payroll means spreadsheets, statutory tables, and separate filings — easy to get wrong. Modern payroll software calculates PF, ESI, PT, and TDS automatically, generates payslips employees can download themselves, and makes statutory filings close to one click. For a small business, that turns a stressful monthly chore into a short, reliable routine — much like how good GST return software simplifies tax filing.
A Simple Monthly Payroll Routine
- ☐ Confirm attendance, leave, and any variable pay
- ☐ Calculate gross pay per employee
- ☐ Apply PF, ESI, TDS, and PT deductions
- ☐ Pay net salaries and share payslips
- ☐ File PF/ESI (monthly) and TDS (quarterly, Form 24Q)
Conclusion
Payroll for a small business comes down to a repeatable monthly cycle: compute salaries, deduct PF, ESI, TDS, and professional tax correctly, pay on time, issue payslips, and file the statutory returns. Do it consistently and it becomes routine rather than a source of penalties. InfiBis includes HR and payroll alongside your billing and accounting, so salaries, deductions, and payslips run from the same system as the rest of your business. As always, confirm state-specific rules and the latest Labour Code changes with your consultant.