Understand the Key Components of India's Payroll Tax Law
Chosen theme: Key Components of India’s Payroll Tax Law. A friendly, practical introduction to TDS, EPF, ESI, Professional Tax, records, and real-world payroll stories. Subscribe to stay updated and share your payroll questions with us.
Choosing your tax regime and shaping monthly TDS
Employees can opt for the old or new tax regime, and payroll must capture that choice early to shape monthly TDS. Collect declarations in April, review proofs midyear, and adjust TDS as incomes or investments shift so year-end surprises are minimized for everyone.
Perquisites and exemptions: Arjun’s first HRA claim
Arjun learned that HRA exemption depends on salary, rent paid, and city category, not guesswork. When his rent crossed the threshold, payroll asked for the landlord’s PAN and proper receipts. His corrected documentation reduced TDS, and he now reminds colleagues to submit proofs on time.
Challans, Form 24Q, and Form 16: the compliance trio
Deposit TDS by the 7th of the following month (April 30 for March), file Form 24Q quarterly, and issue Form 16 by mid-June. Keep cutoffs in your calendar and automate reminders. Tell us in the comments which deadline worries you most, and we will publish a handy checklist.
Coverage and contribution basics without myths
PF generally applies to most establishments, with contributions typically at 12% of basic plus dearness allowance for both employee and employer. Part of the employer share may flow to the pension scheme within prescribed limits. Explain caps clearly and document any higher voluntary contributions transparently.
UAN, ECR, and on-time deposits
Every employee should have a Universal Account Number to keep savings portable across jobs. Payroll uploads the ECR and deposits dues, generally by the 15th of the month. Set internal cutoffs a few days earlier to resolve rejects, missing KYC, or new-joiner mapping without last-minute panic.
Sneha’s portability moment: one ID, many chapters
When Sneha switched roles across cities, her UAN helped her consolidate old PF balances in minutes. Payroll’s welcome email explained how to link her Aadhaar and bank details. She now mentors freshers about checking EPF passbooks monthly. Share this with a colleague who might need that nudge.
ESI: Health Security Through Payroll
ESI generally covers employees up to a notified wage threshold, with contributions split between employer and employee at prevailing rates. Payroll must track gross wages, inclusions, and changes carefully. New joiners deserve a simple explainer so they understand benefits before they need them.
ESI: Health Security Through Payroll
Register new units swiftly, map codes accurately, and align payroll calendars so ESI payments and returns consistently precede the 15th deadline. Keep audit trails, employee master data, and wage registers organized. Calm documentation builds confidence during inspections and protects everyone when questions arise.
Records, Reporting, and Due Dates That Matter
Align calendars for Form 24Q quarterly returns and timely generation of Form 16. Keep employee declarations (Form 12BB) accessible. Version-control your working files so audit trails are clear. A shared compliance calendar, reviewed weekly, reduces last-minute fire drills more than any heroics ever could.
Records, Reporting, and Due Dates That Matter
Collect rent receipts, investment proofs, and donation certificates early, and reconcile with payroll masters monthly. Preserve challans, acknowledgments, and bank proofs together. Good stewardship safeguards employees and the company. Tell us how you store proofs, and we will suggest a simple folder taxonomy.
Tax Regimes, Deductions, and Payroll Communication
Old vs. new regime: guiding with clarity
The new regime is now the default for many employees, but individuals can still choose. Payroll should capture regime choices early, explain implications simply, and remind teams they can reassess at return filing. Clear FAQs build trust and keep year-end reconciliation pleasantly boring.
Deductions employees ask about most
Expect questions on Section 80C, NPS, health insurance, HRA, LTA, and the standard deduction. Publish short explainers showing what counts, what proof is needed, and common pitfalls. Invite questions on edge cases and compile them into a living guide your team can reference anytime.
Perquisites such as accommodation, company cars, concessional loans, and employer-paid memberships follow specific valuation rules. Document assumptions, cite rule references, and show employees sample calculations. Transparency here prevents disputes and keeps monthly TDS aligned with real taxable value.
