Question 1

What is payroll?

Accepted Answer

Payroll is the systematic monthly operational process of calculating compensation owed to employees based on attendance, contracts, salary components, overtime, incentives, and authorized deductions.

Question 2

What is payroll compliance?

Accepted Answer

Payroll compliance is the statutory adherence to labour, tax, and social security laws governing employee remuneration—including Salary TDS withholding, EPFO contributions, ESIC deductions, State Professional Tax, and statutory bonus distributions.

Question 3

What is the difference between payroll processing and payroll compliance?

Accepted Answer

Payroll processing calculates gross-to-net take-home pay and generates monthly payslips. Payroll compliance computes statutory deductions, deposits employer/employee taxes with government authorities, files monthly returns (ECR/TDS), and issues Form 16.

Question 4

What is Cost to Company (CTC)?

Accepted Answer

CTC represents the total financial expenditure incurred by an employer on an employee over a year, encompassing direct gross salary, employer PF/ESIC contributions, gratuity provisions, insurance, and company benefits.

Question 5

Is CTC equal to gross salary?

Accepted Answer

No. CTC includes employer-side statutory contributions (such as Employer EPF, EPS, EDLI, and ESIC) and benefits that are not paid out directly in the monthly pay packet.

Question 6

Is gross salary equal to take-home salary?

Accepted Answer

No. Gross salary is the total earnings before any deductions. Take-home (net) salary is what reaches the employee's bank account after deducting employee PF, ESI, Professional Tax, and Salary TDS.

Question 7

What is basic salary?

Accepted Answer

Basic salary is the foundational fixed core component of an employee's compensation structure (typically 40% to 50% of CTC), upon which statutory benefits like EPF contributions, gratuity, and HRA exemptions are calculated.

Question 8

What is House Rent Allowance (HRA)?

Accepted Answer

HRA is an allowance paid to employees to meet rental accommodation expenses. Under the Old Tax Regime, employees can claim tax exemptions subject to statutory rent receipt conditions.

Question 9

What are common payroll allowances?

Accepted Answer

Common allowances include Special Allowance, Dearness Allowance (DA), Conveyance, Children Education Allowance, Shift Allowance, and Medical Allowances, classified as taxable or partially exempt.

Question 10

What are employee deductions in payroll?

Accepted Answer

Deductions subtracted from gross earnings include statutory items (Employee EPF at 12%, Employee ESIC at 0.75%, Professional Tax, Salary TDS) and authorized non-statutory items (salary advances, loan EMIs).

Question 11

What is employee contribution vs employer contribution?

Accepted Answer

Employee contribution is deducted directly from the employee's gross pay. Employer contribution is an additional statutory cost borne solely by the company over and above gross salary.

Question 12

What is a payroll register?

Accepted Answer

A master monthly accounting spreadsheet recording employee attendance, earnings breakdown, deductions, net payout, and employer statutory costs across all staff for audit purposes.

Question 13

What is a payslip?

Accepted Answer

A monthly itemized statement issued to an employee detailing payable days, basic salary, allowances, gross earnings, itemized deductions, net take-home pay, and YTD tax withholdings.

Question 14

What is Form 16?

Accepted Answer

Form 16 is an annual statutory TDS certificate issued by an employer under the Income-tax law detailing total salary paid, tax computed under chosen regimes, and TDS deposited via TRACES.

Question 15

Is Form 16 a payslip?

Accepted Answer

No. A payslip is an internal monthly salary breakdown. Form 16 is an annual statutory direct tax certificate issued following the financial year-end.

Question 16

What is Form 12BB?

Accepted Answer

Form 12BB is the declaration form through which an employee furnishes particulars and documentary evidence (rent receipts, home loan interest, 80C investments) to the employer for tax computation.

Question 17

What is Salary TDS?

Accepted Answer

Salary TDS is the mandatory monthly income tax withholding deducted by an employer on an employee's estimated average taxable salary under income-tax provisions.

Question 18

Who is required to deduct salary TDS?

Accepted Answer

Any employer (company, firm, LLP, or individual) paying salary exceeding the basic exemption limit under the applicable tax regime is legally required to deduct TDS.

Question 19

What changed in Salary TDS from 1 April 2026?

Accepted Answer

Salaries paid or credited on or after 1 April 2026 are governed by Section 392(1) of the Income-tax Act, 2025. Employers must reset withholding computations for Tax Year 2026-27 under the modernized framework.

Question 20

Which Act applies to salaries paid up to March 2026?

Accepted Answer

Salaries paid or credited up to 31 March 2026 (FY 2025-26 / AY 2026-27) remain strictly governed by Section 192 of the legacy Income-tax Act, 1961.

Question 21

Does payroll TDS need to be recalculated from 1 April 2026?

Accepted Answer

Yes. Official Income Tax Department guidelines instruct employers to reset employee tax computations for the new tax year commencing 1 April 2026, aligning declarations with the 2025 Act.

Question 22

Can an employee choose between the Old and New Tax Regimes?

Accepted Answer

Yes. Salaried employees can select their preferred regime at the beginning of the financial year for monthly payroll TDS, with the New Tax Regime serving as the statutory default.

Question 23

How does payroll TDS connect to quarterly TDS return Form 138?

Accepted Answer

Monthly tax deducted from employee salaries is deposited by the 7th of the next month and consolidated quarterly in Form 138 (earlier Form 24Q) with the Income Tax Department.

Question 24

When must Form 16 be issued to employees?

Accepted Answer

Employers must generate and issue digitally signed Form 16 (Part A and Part B) to employees on or before 15 June following the end of the relevant financial year.

Question 25

What is EPFO?

Accepted Answer

EPFO stands for the Employees' Provident Fund Organisation, a statutory social security body administering provident funds, pensions, and insurance for Indian workers.

Question 26

When is EPFO registration mandatory for an employer?

Accepted Answer

EPFO registration is mandatory for any commercial establishment or factory employing 20 or more persons, though voluntary registration is permitted for smaller teams.

Question 27

What is the standard EPF contribution rate?

Accepted Answer

The standard employee contribution is 12% of basic salary + DA, matched by an employer contribution of 12% (split into 8.33% EPS pension, 3.67% EPF, plus EDLI and admin charges).

Question 28

What is the statutory EPF wage ceiling?

Accepted Answer

The standard statutory wage threshold for mandatory EPF membership is ₹15,000 per month basic wages, though employers may contribute on higher actual wages under joint declarations.

Question 29

What is an Electronic Challan cum Return (ECR) in EPFO?

Accepted Answer

ECR is the monthly electronic statement uploaded on the EPFO Unified Portal detailing member UANs, wages, and contribution breakdowns before generating the deposit challan.

Question 30

What is a Universal Account Number (UAN)?

Accepted Answer

UAN is a unique 12-digit number allotted by EPFO that acts as an umbrella identifier for all PF accounts held by an individual across different employments.

Question 31

What is ESIC?

Accepted Answer

ESIC stands for the Employees' State Insurance Corporation, providing medical care, sickness benefits, and maternity benefits to employees and their dependents.

Question 32

When is ESIC registration mandatory?

Accepted Answer

ESIC applies to non-seasonal factories employing 10 or more persons and specified commercial establishments employing 10 or 20 persons (depending on the State).

Question 33

What is the statutory ESIC wage ceiling?

Accepted Answer

Employees earning monthly gross wages up to ₹21,000 (or ₹25,000 for employees with disabilities) are mandatorily covered under the ESIC scheme.

Question 34

What are the current ESIC contribution rates?

Accepted Answer

The employee contribution is 0.75% of gross wages, and the employer contribution is 3.25% of gross wages, totaling 4% deposited monthly.

Question 35

What is Professional Tax (PT)?

Accepted Answer

Professional Tax is a state-level direct tax levied by State Governments on salaried individuals and professionals, deducted by the employer and remitted to the respective State tax department.

Question 36

Is Professional Tax applicable in every State?

Accepted Answer

No. Professional Tax is state-specific. States like Maharashtra, Karnataka, Tamil Nadu, Telangana, and Gujarat enforce PT, whereas Delhi, Haryana, and Rajasthan do not levy PT.

Question 37

Does Professional Tax have a single national rate?

Accepted Answer

No. Slabs, salary thresholds, and monthly rates differ by state, subject to a constitutional maximum ceiling of ₹2,500 per employee per financial year.

Question 38

What is monthly payroll reconciliation?

Accepted Answer

The process of verifying that net salaries computed in the payroll register match actual bank disbursement files, and statutory deductions match challan deposits.

Question 39

Why is payroll bank reconciliation critical?

Accepted Answer

To identify failed bank transfers, unpaid wages, duplicate credits, or unmapped salary reversals before concluding monthly accounts.

Question 40

What is a New Joiner payroll onboarding workflow?

Accepted Answer

Collecting PAN, Aadhaar, bank details, previous PF UAN, ESIC IP number, structuring the salary breakdown, and obtaining Form 12BB tax declarations.

Question 41

What is Full & Final (F&F) Settlement upon employee exit?

Accepted Answer

The comprehensive terminal accounting process calculating unpaid salary for worked days, earned leave encashment, statutory bonus, gratuity, notice pay adjustments, and tax deductions.

Question 42

When does statutory gratuity apply?

Accepted Answer

Gratuity under the Payment of Gratuity Act, 1972 is payable to an employee upon exit who has rendered continuous service of at least five years in an establishment employing 10 or more staff.

Question 43

How is gratuity calculated?

Accepted Answer

Gratuity is calculated as: (15 &times; Last Drawn Basic Salary &times; Completed Years of Service) &divide; 26, subject to statutory maximum caps.

Question 44

What is leave encashment in payroll?

Accepted Answer

The compensation paid to an employee for accumulated, unutilized paid privilege leave at the time of retirement, resignation, or termination.

Question 45

What are salary arrears and how are they taxed?

Accepted Answer

Arrears are backdated increments or salary revisions paid in a later month. Tax is deducted in the month of disbursement, and employees may claim relief under tax rules.

Question 46

How does the Maternity Benefit Act affect payroll?

Accepted Answer

Eligible female employees are entitled to 26 weeks of fully paid maternity leave, requiring payroll to disburse regular salary without attendance deductions.

Question 47

What is payroll maker-checker control?

Accepted Answer

An internal security control where HR or payroll specialists compile attendance and salary inputs (Maker), and a finance head reviews and approves the payout (Checker) before disbursement.

Question 48

What is a payroll variance report?

Accepted Answer

A month-on-month comparison tracking variances in total salary cost, highlighting new joinees, exits, increments, overtime, and unusual deductions.

Question 49

What is payroll data security and confidentiality?

Accepted Answer

Restricting salary master records to authorized personnel, securing bank details, and maintaining encrypted data rooms to prevent internal compensation leaks.

Question 50

How does payroll integrate with corporate bookkeeping?

Accepted Answer

Monthly gross wages are booked as salary expenses, employer PF/ESI as administrative costs, and deducted TDS/PF as current liabilities in financial statements.

Question 51

Can TeleTax Solutions manage end-to-end monthly payroll?

Accepted Answer

Yes. TeleTax Solutions provides full payroll management, from attendance capture and salary calculation to TDS withholding, EPFO/ESIC challans, and payslip generation.

Question 52

Does TeleTax Solutions guarantee labor law compliance?

Accepted Answer

TeleTax ensures accurate mathematical computation and filing based on client-provided data. Final compliance depends on company operational practices and adherence to state rules.

PAYROLL COMPLIANCE

SALARY TDS RESET • INCOME-TAX ACT 1961 VS 2025

Income-tax Act, 1961 • Section 192

Income-tax Act, 2025 • Section 392(1)

WHAT IS PAYROLL COMPLIANCE?

PAYROLL PROCESSING VS STATUTORY COMPLIANCE

CTC ≠ GROSS SALARY ≠ NET TAKE-HOME SALARY

Cost to Company (CTC)

Gross Salary

Net Take-Home Pay

PAYROLL COMPLIANCE CONTROL DASHBOARD

Basic Salary, HRA & Allowances Allocation

YOUR DEDICATED PAYROLL COMPLIANCE TEAM

TeleTax Payroll Service Scope

PAYROLL COMPLIANCE SUPPORT ACROSS INDIA

FREQUENTLY ASKED QUESTIONS

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