Seeking Feedback on My Payroll Process Design: How Can I Improve It?

I am Ruban, pursuing M.S.W (H.R) at Mar Gregorios College. I have prepared a payroll process based on my knowledge. I am seeking your suggestions and corrections so that I can improve myself. I am eagerly awaiting your valuable comments.

Thank you.

Regards

Feedback on Payroll Process

Hi, this is Karra Sarma, working as Senior Officer - HR. Your prepared payroll statement has errors in HRA and Travel Allowance calculations. Basically, HRA should be 40%/50% of the basic amount depending on whether it is a non-metro/metro city, following IT exemption rules. Travel allowance should be ₹800/₹1650 for normal health/physically handicapped individuals according to IT exemption rules.

We should not show PF & ESI as earning columns. According to regulations, PF deduction should be 12% of Basic+DA/Gross amount and ESI should be 1.75% of Gross Salary. Employer contributions for PF & ESI should not be deducted from the employee's salary, as this can lead to government scrutiny for incorrect practices.

Employer contributions should be made solely by the employer. The Basic + DA amount should be mentioned in accordance with the Minimum Wages applicability as per Government Gazette.

Please review my payroll statement and feel free to call me or email me for further clarification.

Regards,
Sarma
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[Email Removed For Privacy Reasons]

There is no universal format for a salary structure. However, earnings should be on the left-hand side (LHS) and deductions on the right-hand side (RHS).

I have reviewed your salary sheet and appreciate the comments provided by Sharma. I would like to request the addition of EPs 8.33% MAX up to Rs. 541/- only, with the remaining amount going to PF. Please update accordingly.

Regards,
ASK

What about the ESI and EPF ceiling? EPF is fine if your organization allows contributions of more than 6500, but in your paysheet, there is no ceiling for ESI. Please check.

Regards.

Attached is a payroll format for your understanding. Please review, and if you need anything further to insert, please revert.

Thanks,

Taru

Please change the PF card No. into PF Account No. Calculations and other details are okay. Please start with Basic Pay. HRA can be a lump sum or up to 40 to 50% of the basic. Not everyone will be traveling, so travel allowance is not required. Instead, you can make it a Conveyance Allowance.

In totality, it seems to be okay. All the best, dear.

I have gone through the XLS file, and I suggest that HRA can be calculated at 50% of the basic salary instead of 25% to avoid taxation on HRA.

Hello seniors, as I am studying, I prepared it. But I don't know the split-ups. Can anyone help me out with the split-up? I am not familiar with taxes. Could you teach me so that it will be helpful for me? Another question I have is about attendance. How should we take it, as 30, 31, or else 30.5? These are the doubts I have. Could you please clear them for me? Thank you very much for your suggestions and corrections, seniors.

Thanks and regards,
Ruban

Hello seniors, can anyone help me out with salary split-ups, tax, and attendance? Seniors, please help me out.

Dear Sarma,

What about the ESI & EPF ceiling? EPF is fine if your organization allows contributions more than ₹6,500, but in your paysheet, there is no ceiling for ESI. Please check.

Thanks for your communication. As per your advice, I have revised the format. ESI has a ceiling of ₹15,000. PF does not have a ceiling due to the act, with a wage limit of ₹6,500 for PF A/c No 10, 21, 22 purposes only. For remaining A/c No 1 & 2, it is the whole basic. If any employee is not willing to pay the PF amount, whether they are earning above ₹6,500, they need to provide a letter stating they are not willing to contribute to the PF. In the CTC Format and Salary sheet, it should be marked as Zero.

Simple.

I await your response.

Regards,
Sarma
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[Email Removed For Privacy Reasons]

Hi Ruban,

Understanding Attendance and Income Tax Deductions

Attendance is counted as the number of worked days plus leave with pay (SL/CL/PL/ML/Special Leave) minus leave without pay. Income tax deductions are normally handled by tax professionals. Every company has separate employees who are engaged and belong to the Chart of Accounts, Finance, or the senior-most HR person in the Compensation & Benefits division. It's a wide subject. If you want, please search on the Cite HR pages.

After becoming well-versed in the CTC format and salary statement preparation, only then can you understand the income tax deductions part.

Regards,
[Email Removed For Privacy Reasons]
[Phone Number Removed For Privacy Reasons]

Dear Mr. Ruban,

I have gone through the XLS file and I suggest that HRA can be calculated at 50% of the basic instead of 25% to avoid taxation on HRA.

Review of Previous Communication

Hi RSDG, please check the earlier reply email to Ruba. Kindly review it as your statement is incorrect. Please verify and respond.

Regards,
Sarmakpk

Thanks, Sharma ji. It will be a great help for me. Welcome, and if you need any clarification regarding:

- Payroll
- Attendance
- Compensatory & benefits
- Statutory provisions

Please share with me. I will provide you with information to the best of my knowledge.

Regards,
Sarma