Payroll Basics Every HR Professional Should Understand

What Is Payroll?

Payroll refers to the process of calculating and paying employee compensation while ensuring statutory deductions and legal compliance.

It includes:

• Salary computation

• Statutory deductions

• Payslip generation

• Government filings
  

Key Components of Indian Payroll

1. Salary Structure

A typical salary structure includes:

• Basic salary

• Allowances

• Employer and employee statutory contributions

Each component has tax and compliance implications.

2. Statutory Deductions

Depending on eligibility:

• Provident Fund (PF)

• ESIC

• Professional Tax

• Income Tax (TDS)

Incorrect deduction handling is a common compliance issue.

3. Payroll Cycles and Cut-off Dates

HR must define:

• Payroll cut-off

• Attendance finalisation

• Salary credit timelines

Clear cycles reduce disputes and errors.

HR vs Payroll Roles

While payroll may be processed by:

• Internal teams

• Payroll vendors

HR remains responsible for:

• Data accuracy

• Policy alignment

• Employee communication

Payroll errors often originate from incorrect HR inputs.

Common Payroll Mistakes

• Incorrect PF applicability

• Misaligned CTC structures

• Late statutory payments

• Inconsistent payslips

These errors can attract penalties and employee dissatisfaction.

Best Practices for HR

• Maintain standard payroll checklists

• Reconcile payroll every month

• Coordinate closely with finance

• Document payroll processes
  

Conclusion

Payroll is not just about numbers—it reflects organisational discipline and HR credibility. A strong understanding of payroll basics enables HR to support compliance, employee trust, and operational stability.

This article is part of HireDesk’s Payroll, PF & Benefits knowledge resources.