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Knighthood Documentation

What Is Payroll?

Salary payment to all employees by the company is known as payroll.

Functions

  • Develop organization policies such as Wage policy, Leave Encashment policy, Flexible benefits and any other allowances

  • Define basic salary structure in an Employee Payslip (Basic, variable pay, LTA, HRA and allowances if any)

  • Gross Salary calculation and statutory as well as non-statutory deductions to arrive at net pay

  • Salary Payment

  • Deposit dues such as TDS, PF, etc. with appropriate authorities and filing their corresponding returns

Calculation

The payroll process calculates what is due to the employees, defined as ‘net pay’ arrived after accounting for taxes and other deductions for the employee

Net Pay is calculated as

Net Pay = Gross Salary- Deductions

Gross Salary = All types of regular income + allowances + any one-time payment or benefit.

Deductions = All types of regular deductions + statutory deductions + any one-time deductions.

There are multiple Segments and activities involved while preparing a payroll and they are discussed in following topics