Payroll Process

Once the data is gathered and verified, run the payroll. The process below applies whether you use a payroll system or a spreadsheet.

Payroll steps

1. Input the data. Enter each employee’s salary structure, attendance, leave, and any reimbursements or deductions into the payroll system.
2. Apply statutory deductions. Calculate PF, ESI, professional tax, and TDS for each eligible employee. Include these in this stage so there are no surprises later.
3. Calculate gross and net pay. Gross salary less all deductions gives the net payable.
4. Check the figures. Reconcile the totals against the previous month and against the inputs before payment.
5. Approve and pay. Route the payroll for approval, then pay salaries through the bank.
6. Deposit statutory dues. Pay the PF, ESI, PT, and TDS to the authorities by their due dates and file the returns.

The key point is to account for statutory deductions and TDS during the calculation, not after. See Understanding CTC for the wage structure and Post-payroll processing for what happens after the run.