Payroll Management

2026-02-01 · 4 min

Overview

The Payroll module processes monthly salary computation, statutory deductions (PF, ESI, PT, TDS), attendance integration, and payslip generation for all employees. It integrates with the People module for staff records and the Finance module for GL posting.

Salary Structure

Define salary components:

• Earnings: Basic, HRA, Conveyance, Medical, Special Allowance, Shift Allowance, Overtime.
• Deductions: PF (Employee + Employer), ESI, Professional Tax, TDS, Loan Recovery, Canteen.
• Salary structures: Create templates for different employee grades (e.g., Doctor, Nurse, Admin, Housekeeping).
• CTC calculation with employer contributions.
• Increment management: Annual increment processing with effective date.

Monthly Processing

Run payroll each month:

1. Import attendance data: Present days, leaves, overtime hours, shift differentials.
2. Review and adjust: Arrears, advances, reimbursements, one-time deductions.
3. Run payroll calculation: System computes gross salary, deductions, and net pay.
4. Review payroll summary: Department-wise salary totals, headcount, variance from previous month.
5. Approve payroll (requires Finance Manager or HR Head approval).
6. Generate bank file: NEFT/RTGS file for salary credit.
7. Post to GL: Auto-generate salary journal entries.
8. Generate payslips: Individual payslips with YTD earnings and deductions.

Statutory Compliance

Auto-calculate and generate statutory returns:

• PF: Monthly ECR (Electronic Challan cum Return) file for EPFO upload.
• ESI: Monthly contribution statement.
• Professional Tax: State-wise PT calculation and challan.
• TDS: Monthly TDS computation, quarterly Form 24Q preparation.
• Form 16: Annual salary certificate generation.
• Bonus: Statutory bonus calculation as per the Payment of Bonus Act.

Reporting

Payroll reports include: Monthly payroll register, bank transfer statement, department-wise salary analysis, PF/ESI contribution sheets, TDS computation report, CTC analysis, and annual salary statement per employee.

Salary Structure Assignment

Define and assign salary components to individual employees:

• Navigate to Payroll > Salary Structure to manage employee-wise component mapping.
• Assign earning components (Basic, HRA, DA, Special Allowance) with amount or formula.
• Assign deduction components (PF, ESI, PT, TDS) with applicable rules.
• Effective date tracking: changes apply from a specified date without overwriting history.
• Bulk assignment: apply a salary template to multiple employees of the same grade.
• Revision history: full audit trail of salary component changes with old/new values.

Loans & Advances

Manage employee loans and advance salary disbursements:

• Navigate to Payroll > Loans & Advances to create new loans.
• Loan types: salary advance, personal loan, vehicle loan, housing loan.
• Enter principal amount, interest rate (if applicable), tenure, and EMI amount.
• EMI deductions are auto-applied to monthly payroll processing.
• Track loan balance, total repaid, and outstanding amount.
• Approval workflow: loan requests go through HR and finance approval.
• Early closure and partial prepayment options available.

Full & Final Settlement

Process the final settlement when an employee exits the organization:

• Navigate to Payroll > Full & Final to initiate settlement.
• Earnings computed: unpaid salary, leave encashment, bonus, gratuity, notice period recovery.
• Deductions computed: loan recovery, advance recovery, notice shortfall, asset recovery.
• Net payable/recoverable amount auto-calculated.
• Settlement status workflow: Draft > Under Review > Approved > Settled.
• Generate FnF statement for employee acknowledgement.
• Final payslip generation and GL posting of settlement entries.

Notes

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