Payroll Software India: Must-Have Features for Compliance

Introduction: Why Indian Compliance is Important

Payroll management in India is much more than simply disbursing salaries. With constantly changing tax legislation, numerous statutory deductions, and aggressive filing deadlines, complying is the very basis of payroll operations. For organizations—whether it is a startup, SME, or large corporation—remaining compliant is not a choice. It is necessary to stay clear of significant penalties, preserve employee confidence, and ensure business continuity.

This is where Payroll Software in India comes into the picture. Through automation, real-time updates, and legal tracking capabilities, current payroll systems assist businesses in remaining on the correct side of the law while streamlining everyday transactions.

We delve into the features a business needs for 100% compliance in this blog, and how the top payroll software in India can defend your business against regulatory snags.

Key Payroll Compliance Laws in India

Before diving into features, it’s important to understand the core payroll compliance requirements that Indian businesses must follow:

1. Employees’ Provident Fund (EPF):

A retirement benefit scheme requiring both employer and employee contributions. The EPF rate is typically 12% of basic wages.

2. Employees’ State Insurance (ESI):

Applicable to employees earning ₹21,000 or less per month. Employers contribute 3.25%, while employees contribute 0.75%.

3. Professional Tax (PT):

Imposed by individual state governments, PT needs to be deducted every month and deposited according to respective state regulations.

4. Tax Deducted at Source (TDS):

Compulsory deduction on salaries earned by employees according to relevant income tax brackets. Monthly deposits and quarterly returns (Form 24Q) are to be done.

5. Gratuity:

Statutory welfare payable to employees for completing five years or more of continuous service, regulated under the Payment of Gratuity Act.

6. Labour Welfare Fund (LWF):

Applicable only in specific states; employers have to deduct and contribute a certain amount towards employee welfare.

Non-compliance with such regulations results in enormous financial and reputational loss. Therefore, contemporary companies require compliance-ready payroll software that facilitates compliance without human intervention.