What is Payroll?

Payroll refers to the process of calculating, managing, and distributing salaries/wages to employees of a company. It includes everything from employee compensation, tax deductions, bonus calculations, attendance tracking, and compliance with statutory laws.

🔍 Key Components of Payroll:

Component	Description
Basic Salary	Fixed amount paid to employees before any additions or deductions.
Allowances	Additional payments like HRA, DA, TA, etc.
Deductions	Statutory (e.g., PF, ESI, TDS) and non-statutory deductions (e.g., loans).
Net Pay	Take-home salary after deductions.
Bonuses/Incentives	Extra pay based on performance, festival, or targets achieved.
Overtime Pay	Compensation for extra hours worked beyond regular duty.

🛠 Payroll Process (Step-by-Step)

Collect Employee Data
- Name, designation, PAN, bank details, attendance, etc.
Calculate Earnings
- Basic pay + allowances + bonuses.
Calculate Deductions
- Provident Fund (PF), ESI, TDS, Professional Tax, etc.
Generate Payslip
- Summary of earnings, deductions, and net pay.
Salary Disbursement
- Transfer salaries to employee bank accounts.
Statutory Compliance
- File returns for TDS, EPF, ESI, and generate challans.
Record Keeping
- Maintain payroll registers and employee files.

🧾 Statutory Deductions in India:

Deduction	Applicability
EPF	Provident Fund for retirement
ESI	Employee State Insurance (health benefits)
TDS	Tax Deducted at Source
Professional Tax	Levied by state governments

📄 Importance of Payroll in Business:

Ensures employee satisfaction through timely and correct payments.
Maintains legal compliance and avoids penalties.
Helps in financial planning and budgeting.
Facilitates reporting to government and statutory bodies.

🧮 Payroll in Tally:

Tally ERP 9 and Tally Prime offer integrated payroll modules, allowing you to:

Automate payroll calculations
Generate payslips and reports
Handle compliance (PF, ESI, TDS)
Configure salary structures

What is Basic Salary?

Basic Salary is the core fixed component of an employee’s total salary. It is the amount agreed upon between the employer and the employee before any additions like allowances (HRA, DA) or deductions (PF, TDS) are applied.

It does not include bonuses, overtime, or any extra benefits.
Basic salary is used as the basis for calculating many allowances and statutory deductions like Provident Fund (PF), Gratuity, etc.

📌 Key Features of Basic Salary:

Feature	Description
Fixed component	Remains constant unless there’s a salary revision.
Allowances based on	HRA, DA, etc., are usually calculated as a percentage of basic salary.
Statutory links	PF, Gratuity, and other benefits are based on the basic salary.
Negotiable	Defined during offer negotiations or appraisal discussions.

💡 How to Calculate Basic Salary?

There is no universal formula, but the basic salary is usually a fixed percentage of the CTC (Cost to Company).

🔢 Common Methods to Calculate Basic Salary:

1. Fixed Percentage of Gross or CTC

Type	Formula
Based on CTC	`Basic Salary = 40% to 50% of CTC`
Based on Gross	`Basic Salary = 40% to 60% of Gross Salary`

🔹 E.g. If CTC is ₹5,00,000 per year, basic could be ₹2,00,000 (40%).

2. Reverse Calculation from Net Pay

If net salary (after tax and deductions) is known, you can estimate basic using reverse calculations, factoring in allowances and deductions.

3. Organization Policy-Based Structure

Some companies define basic as a flat amount, and allowances are structured accordingly:

HRA = 40% or 50% of Basic
DA = 10% of Basic
Special Allowance = Balance amount after fixed components

📌 Example Salary Structure Breakdown:

Component	Amount (₹)
Basic Salary	₹20,000
HRA (50% of Basic)	₹10,000
DA (10% of Basic)	₹2,000
Other Allowances	₹8,000
Gross Salary	₹40,000

🧮 Impact of Basic Salary:

Area	Effect
HRA Exemption	Calculated based on Basic
EPF Contributions	Usually 12% of Basic
Gratuity	Calculated as `15/26 × Last Drawn Basic × No. of Years`
Cost to Company	The higher the basic, the higher the total employer liability

What is DA (Dearness Allowance)?

Dearness Allowance (DA) is a cost-of-living adjustment allowance paid to employees (mainly government and public sector) to offset the impact of inflation. It is calculated as a percentage of the basic salary and is revised periodically based on the Consumer Price Index (CPI).

🧾 Who Gets DA?

Sector	Eligibility
Central Govt. Employees	Yes (as per DA rate announced by Govt)
State Govt. Employees	Yes (may vary by state)
Public Sector Units (PSUs)	Yes (linked to IDA/CDA structure)
Private Sector Employees	Usually No (unless company chooses to include DA)

📌 Key Points about DA:

Revised twice a year: January and July.
Helps to manage inflation: Adjusted according to changes in the Consumer Price Index.
Fully taxable: DA is fully taxable under income tax laws.
Linked to PF and pension: DA is considered for retirement benefits like Provident Fund (PF) and Gratuity.

📊 Types of DA:

Type	Description
CDA (Central DA)	For Central Government employees; revised by the Central Govt.
IDA (Industrial DA)	For PSU employees; revised quarterly based on the CPI
Variable DA	In some wage structures, part of DA is fixed and part is linked to CPI

🔢 Methods to Calculate DA:

✅ 1. For Central Government Employees (CDA pattern):

Formula:

matlab

CopyEdit

DA % = ((Average CPI – Base CPI) / Base CPI) × 100

But this is usually simplified as the Government notifies the exact percentage.

🔹 For example: If DA is declared as 50%, and your Basic Salary is ₹30,000:
DA = 50% of ₹30,000 = ₹15,000

✅ 2. For PSU Employees (IDA pattern):

DA is linked to the quarterly movement of the CPI.
Formula and rates are notified by the Department of Public Enterprises (DPE).
IDA calculation is complex and often done centrally by HR or finance departments using CPI data.

💡 Example Salary Breakup Including DA:

Component	Amount (₹)
Basic Salary	₹30,000
Dearness Allowance (50%)	₹15,000
HRA	₹12,000
Other Allowances	₹8,000
Gross Salary	₹65,000

📍 Importance of DA:

Factor	Impact
Inflation Control	Helps maintain real income levels
Retirement Benefits	DA affects PF, gratuity, and pension
Taxation	Fully taxable under “Income from Salary”
Government Policy	Used as a tool for adjusting wages per economy

What is HRA (House Rent Allowance)?

House Rent Allowance (HRA) is a component of the salary provided by employers to employees who live in rented accommodation. It helps them meet the cost of housing and also provides tax benefits under Section 10(13A) of the Income Tax Act.

🔍 Key Features of HRA:

Feature	Description
Part of Salary	Paid monthly along with basic salary
Applicable if renting	HRA exemption can be claimed only if you live in a rented house
Taxable & Exempt	Part of HRA may be tax-exempt, and part is taxable
Depends on City	Higher exemption for metro cities (Delhi, Mumbai, Chennai, Kolkata)

📌 HRA Calculation Formula for Tax Exemption:

Under Section 10(13A), the least of the following three is exempt from tax:

Actual HRA received
50% of Basic Salary (for metro cities)
OR
40% of Basic Salary (for non-metro cities)
Rent paid – 10% of Basic Salary

❗ Note: Salary = Basic + DA (if DA is part of retirement benefit)

🧮 Example Calculation of HRA Exemption:

Let’s say:

Basic Salary: ₹30,000/month
HRA Received: ₹15,000/month
Rent Paid: ₹12,000/month
City: Non-Metro (e.g., Pune)

Step 1: Calculate the 3 conditions

Actual HRA received: ₹15,000
40% of Basic Salary (non-metro): ₹30,000 × 40% = ₹12,000
Rent paid – 10% of Basic: ₹12,000 – ₹3,000 = ₹9,000

Step 2: Take the least of the three:

Exempt HRA = ₹9,000/month × 12 = ₹1,08,000 annually

👉 Taxable HRA = ₹15,000 – ₹9,000 = ₹6,000/month

🧾 HRA Exemption Eligibility Checklist:

✅ You must receive HRA as part of salary
✅ You must pay rent for your accommodation
✅ Rent receipts or agreement may be required
✅ PAN of landlord is needed if rent > ₹1,00,000/year
✅ HRA is not available if you own a house in the same city

🧾 HRA & Income Tax Return (ITR):

Claim HRA in Form 16 under “Exemptions under Section 10”.
Mention rent paid and address in ITR-1 or ITR-2 if eligible.
No need to submit documents while filing ITR, but keep them for assessment.

📊 Salary Structure with HRA:

Component	Amount (₹)
Basic Salary	₹30,000
HRA	₹15,000
Special Allowance	₹10,000
Gross Salary	₹55,000

CA – Conveyance Allowance

➤ What is it?

Conveyance Allowance is given to employees to meet expenses incurred for commuting from home to office and back.

➤ Tax Exemption:

Up to ₹1,600/month (i.e., ₹19,200/year) is tax-free under Section 10(14) of the Income Tax Act (until FY 2017–18).
Now replaced for salaried employees by standard deduction of ₹50,000 per annum.

🔸 Still allowed for non-salaried or special category government employees (e.g., judges, MPs, etc.)

➤ Current Relevance:

In most private salary structures today, CA is either absorbed into CTC or merged with Special Allowance.

TA – Travel Allowance

➤ What is it?

Travel Allowance (not to be confused with Conveyance Allowance) is paid to employees to cover expenses when they are on official tours or work-related travel.

➤ Tax Exemption:

Fully exempt if it is for official duty and supported by bills, vouchers, or company policy.
Not taxable if reimbursed on actual expenses incurred for business travel.

➤ Common Inclusions:

Flight or train tickets
Local transport (e.g., taxi, auto)
Hotel stay, meals (sometimes split as Daily Allowance)

⚠️ If TA is paid as a fixed monthly amount, then it may be fully taxable unless proper policies and proofs exist.

LTA – Leave Travel Allowance

➤ What is it?

Leave Travel Allowance (LTA) is provided to cover travel expenses incurred by an employee and family while traveling on leave within India.

➤ Tax Exemption Rules:

Exempt under Section 10(5) of the Income Tax Act.
Only for travel within India.
Only actual travel fare (by rail/air/public transport) is exempt.
Maximum of 2 times in a block of 4 years (e.g., current block: 2022–2025)

➤ Conditions for Exemption:

Criteria	Detail
Mode of Travel	Air (economy), Rail (AC 1st Class), Bus (recognized)
Persons Covered	Self, spouse, children (max. 2), parents, siblings
Proof Required	Tickets, boarding passes, bills
LTC Cash Voucher Scheme	Temporary relief during COVID — now not in force

➤ Not Covered:

Hotel bills, food, taxi, local sightseeing – not exempt
Foreign travel – not allowed under LTA

💡 Tip: If an employee doesn’t travel in the block, one carry-forward is allowed to next block’s first year.

📊 Sample Salary Structure Including These Allowances:

Component	Monthly Amount (₹)
Basic Salary	30,000
HRA	12,000
Conveyance Allowance (CA)	1,600
Travel Allowance (TA)	2,500
Leave Travel Allowance (LTA)	3,000
Special Allowance	5,000
Gross Salary	54,100

📌 Taxability Summary:

Pay Head	Exemption Limit	Taxable Portion
Conveyance Allowance (CA)	₹1,600/month (now replaced by std. deduction)	Excess above limit
Travel Allowance (TA)	Actual expense (on tour, with bills)	Fixed or unclaimed amount
Leave Travel Allowance (LTA)	2 journeys in 4 years (India only, travel fare only)	Other expenses or excess journeys

What is EPF?

Employee Provident Fund (EPF) is a retirement benefit scheme mandated by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, applicable to establishments with 20 or more employees. Both the employee and employer contribute a certain percentage of the employee’s salary every month to the EPF account, which accumulates and earns interest.

Components of EPF Contribution

The EPF contribution is generally 12% of the Basic Salary + Dearness Allowance (DA) for both employee and employer.

Employee Contribution: 12% of (Basic + DA)
Employer Contribution: 12% of (Basic + DA), but this is further divided into:
- 3.67% to EPF account
- 8.33% to Employee Pension Scheme (EPS) (with a maximum salary limit of ₹15,000 for EPS)
- Remaining part to EPF account

Calculation Details

1. Employee Contribution

12% of (Basic + DA) is deducted from the employee’s salary and credited to the EPF account.

2. Employer Contribution

Employer also contributes 12% of (Basic + DA).
Out of this 12%:
- 8.33% goes to EPS (Pension Scheme)
  - Note: EPS contribution is capped on ₹15,000 salary. So, max EPS contribution = 8.33% of ₹15,000 = ₹1,249.50
- Remaining (12% – 8.33% = 3.67%) goes to the employee’s EPF account
If Basic + DA exceeds ₹15,000:
- Employer contribution towards EPS is fixed at ₹1,249.50.
- Remaining amount of employer contribution goes to EPF.

Example Calculation

Particulars	Amount (₹)
Basic Salary + DA	20,000
Employee Contribution (12%)	2,400
Employer Contribution (12%)	2,400

Employer’s Contribution Break-up:

EPS Contribution: 8.33% of ₹15,000 = ₹1,249.50
EPF Contribution: ₹2,400 – ₹1,249.50 = ₹1,150.50

Summary Table

Contribution	Formula	Example (₹20,000 Basic+DA)
Employee EPF	12% of Basic+DA	2,400
Employer EPF	3.67% of Basic+DA	734
Employer EPS	8.33% of ₹15,000 (max cap)	1,249.50
Total Employer	12% of Basic+DA	2,400

Important Points

Contribution is deducted every month.
Interest is credited annually on the accumulated balance.
Withdrawals are allowed on retirement or resignation as per rules.
EPF rules and rates may be updated by government notifications.

Employee State Insurance (ESI)

Rules, Contribution Percentages & Contribution Period

1. What is ESI?

Employee State Insurance (ESI) is a social security and health insurance scheme that provides medical and cash benefits to employees and their families. It is governed by the ESI Corporation under the ESI Act, 1948.

2. Applicability Criteria

Applies to establishments with 10 or more employees (varies by state).
Covers employees earning gross monthly wages up to ₹21,000 (₹25,000 for persons with disabilities).

3. Contribution Rates (Percentages)

Contributor	Rate (%)	Calculation Base
Employee	0.75%	Gross Monthly Wages
Employer	3.25%	Gross Monthly Wages

4. Definition of Wages for ESI

Includes basic salary, dearness allowance, retaining allowance, cash value of food, house rent allowance, and other allowances.
Excludes overtime wages, bonuses, and commissions.

5. Contribution Payment Period & Filing

Contributions are deducted monthly.
Payments must be deposited within 15 days after the end of each month.
Returns are filed quarterly or monthly, as per ESIC guidelines.

6. Benefits Provided Under ESI

Medical treatment for employees and dependents
Sickness benefit (daily cash allowance during illness)
Maternity benefit
Disablement benefit
Dependent’s benefit in case of employment-related death
Funeral expenses reimbursement

7. Example of ESI Contribution Calculation

Description	Rate (%)	Calculation	Amount (₹)
Employee Contribution	0.75%	₹20,000 × 0.75%	₹150
Employer Contribution	3.25%	₹20,000 × 3.25%	₹650
Total Contribution	—	—	₹800

8. Summary Table

Parameter	Details
Applicability	Establishments with 10+ employees
Wage Limit	₹21,000 per month (₹25,000 for disabled)
Employee Contribution	0.75% of gross wages
Employer Contribution	3.25% of gross wages
Contribution Deposit	Within 15 days post month-end
Return Filing	Quarterly or Monthly

Gratuity – Meaning, Calculation, Taxability & Ceiling Limit

1. What is Gratuity?

Gratuity is a statutory retirement benefit paid by an employer to an employee as a token of appreciation for the employee’s continuous service. It is governed by the Payment of Gratuity Act, 1972 and is applicable to establishments with 10 or more employees.

2. Eligibility for Gratuity

Employee must have completed at least 5 years of continuous service with the employer.
Gratuity is payable on superannuation (retirement), resignation, death, or disablement.

3. Calculation of Gratuity

Formula for Gratuity Payment (for non-government employees covered under Payment of Gratuity Act):

Gratuity=Last Drawn Salary×15×Number of Completed Years of Service26\text{Gratuity} = \frac{\text{Last Drawn Salary} \times 15 \times \text{Number of Completed Years of Service}}{26}Gratuity=26Last Drawn Salary×15×Number of Completed Years of Service

Last Drawn Salary = Basic salary + Dearness Allowance (DA)
15 = Number of days gratuity is calculated for each completed year of service
26 = Number of working days in a month considered for gratuity calculation (some companies use 30)

Note: For employees who have worked more than 6 months in a year, that year is counted as a full year.

4. Ceiling Limit on Gratuity

As per the latest amendment, the maximum gratuity payable is ₹20,00,000 (20 lakh rupees).
If the calculated gratuity exceeds this limit, the employer pays only up to this ceiling amount.

5. Taxability of Gratuity

Gratuity received by government employees is fully exempt from tax.
For non-government employees covered under the Payment of Gratuity Act:
- Gratuity up to ₹20 lakh is exempt from tax.
- Any amount above ₹20 lakh is taxable.
For non-government employees not covered under the Payment of Gratuity Act:
- Tax exemption is limited to the least of the following:
  - Actual gratuity received
  - ₹20 lakh (ceiling)
  - 15 days’ salary for each completed year of service (based on average salary of last 10 months)

6. Example Calculation

Particulars	Amount (₹)
Last Drawn Salary (Basic + DA)	30,000
Years of Service	10
Gratuity Calculation	(30,000 × 15 × 10) / 26 = 1,73,077
Ceiling Limit	₹20,00,000
Gratuity Payable	₹1,73,077 (below ceiling)

7. Summary Table

Parameter	Detail
Eligibility	5+ years continuous service
Calculation Formula	(Last Drawn Salary × 15 × Years) / 26
Ceiling Limit	₹20,00,000 (20 lakh rupees)
Taxability	Exempt up to ₹20 lakh; taxable above that (non-government)

Payment of Bonus Act, 1965 – What is Bonus, Calculation Method & Taxability

1. What is Bonus?

Bonus is a financial reward paid by employers to employees, usually on an annual basis, as a share of the company’s profits or as an incentive. The Payment of Bonus Act, 1965 governs the payment of bonus to employees in India.

Key points:

Bonus is a profit-linked incentive paid in addition to salary or wages.
It is meant to motivate employees and share profits fairly.
Applicable to establishments with 20 or more employees.

2. Applicability of Bonus Act

Covers employees drawing wages up to ₹21,000 per month (as per latest amendment).
Employees must have worked at least 30 days in the accounting year to be eligible for bonus.

3. How to Calculate Bonus?

Formula for Minimum Bonus (as per the Act):

Minimum Bonus=8.33%×(Wages Earned in the Year)\text{Minimum Bonus} = 8.33\% \times \text{(Wages Earned in the Year)}Minimum Bonus=8.33%×(Wages Earned in the Year)

Maximum Bonus:

Up to 20% of wages can be paid as bonus based on profits or productivity.

Wages Definition:

Wages include basic pay, dearness allowance, and any other remuneration expressed as wages.
Excludes bonuses, overtime, and other allowances.

4. Steps to Calculate Bonus:

Calculate total wages earned by the employee during the accounting year.
Compute 8.33% (minimum bonus) of total wages.
If company profits permit, bonus can be increased up to 20% of wages.
Bonus amount should not exceed wages earned by the employee in the year.

5. Example of Bonus Calculation

Particulars	Amount (₹)
Annual Wages Earned	2,40,000
Minimum Bonus (8.33%)	2,40,000 × 8.33% = 20,000
Maximum Bonus (20%)	2,40,000 × 20% = 48,000

The employer must pay at least ₹20,000 but can pay up to ₹48,000 depending on profits.

6. Taxability of Bonus

Bonus received by employees is treated as part of salary income under the Income Tax Act.
It is fully taxable as per the applicable income tax slab rates of the employee.
Employers deduct TDS (Tax Deducted at Source) on bonus payment if it exceeds the threshold limit.

7. Summary Table

Parameter	Detail
Governing Law	Payment of Bonus Act, 1965
Applicability	Employees earning ≤ ₹21,000/month
Eligibility	Minimum 30 days service in accounting year
Minimum Bonus Rate	8.33% of wages earned
Maximum Bonus Rate	20% of wages earned
Taxability	Fully taxable as salary income

Income Tax on Salary – TDS Computation, Cess, Surcharges & Salary Increment Impact

1. Understanding Income Tax on Salary

Salary income includes all earnings received from employment such as:

Basic salary
Dearness Allowance (DA)
House Rent Allowance (HRA)
Other allowances (special, conveyance, medical, etc.)
Bonus, commissions, perquisites, and retirement benefits

The income tax on salary is calculated based on the individual’s total taxable income after allowing deductions and exemptions.

2. TDS (Tax Deducted at Source) on Salary

Employers deduct TDS on salary based on the estimated annual taxable income of the employee.
TDS is deducted monthly during salary payment.
The employer uses Form 16 to provide a certificate of TDS deducted at year-end.

3. Steps to Compute TDS on Salary

Calculate Gross Salary (Basic + DA + allowances + bonus + perquisites).
Subtract exemptions (e.g., HRA exemption, leave travel allowance).
Subtract allowable deductions under Chapter VI-A (e.g., Section 80C, 80D).
Compute taxable salary = Gross salary – exemptions – deductions.
Calculate income tax liability as per applicable income tax slabs.
Add health and education cess (currently 4% on tax + surcharge).
Add surcharge if applicable (for income above specified thresholds).
Deduct TDS already paid (if any).
Calculate monthly TDS and deduct from salary.

4. Income Tax Slabs for Individuals (FY 2024-25)

(Example: Old Tax Regime)

Income Range (₹)	Tax Rate
Up to 2,50,000	Nil
2,50,001 to 5,00,000	5%
5,00,001 to 10,00,000	20%
Above 10,00,000	30%

Note: New tax regimes and slabs may apply based on taxpayer choice.

5. Cess and Surcharges

Health and Education Cess: 4% on income tax plus surcharge.
Surcharge: Applicable on taxable income exceeding certain thresholds:

Income Range (₹)	Surcharge Rate
₹50 lakh to ₹1 crore	10%
₹1 crore to ₹2 crore	15%
₹2 crore to ₹5 crore	25%
Above ₹5 crore	37%

6. Impact of Salary Increment on Tax & TDS

When salary increases, taxable income increases, potentially moving the employee to a higher tax slab.
Employers should recompute estimated annual income and adjust TDS accordingly.
Failure to update may lead to under-deduction or excess deduction of TDS.
Employees should provide updated investment declarations and proofs to employers to adjust deductions.

7. Example: TDS Computation for an Employee

Particulars	Amount (₹)
Annual Gross Salary	8,00,000
Less: Exemptions (HRA etc.)	1,50,000
Less: Deductions (80C etc.)	1,50,000
Taxable Salary	5,00,000

Income Tax Calculation:

Income Slab	Tax Rate	Tax Amount (₹)
Up to ₹2,50,000	Nil	0
₹2,50,001 to ₹5,00,000	5%	12,500

Health and Education Cess (4%) = 500 (4% of 12,500)
Total Tax Liability = 13,000

Monthly TDS = ₹13,000 ÷ 12 = ₹1,083 approx.

8. Summary Table

Aspect	Detail
Tax on Salary	Based on taxable income after exemptions and deductions
TDS Deduction	Monthly deduction by employer
Cess	4% on tax plus surcharge
Surcharge	Applicable for income above ₹50 lakh
Salary Increment Effect	May increase taxable income and TDS

Professional Tax (PT) – Applicability, State-wise Details & Tax Slabs

1. What is Professional Tax?

Professional Tax is a state-level tax levied on individuals earning income from salary, professions, trades, or employment. It is governed by respective State Professional Tax Acts and administered by State Governments.

2. Applicability of Professional Tax

Applies to salaried employees, professionals, traders, and self-employed persons.
The rate and applicability vary from state to state as per the State Laws.
Employers deduct Professional Tax from employees’ salary every month and remit it to the state government.
Self-employed or professionals need to pay Professional Tax themselves.

3. States Where Professional Tax is Levied

State/UT	Professional Tax Applicable?
Maharashtra	Yes
Karnataka	Yes
Tamil Nadu	Yes
West Bengal	Yes
Andhra Pradesh	Yes
Telangana	Yes
Gujarat	Yes
Kerala	Yes
Assam	Yes
Odisha	Yes
Madhya Pradesh	Yes
Chhattisgarh	Yes
Jharkhand	Yes
Punjab	Yes
Bihar	Yes
Others (including Delhi, Haryana, UP, Rajasthan, etc.)	No or varies

4. Professional Tax Slabs (Example States)

Maharashtra

Monthly Salary (₹)	Professional Tax (₹)
Up to 7,500	Nil
7,501 to 10,000	175
Above 10,000	200

Karnataka

Monthly Salary (₹)	Professional Tax (₹)
Up to 15,000	Nil
15,001 to 20,000	150
Above 20,000	200

Tamil Nadu

Monthly Salary (₹)	Professional Tax (₹)
Up to 3,500	Nil
3,501 to 6,000	150
Above 6,000	200

5. Payment and Compliance

Employers are responsible for deducting and depositing Professional Tax for employees.
Payment frequency is usually monthly or quarterly, depending on the state.
Professionals and self-employed individuals pay PT by filing returns with the state tax department.

6. Professional Tax Exemptions

Some states exempt certain categories such as agricultural income earners, senior citizens, persons with disabilities, and others as specified in respective state laws.

7. Summary Table

Aspect	Details
Tax Type	State-level Professional Tax
Applicability	Salaried employees, professionals, traders
States Applicable	Maharashtra, Karnataka, Tamil Nadu, West Bengal, Gujarat, Kerala, and others
Deduction Frequency	Monthly or Quarterly
Tax Slabs	Varies state-wise (₹0 to ₹200 approx.)
Responsibility	Employer (for salaried), self (for professionals)

CTC vs Gross Salary vs Net Salary

Definitions and Differences Explained

1. What is CTC (Cost to Company)?

CTC is the total cost an employer incurs on an employee in a year.
It includes all components of salary and benefits, such as:
- Basic salary
- Allowances (HRA, DA, Conveyance, etc.)
- Bonuses and incentives
- Employer’s contribution to Provident Fund (PF), gratuity, and other perks
- Taxes paid by employer (like Professional Tax)

CTC = Gross Salary + Employer’s Contributions + Other Benefits

2. What is Gross Salary?

Gross Salary is the total salary earned by the employee before any deductions.
It includes:
- Basic salary
- All allowances (HRA, DA, Special Allowance, etc.)
- Bonus (if paid monthly)
It does not include employer’s contributions to PF or other benefits paid by employer.

3. What is Net Salary?

Net Salary (also called Take-Home Salary) is the amount the employee actually receives after all deductions.
Deductions include:
- Employee’s contribution to Provident Fund (PF)
- Professional Tax (PT)
- Income Tax (TDS)
- Other deductions (loan repayments, insurance premiums, etc.)

4. Relationship Summary

Component	Description	Included in CTC	Included in Gross Salary	Included in Net Salary
Basic Salary	Fixed core salary	Yes	Yes	Yes
Allowances	HRA, DA, Conveyance, Special Allowance	Yes	Yes	Yes
Bonus	Performance-based payments	Yes	May be included monthly	Yes
Employer’s PF Contribution	Employer’s share of Provident Fund	Yes	No	No
Employee’s PF Contribution	Employee’s share deducted	No	Yes	No
Income Tax (TDS)	Tax deducted at source	No	No	No (deducted)
Other Deductions	Loan repayments, insurance, etc.	No	No	No (deducted)

5. Example Illustration

Salary Component	Amount (₹)
Basic Salary	30,000
HRA	15,000
Special Allowance	5,000
Employer’s PF Contribution	3,600
Employee’s PF Contribution	1,800
Professional Tax	200
Income Tax (TDS)	2,000

Calculations:

Gross Salary = Basic + HRA + Special Allowance + Employee’s PF = 30,000 + 15,000 + 5,000 + 1,800 = ₹51,800
CTC = Gross Salary + Employer’s PF Contribution = 51,800 + 3,600 = ₹55,400
Net Salary (Take Home) = Gross Salary – Employee’s PF – Professional Tax – Income Tax = 51,800 – 1,800 – 200 – 2,000 = ₹47,800

6. Key Takeaways

CTC is the total cost to employer, including benefits and employer contributions.
Gross Salary is the total salary before deductions but excluding employer contributions.
Net Salary is the actual amount received by the employee after deductions.

Attendance Sheet Preparation

Tracking Present Days, Paid Leaves, Absents & Holidays

1. Purpose of Attendance Sheet

To maintain a record of employee attendance daily or monthly.
Helps in salary calculation, leave management, and compliance.
Tracks presence, leaves, holidays, and absences accurately.

2. Key Components of Attendance Sheet

Component	Description
Present (P)	Days employee was physically present at work
Paid Leaves (L)	Authorized leaves with pay (Casual, Sick, etc.)
Absent (A)	Unauthorized leave or absence without pay
Holidays (H)	Official holidays (National/State/Company)

3. Basic Layout of Attendance Sheet

Employee Name	Employee ID	Date 1	Date 2	Date 3	…	Total Present	Paid Leaves	Absents	Holidays
John Doe	1001	P	L	A	…	20	5	3	2

Mark each day with:
- P for Present
- L for Paid Leave
- A for Absent
- H for Holiday

4. Steps to Prepare Attendance Sheet

List all employees with their IDs.
Create columns for each day of the month.
Mark attendance status daily for each employee.
At month-end, calculate totals for Present, Paid Leaves, Absents, and Holidays.
Use totals for salary and leave calculations.

5. Sample Attendance Marking Code

Date	01	02	03	04	05	06	07	08	…
Status	P	P	L	P	A	H	H	P	…

6. Tips for Accuracy

Define leave policies clearly to classify leaves.
Use digital tools or Excel to automate calculations.
Regularly update the sheet to avoid errors.
Keep a record of holidays declared by the company.

Complete Payroll Processing

Components and Calculation Guide

1. Basic Salary

The core fixed salary component.
Usually 40%-50% of the gross salary.
Basis for calculating other allowances and statutory contributions.

2. Dearness Allowance (DA)

Cost of living adjustment allowance paid to employees.
Expressed as a percentage of basic salary (e.g., 10%, 20%).
Fully taxable as per income tax rules.

3. House Rent Allowance (HRA)

Provided to meet house rent expenses.
Partially exempt from tax subject to conditions:
- Actual HRA received
- Rent paid minus 10% of basic salary
- 50% of basic salary if metro city, else 40%

4. Conveyance Allowance (CA)

Allowance for daily travel between home and workplace.
Exempt up to ₹1,600 per month (as per old rules).
Fully taxable if exceeding exempt limit.

5. Travel Allowance (TA)

Reimbursement of travel expenses for official trips.
Can be taxable or exempt depending on actual bills submitted.

6. Leave Travel Allowance (LTA)

Reimbursement for travel expenses incurred during leave within India.
Tax-exempt for travel expenses incurred for employee and family, subject to conditions and limits.

7. Bonus

Additional remuneration linked to company profits or employee performance.
Governed by the Payment of Bonus Act, 1965 (minimum 8.33% of salary, maximum 20%).
Fully taxable.

8. Provident Fund (PF)

Statutory contribution towards employee retirement.
Employee and employer contribute 12% each of basic + DA.
Employer’s PF contribution is part of CTC but not taxable.
Employee’s PF contribution is deducted from salary.

9. Employee State Insurance (ESI)

Social security benefit for employees earning below ₹21,000 per month.
Employee contributes 0.75% of gross salary, employer contributes 3.25%.
Provides medical and other benefits.

10. Payroll Calculation Flow

Step	Calculation Detail
Gross Salary	Basic + DA + HRA + CA + TA + LTA + Bonus
PF Deduction	12% of (Basic + DA) from employee
Employer PF Contribution	12% of (Basic + DA) added to CTC
ESI Deduction	0.75% of gross salary (if applicable)
Employer ESI Contribution	3.25% of gross salary (if applicable)
Taxable Salary	Gross Salary – Exemptions (like HRA, LTA)
Income Tax Deduction	As per tax slabs, TDS deducted monthly
Net Salary	Gross Salary – (PF + ESI + TDS + other deductions)

11. Example: Monthly Payroll Calculation

Component	Amount (₹)
Basic Salary	25,000
Dearness Allowance	5,000 (20% of Basic)
HRA	12,000
Conveyance Allowance	1,600
Travel Allowance	2,000
LTA	3,000
Bonus	2,000
Gross Salary	50,600
PF (Employee)	3,600 (12% of Basic + DA)
PF (Employer)	3,600
ESI (Employee)	380 (0.75% of Gross)
ESI (Employer)	1,645 (3.25% of Gross)
Income Tax (TDS)	2,000
Net Salary	44,020 (Gross – deductions)

12. Summary Table

Component	Description	Taxability
Basic Salary	Fixed salary	Taxable
DA	Inflation adjustment	Taxable
HRA	House rent allowance	Partially exempt
CA	Conveyance for commute	Partially exempt
TA	Travel reimbursement	Depends on bills
LTA	Leave travel reimbursement	Tax-exempt subject to rules
Bonus	Performance-linked payment	Taxable
PF	Retirement fund contribution	Employer part not taxable
ESI	Social security contribution	Not taxable

TDS Deposit on Income Tax Portal

What is TDS Deposit?

TDS (Tax Deducted at Source) is the tax deducted by a person/entity (deductor) while making specified payments like salary, rent, contractor payments, etc.
The deductor must deposit the deducted tax with the Government of India within prescribed timelines.

Step-by-Step Process to Deposit TDS on Income Tax Portal

Step 1: Register or Log in to the Income Tax e-Filing Portal

Visit https://www.incometax.gov.in
Click on Login and enter your credentials (PAN and password).
If new, register yourself as a deductor by selecting “Register Yourself” → “Deductor.”

Step 2: Generate Challan for TDS Payment

After login, go to TDS → e-Payment: Pay Tax Online or directly visit TDS Challan (Challan 281) page.
Select Challan No./ITNS 281 for TDS/TCS payment.

Step 3: Fill the Challan Details

Assessment Year: Select the financial year for which TDS is being deposited.
Type of Payment: Choose “0021 – TDS on Salary” or the appropriate code based on the nature of payment (e.g., 0020 for Non-Salary).
PAN of Deductor: Enter your PAN.
Address and Contact Details: Fill in your deductor’s address and contact info.
TDS Amount: Enter the amount of TDS being deposited.
Late Fee, Interest, Penalty: If applicable, enter amounts for late payment.

Step 4: Payment Mode

Select the mode of payment (Net Banking or Over the Counter).
For Net Banking, select your bank and proceed with payment.
For OTC, get the challan printed and visit the bank branch for payment.

Step 5: Receive and Save the Acknowledgment

After successful payment, an Acknowledgment Receipt (Challan Counterfoil) with a BSR Code and Challan Identification Number (CIN) will be generated.
Save and print this acknowledgment for your records.

Important Points to Remember

TDS must be deposited within due dates to avoid interest and penalties.
Use correct TAN (Tax Deduction Account Number) while depositing TDS.
Always verify TDS payment status after deposit via the portal.
Ensure to file TDS returns (Form 24Q, 26Q, etc.) after deposit.

Employer Contributions: PF & ESI

1. Provident Fund (PF) Employer Contribution

Overview

Under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, employers must contribute to the Provident Fund (PF) for eligible employees.
The employer’s contribution helps employees save for retirement, medical emergencies, or other needs.

Contribution Rates

Employer Contribution: 12% of Basic Salary + Dearness Allowance (DA).
Out of this 12%, 8.33% goes towards the Employee Pension Scheme (EPS) (subject to a wage ceiling of ₹15,000 per month), and the remaining 3.67% goes to the Employee Provident Fund (EPF) account.

Example

If Basic + DA = ₹20,000/month,
- Employer PF contribution = 12% of 20,000 = ₹2,400.
- Out of ₹2,400:
  - ₹1,250 (8.33% of ₹15,000 wage ceiling) goes to EPS.
  - ₹1,150 goes to EPF.

Additional Employer Contribution

Some companies may contribute more than 12% as a welfare measure, but statutory compliance requires at least 12%.

2. Employee State Insurance (ESI) Employer Contribution

Overview

Under the Employees’ State Insurance Act, 1948, employers contribute to the ESI fund which provides medical, sickness, maternity, and other benefits to employees.

Contribution Rates

Employer contribution rate: 3.75% of the employee’s gross wages.
Employee contribution rate: 0.75% of gross wages deducted from salary.

Eligibility

Applies to employees earning gross wages up to ₹21,000 per month (₹25,000 for persons with disability).
The employer registers and pays contributions monthly to the ESI Corporation.

Example

If an employee’s gross salary = ₹15,000/month,
- Employer’s ESI contribution = 3.75% of ₹15,000 = ₹562.50.

3. Summary Table

Contribution Type	Employer % Contribution	Employee % Contribution	Wage Ceiling for Contribution
Provident Fund (PF)	12% (8.33% EPS + 3.67% EPF)	12% EPF	No wage ceiling for EPF (but EPS has ₹15,000 limit)
Employee State Insurance (ESI)	3.75%	0.75%	₹21,000 (₹25,000 for disabled persons)

4. Compliance and Payment

Both contributions must be deposited timely to respective authorities.
PF contributions are deposited monthly with the Employees’ Provident Fund Organisation (EPFO).
ESI contributions are deposited monthly with the Employees’ State Insurance Corporation (ESIC).
Non-compliance can lead to penalties and legal issues.

EPF & ESI Establishment Registration

1. EPF Establishment Registration

Who Should Register?

Any establishment (factory, company, firm, organization) employing 20 or more employees is mandatorily required to register under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
Voluntary registration is also possible for establishments with fewer than 20 employees.

Registration Process

Visit the EPFO Unified Portal: https://unifiedportal-emp.epfindia.gov.in/epfo/
Click on Establishment Registration → For New Establishment.
Fill details such as:
- Establishment name, address, and contact details
- Type of establishment (Private Ltd., Partnership, etc.)
- Number of employees
- Details of the employer (PAN, Aadhaar, etc.)
- Bank details for contribution payment
Upload necessary documents (Proof of business, PAN card, address proof).
Submit the form.

After Registration

An Establishment Code Number and Employer Identification Number (EIN) are generated.
Use these credentials to file monthly returns and deposit contributions.
Registration is mandatory before deducting and depositing PF contributions.

2. ESI Establishment Registration

Who Should Register?

Any establishment employing 10 or more employees (in some states 20 or more) earning gross wages up to ₹21,000 per month must register under the Employees’ State Insurance Act, 1948.
Applies to factories, shops, hotels, restaurants, cinemas, road transport, newspapers, and other establishments notified by the government.

Registration Process

Visit the ESIC Portal: https://www.esic.in/ESICInsurance1/
Go to Establishment Registration → New Employer Registration.
Provide details including:
- Establishment name, address, contact info
- Nature of business
- Number of employees
- Employer’s PAN and other identity proofs
- Bank account details for contribution payments
Upload supporting documents.
Submit the application.

After Registration

ESIC issues a Registration Number for the establishment.
Employer can then pay ESI contributions monthly and file returns.
Registration is compulsory before deducting ESI from employees.

3. Important Points to Note

Both registrations are mandatory before deductions are made from employee salaries.
Failure to register can lead to legal penalties and fines.
Both portals provide online dashboards to manage employee details, contributions, and filings.
Keep all business and identity proofs handy before registration to avoid delays

EPF & ESI Establishment Registration + Employee Exit Process on EPFO

1. EPF Establishment Registration

(Same as before — briefly summarized)

Establishments with 20+ employees must register on the EPFO Unified Portal.
Registration generates an Establishment Code Number and Employer Identification Number (EIN).
Used for monthly returns and contribution deposits.

2. ESI Establishment Registration

(Same as before — briefly summarized)

Establishments with 10+ employees (state-dependent) must register on the ESIC Portal.
After registration, employer can deposit ESI contributions and file returns online.

3. Exit of Employee Records on EPFO Website

Why is Employee Exit Important?

When an employee leaves an organization, it is essential to update their exit details in the EPFO system.
This facilitates final settlement of PF, pension calculations, and prevents discrepancies in future claims.

How Employers Update Employee Exit on EPFO Portal

Login to the Employer’s EPFO Portal:
1. https://unifiedportal-emp.epfindia.gov.in/epfo/
1. Use your establishment credentials.
Go to ‘Manage’ Section:
1. Select “Manage Employee” or “View/Modify Member Details”.
Search Employee by UAN or Member ID:
1. Enter the employee’s Universal Account Number (UAN) or EPF member ID to fetch details.
Update Exit Date:
1. Provide the employee’s last working day or date of exit.
1. Confirm the exit date.
Upload Supporting Documents (if required):
1. Some EPFO portals may require proof such as relieving letter or resignation acceptance.
Submit Exit Details:
1. After submission, exit is updated in the EPFO system.
1. Employee can now apply for PF final settlement or transfer.
Notify Employee:
1. Inform the employee about the updated exit status and how to proceed for PF withdrawal or transfer via the EPFO member portal.

Benefits of Proper Exit Record Update

Ensures smooth PF withdrawal or transfer.
Helps in maintaining accurate service records for pension eligibility.
Prevents employer liability on PF contributions for exited employees.

EPF Returns Preparation & Filing

What are EPF Returns?

EPF Returns are monthly reports that employers must prepare and file with the Employees’ Provident Fund Organisation (EPFO).
These returns provide details about employee wages, PF contributions, and other statutory information.
Filing is mandatory for all establishments registered under the EPF Act.

Types of EPF Returns

Return Type	Description	Frequency
Form 5IF	Monthly contribution challan details	Monthly
Electronic Challan Cum Return (ECR)	Monthly statement containing employee PF details	Monthly
Form 10	Annual return with employee details	Annually (if applicable)

Note: The most commonly used return is the ECR (Electronic Challan Cum Return).

Step 1: Gather Required Information

Employee details: Name, UAN, Member ID, Date of joining, Date of exit (if applicable)
Wages: Basic wages, Dearness Allowance, and other eligible earnings
Contribution Amounts: PF contributions from employer and employee, EPS contributions, EDLI, and administrative charges
Payment details: Bank transaction details for the PF deposit

Step 2: Prepare the Electronic Challan Cum Return (ECR)

The ECR is an electronic file containing PF contribution details for all employees for the month.
It includes:
- Employee-wise wages and contribution amounts
- Employer’s contribution details
- Summary of total contributions
Employers can generate ECR file using:
- EPFO Unified Portal (online entry or bulk upload)
- Third-party payroll software integrated with EPFO portal

Step 3: Deposit PF Contributions

Contributions (employer + employee share) must be deposited with EPFO before filing the return.
Use Challan No. 5 on the EPFO portal or the authorized bank’s portal to deposit contributions.

Step 4: File the ECR Return on EPFO Portal

Login to the EPFO Employer Portal
https://unifiedportal-emp.epfindia.gov.in/epfo/
Navigate to ‘Payments’ Section
1. Select ECR Upload or Submit Return
Upload the ECR File
1. If generated offline, upload the XML file.
1. If entering data online, fill employee details and contribution info manually.
Validate and Submit
1. Check for errors during validation.
1. Correct any discrepancies and resubmit.
Acknowledgment
1. On successful submission, an acknowledgment receipt is generated.
1. Save this for records and compliance proof.

Step 5: Annual Returns (if applicable)

Some establishments file Form 10 annually with detailed employee info.
Usually applicable to establishments with specific registration types.

Important Compliance Notes

Monthly PF contributions and returns must be filed within 15 days of the following month.
Late filing may attract penalties and interest.
Maintain proper records for audit and inspection purposes.
Regularly reconcile your payroll and EPFO records to avoid discrepancies.

EPF Nil Return Filing

What is an EPF Nil Return?

An EPF Nil Return is a monthly return filed by employers who do not have any employees contributing to EPF during that particular month.
This means no salary payments or PF contributions were made in that period.

When to File Nil Return?

If your establishment is registered with EPFO but has zero employees contributing for the month (e.g., no payroll, no salary disbursed), you must still file a Nil Return.
Filing Nil Return ensures compliance and avoids penalties for non-filing.

How to File EPF Nil Return?

Step 1: Login to EPFO Employer Portal

Visit: https://unifiedportal-emp.epfindia.gov.in/epfo/
Enter your establishment credentials to log in.

Step 2: Navigate to the Return Filing Section

Go to ‘ECR Upload’ or ‘File Return’ section.

Step 3: Select the Relevant Month and Year

Step 4: Choose the Nil Return Option

In the return filing form, select the option to file Nil Return (usually a checkbox or specific field).
This indicates no employees or contributions for that month.

Step 5: Submit the Nil Return

Confirm and submit the nil return.
On successful submission, you will get an Acknowledgment Receipt for Nil Return filing.

Important Points to Remember

Even if no employees or salary, filing Nil Return on time avoids legal notices and penalties.
Nil returns are typically filed monthly like normal returns.
Maintain proof of nil return filing for future reference.

How to Add Employee in ESI Portal & Generate IP Number

Step 1: Access the ESIC Employer Portal

Visit the ESIC Employer Portal:
https://www.esic.in/ESICInsurance1/
Click on ‘Employer Login’ and enter your Employer Code, User ID, and Password.

Step 2: Navigate to Employee Registration Section

After login, go to the ‘Employee’ or ‘Insured Persons’ menu.
Select ‘New Employee Registration’ or ‘Add Insured Person (IP)’.

Step 3: Fill Employee Details

Provide the required details about the employee, including:

Name
Date of Birth
Gender
Father’s/Husband’s Name
Date of Joining
Mobile Number and Email (optional)
Bank Account Details (sometimes required)
Employee’s Aadhaar Number (if applicable)
Employee’s Address

Ensure that all details are accurate as these will be used to generate the IP number.

Step 4: Upload Required Documents (if applicable)

Some portals may ask for scanned copies of ID proof or photo.
Upload as required or proceed if not mandatory.

Step 5: Submit Employee Details

Review the details carefully.
Submit the form.

Step 6: Generation of IP Number

Once submitted, the portal will automatically generate an Insurance Person (IP) Number for the employee.
This unique number is the employee’s ESI identity and will be used for all future transactions.

Step 7: Download or Note the IP Number

Download the employee’s ESI card or print the confirmation page containing the IP number.
Share the IP number with the employee for reference.

Additional Tips:

You can also update employee details or mark exit on the portal when needed.
Keep employee records updated to avoid compliance issues.

ESI Returns Preparation & Filing

What are ESI Returns?

ESI Returns are periodic reports that employers registered under the Employees’ State Insurance Act, 1948 must file with the Employees’ State Insurance Corporation (ESIC).
These returns provide details about employees covered, their wages, and contributions deducted from both employer and employee.

Types of ESI Returns

Return Type	Description	Frequency
ESI Contribution Return	Details of wages and contribution payments for employees	Monthly
Annual Return (Form 6)	Annual statement of contributions and employee details	Annually

Step 1: Collect Employee Data

List of all employees covered under ESI
Employee-wise gross wages for the month
Employee and employer contribution amounts (Employee: 0.75%, Employer: 3.75%)
Details of any exempted or excluded employees (if any)

Step 2: Calculate Contributions

Calculate the employee’s contribution: 0.75% of gross wages
Calculate the employer’s contribution: 3.75% of gross wages
Ensure wages are within the ESI wage ceiling (₹21,000/month)

Step 3: Prepare the ESI Contribution Return

Use the ESIC online portal or authorized software to prepare the return.
The return will include:
- Employee details (Name, IP Number, UAN, etc.)
- Wages for the month
- Contribution amounts deducted and payable
Many companies maintain an Excel template for ease and then upload the data.

Step 4: Deposit ESI Contributions

Deposit combined employer + employee contributions before filing the return.
Payment can be made online via the ESIC portal or authorized banks.

Step 5: File the ESI Return on ESIC Portal

Login to the ESIC Employer Portal:
https://www.esic.in/ESICInsurance1/
Navigate to ‘Return Filing’ Section
Upload or Enter Employee Contribution Data
1. Upload the monthly contribution file (usually in CSV or Excel format) or enter data online.
Validate the Return
1. The system will check for errors or mismatches.
1. Correct any errors before submission.
Submit the Return
Download Acknowledgment
1. Save the acknowledgment receipt for your records.

Step 6: Annual Return Filing (Form 6)

Annually, employers file Form 6, summarizing contributions and employee details.
This is a consolidated report for the whole financial year.

Compliance Notes

ESI contributions and returns are due by the 15th of the following month.
Late payment or filing attracts penalties and interest.
Keep employee records and return copies for audit and inspection.

Payroll Management: A Complete Guide

What is Payroll?

What is Basic Salary?

📌 Key Features of Basic Salary:

💡 How to Calculate Basic Salary?

🔢 Common Methods to Calculate Basic Salary:

1. Fixed Percentage of Gross or CTC

2. Reverse Calculation from Net Pay

3. Organization Policy-Based Structure

📌 Example Salary Structure Breakdown:

🧮 Impact of Basic Salary:

What is DA (Dearness Allowance)?

🧾 Who Gets DA?

📌 Key Points about DA:

📊 Types of DA:

🔢 Methods to Calculate DA:

✅ 1. For Central Government Employees (CDA pattern):

✅ 2. For PSU Employees (IDA pattern):

💡 Example Salary Breakup Including DA:

📍 Importance of DA:

What is HRA (House Rent Allowance)?

🔍 Key Features of HRA:

📌 HRA Calculation Formula for Tax Exemption:

🧮 Example Calculation of HRA Exemption:

Step 1: Calculate the 3 conditions

Step 2: Take the least of the three:

🧾 HRA Exemption Eligibility Checklist:

🧾 HRA & Income Tax Return (ITR):

📊 Salary Structure with HRA:

CA – Conveyance Allowance

➤ What is it?

➤ Tax Exemption:

➤ Current Relevance:

TA – Travel Allowance

➤ What is it?

➤ Tax Exemption:

➤ Common Inclusions:

LTA – Leave Travel Allowance

➤ What is it?

➤ Tax Exemption Rules:

➤ Conditions for Exemption:

➤ Not Covered:

📊 Sample Salary Structure Including These Allowances:

📌 Taxability Summary:

What is EPF?

Components of EPF Contribution

Calculation Details

1. Employee Contribution

2. Employer Contribution

Example Calculation

Summary Table

Important Points

Employee State Insurance (ESI)

Rules, Contribution Percentages & Contribution Period

1. What is ESI?

2. Applicability Criteria

3. Contribution Rates (Percentages)

4. Definition of Wages for ESI

5. Contribution Payment Period & Filing

6. Benefits Provided Under ESI

7. Example of ESI Contribution Calculation

8. Summary Table

Gratuity – Meaning, Calculation, Taxability & Ceiling Limit

1. What is Gratuity?

2. Eligibility for Gratuity

3. Calculation of Gratuity

Formula for Gratuity Payment (for non-government employees covered under Payment of Gratuity Act):

4. Ceiling Limit on Gratuity

5. Taxability of Gratuity

6. Example Calculation

7. Summary Table

Payment of Bonus Act, 1965 – What is Bonus, Calculation Method & Taxability

1. What is Bonus?

2. Applicability of Bonus Act

3. How to Calculate Bonus?

Formula for Minimum Bonus (as per the Act):

Maximum Bonus:

Wages Definition:

4. Steps to Calculate Bonus:

5. Example of Bonus Calculation