Compliance Requirements for Payroll Software in India: A Friendly, Actionable Guide

Selected theme: Compliance Requirements for Payroll Software in India. Step into a practical, confidence-building introduction that translates dense regulations into clear, doable steps your payroll team can adopt today. Subscribe for timely updates, ask questions about your state, and help us shape future deep-dives.

The Indian Payroll Compliance Landscape at a Glance

Your software must map to the Income Tax Act (TDS on salaries), EPF & MP Act, ESI Act, Payment of Wages, Payment of Bonus, Professional Tax laws, Labour Welfare Fund, Shops and Establishments, Maternity Benefit, Gratuity, and the Digital Personal Data Protection Act, 2023. Build for change, not assumptions.

India’s compliance is a mosaic. Central requirements define the backbone, while states set Professional Tax, minimum wages, and registers. Robust payroll needs location-aware logic, auto-updates, and clear audit evidence. Tell us your state, and we’ll share an upcoming checklist tailored to it.

A 120-person startup moved from spreadsheets to a compliance-first payroll. They standardized salary heads, enabled UAN and ESIC validations, and mapped PT by work location. Result: zero notices last year, faster closures, and happier employees. Want their template? Comment, and we’ll send it.

Old vs new regime, exemptions, and perquisites

Let employees declare and switch regimes as permitted, with clear projections. Handle HRA, LTA, Section 80C/80D, standard deduction, and perquisite valuation. Collect Form 12BB proofs on time and lock payroll with rule-based overrides to prevent last-minute surprises and disputes.

Deposits, returns, and certificates without drama

Automate TDS deposit reminders by the 7th of the next month (April 30 for March), prepare Form 24Q for 31 Jul, 31 Oct, 31 Jan, and 31 May, and issue Form 16 by 15 June. Build a calendar, track SLAs, and subscribe for our annual deadline cheat sheet.

Social Security: EPF, ESI, and Labour Welfare Fund

Configure EPF on Basic plus DA, respect the current ₹15,000 wage ceiling for mandatory coverage, and support voluntary coverage where applicable. Validate UANs, generate accurate ECR files, and reconcile challans. Track joins, exits, and arrears to prevent unnoticed shortfalls.

Social Security: EPF, ESI, and Labour Welfare Fund

Apply ESI eligibility up to the current ₹21,000 wage ceiling, capture IP numbers, and align contribution periods. Map the right salary heads, export portal-ready files, and reconcile payments monthly. Missed uploads snowball quickly—set alerts and keep your evidence pack tidy.

State Duties: Professional Tax, Minimum Wages, and Registers

Register in applicable states, map employees by work location, and apply the correct slab automatically. A Mumbai startup avoided penalties after auto-reassigning remote employees who relocated. Need our PT mapping guide for hybrid teams? Comment with your states and we’ll share it.

Issue clear notices, capture valid consent where required, and process only what payroll truly needs. Honor access and correction requests, minimize retention, and govern cross-border transfers responsibly. Train admins and document your decisions—compliance is as much culture as code.

Data Protection, Security, and Audit Trails

Limit who sees what, encrypt at rest and in transit, and log every sensitive action. Review admin roles quarterly, rotate keys, and alert on unusual downloads. Good security shrinks breach risk and strengthens trust across finance, HR, and your employees.

Data Protection, Security, and Audit Trails

Employee Lifecycle: Onboarding, F&F, and Contracting Nuances

Capture PAN for TDS, support UAN creation and ESIC IP numbers, and collect declarations early. Use Aadhaar only where legally required, with appropriate safeguards. Build checklists by role and state. New joiners feel confident when documentation is crisp and respectful.

Employee Lifecycle: Onboarding, F&F, and Contracting Nuances

Pay within statutory timelines, compute gratuity eligibility correctly, and handle leave encashment per policy and law. Issue final payslips, relieve letters, and Form 16 parts promptly. A transparent tracker prevents post-exit queries from turning into formal complaints.