Curious About Payroll? Understanding Its Key Components Before My Interview

Hi everybody,

I have an interview scheduled after 2 days and so wanted to know about Payroll. What is Payroll and what are its components? Can anybody help me? Please, I'm waiting.

Pali

Hi Kiran,

Payroll is a method used in organizations for employees' salary processing. HR always has the information on the employees' attendance. In the Excel sheet, you have the employees' IDs and names, the number of working days in that month, and the number of days each employee has attended the office. After documenting this, you will forward the HEAD COUNT to the accounts department. The Accounts department holds the salary structure of each employee, and depending on the information you forwarded, they will calculate the salary of each employee and credit it to their respective bank accounts.

Hope this information will help you.

Regards, Kiran.

Hi Pali,

Payroll is divided into two parts, viz:

Monthly payroll, which includes the following:
- Basic salary
- HRA
- Conveyance
- Special allowance

Annual payroll:
- Medical Reimbursement
- LTA
- Meal Vouchers

In payroll on a monthly basis, the monthly breakup is paid and is subject to the following deductions, viz:
- Provident Fund, which is 12% of the basic salary
- Professional Tax
- Income Tax
- Other deductions, which can be a loan or advance, etc.
Net take-home - Rs ....

To answer your query on Payroll, please note the following points:
a. Payroll is nothing but the salaries/breakups of the same of the employees in the organization.
b. Payroll will consist of (normally) the Employee Code no. / Name / Date of joining / No. of days worked (30 or 31 depending on the month) + Basic Salary + allowances (depending on the number of components) = Gross Salary.
c. From the Gross salary, there will be deductions ranging from the statutory deductions like PF / ESI where applicable / Profession Tax / Income Tax where applicable / Loan taken by the employee (this is internal) = NET SALARY.

This is what payroll is.

Thanks,

dsv

Hi,

Components of payroll include:
- Basic salary (Basic Wage + DA + Retaining Allowance)
- HRA (10-40% of the basic depending on the industry and sector)
- Other factors
- Medical
- Conveyance
- Other allowances = gross salary

Deductions on behalf of the employee:
- 12% of the basic wages (PF)
- 1.75% of the gross salary (ESI)

Gross salary - deductions = net in hand

Additions on behalf of the employer:
- 12% of the basic wages (PF)
- 4.75% of the gross salary (ESI)

Gross salary + additions = CTC

With Regards,
Kapil Kaushal

Where do Superannuation and Gratuity be included? Are they on the Gross Salary side or the Benefits side? Do they form part of CTC?

Hi Pali,

That was a complete detail for payroll management. Could you please tell me what all things need to be taken care of when submitting a quotation for Off-roll payroll management?

With regards,
Mithesh

Hi DSV,

The payroll you explained was very helpful. Now, friends, can anyone please explain to me how basic, HRA, conveyance, etc., are calculated out of CTC? It's urgent.

Regards,
Neha.

You may check this payroll resources. Accurate information on payroll processing including salary structuring, ESI, EPF, PT, IT, etc. all at one place.

Hi Sree Kumar,

Thank you for your great help regarding providing me with information about the payroll resources. It was really nice of you in this regard.

With regards,
Sujit Kumar