Understanding the Payroll Process: Can Someone Explain How It Works?

Hi,

Could anybody explain what the payroll process is?

Thanks

Hi, you can get a brief idea of payroll from this attachment. Hope it will be beneficial.

Regards,
Aranyak.

Hi, I am new to this group. I hope this payroll calculator helps. The salary components can be modified as required.

Regards,
MR

My CTC is Rs. 5,49,996.00 per annum. My Net Pay is Rs. 45,833 per month.

Basic - 27,500
HRA - ??
Conveyance Allowance - ??
Medical Allowance - ??
Other Allowance - ??
DEDUCTIONS
PF Contributions - ??
Professional Tax - Rs. 200

Please guide Salary Calculator above Salary breakup.

Regards,
Manoj

Dear Mr. Manoj,

Your salary structure is as follows:

Basic - 27500
HRA - 11000
CCA - 800
Medical Allowance - 1250
Other Allowance - 5283

Gross/Month = 45833
Gross/Annum = 12 * 45833 = 5,49,996/-

Regards,
Amit Seth.

Hi All,

Payroll is the salary processing system. Payroll can be seen from two aspects: one is from the HR side, and the other from the commercial people's side. The HR personnel process the payroll by sending attendance details or, better put, Leave Without Pay (LWP) details and other complete information that an employee will receive in a particular month. After receiving these details, the commercial team starts entering them into the payroll software, initiating the salary processing.

While processing the salary for a specific month, we in HR provide comprehensive LWP (Leave Without Pay) details to the commercial department. When calculating LWP, we prepare the attendance sheet with the weekly offs. Besides weekly offs, we review the employee's absences, cross-referencing with leave applications to determine how many days an employee was on leave. If an employee has submitted an approved leave application and has sufficient leave balance, we mark them as on leave. However, if there is no leave application submitted or there is no leave balance, the employee is considered absent for that day, and their salary is deducted accordingly.

Furthermore, if there is a provision to provide one day's extra salary for a specific day when an employee does come to work, we calculate the additional salary for those employees present on that day.

I hope this clarifies the process for you.

Regards,

Amit Seth

Dear Manoj,

HRA is 40% of the basic salary.

CCA is fixed at 800/- as it is exempted from taxes.

Medical allowance of 1250/- is exempted from taxes after producing a bill for the same, so it is also fixed.

The rest of the basic salary would be considered as Special allowance.

Regards,
Amit Seth.

HRA is 34.5% of basic pay. Medical and conveyance allowance is fixed (as per your company). PF is 12% of basic pay of the employee + 12% of the employer. Maybe it's useful for you.

Thank you all... :)

Up to 1.5 Lacs is exempted for tax calculation for males. Up to 1 Lac is exempted from taxes under Section 80C. Up to 15K is exempted under Section 80D. Deduction under Section 80G is allowed in respect of donations.

Regards,
Amit Seth.

I need a normal payroll calculator where I can input the gross salary, number of days present for deduction, and add incentives easily. This is quite hard to understand.

Hi Amit,

I want to know what are the percentages that you are dividing the HRA, CCA, medical, and all other percentages. Please send me the amounts that you calculate.

Regards,
Rimi

Hi Rimi,

We generally calculate HRA based on the city he is working in. For metro cities, we keep it at 50% of the basic salary, and for non-metro cities, it is 40% of the basic salary, which is exempted from taxes.

CCA - Actually, Rs. 800/- is exempted from taxes, but one may choose to provide more. For example, you can set the standard CCA for your staff levels.

If medical expenses are reimbursed, up to Rs. 15,000/- (i.e., Rs. 1250/- per month) is exempted from taxes. However, one may opt to provide more depending on the company policy.

I hope your queries have been addressed.

Regards,
Amit Seth.

Hi,

I am looking for the slabs for the following. Could somebody please help me in this regard:

1. PT (Professional Tax) Slabs
2. ESI Deductions
3. PF Calculation

Thanks,
Sree

Hi Sree,

PT slabs differ from state to state, so it is better if you check with your state personnel and collect the data. Regarding PF, up to a basic of Rs. 6500/- is covered under PF, but those with a basic salary higher than this may be exempted. However, once covered, they cannot stop the contribution.

For ESIC, up to a gross salary of Rs. 10000/- is covered under ESIC, with a contribution of 1.75% from the employee side and 4.75% from the employer side. Individuals with a gross salary exceeding Rs. 10,000/- are exempted from coverage.

Regards,

Amit Seth.