Guide to payroll processing and monthly calculations

Jon Boyes
Employability and Graduate Development
CHMP
www.hrspot.co.in
Kolkata | Bhubaneswar | Hyderabad
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Payroll Processing
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Payroll Processing 2

Payroll Processing
Payroll Processing
Definition of
Attendance Management

Payroll Processing
 Attendance management is the act of managing attendance or presence in a
work setting to minimize loss due to employee downtime
 Processing monthly attendance for the employees and deciding number of days
worked to process salary

Payroll Processing
Payroll Processing
Types of
Attendance Management

Payroll Processing
Manual
Attendance
System
Automated
Attendance
System

Payroll Processing
Payroll Processing
Definition of
Leave Management

Payroll Processing
Leave Management
encompasses the processes employees use to request time away from work and
supervisors use to grant or deny leave based on organization policies

Payroll Processing
Payroll Processing
Different Types
of Leaves

Casual Leave
Payroll Processing
Sick LeavePrivilege Leave

Payroll Processing
 Calculated on calendar year basis
 Pro rata basis i.e. In proportionality to some factor that can be exactly calculated
 All leave for the year can not be taken at the beginning

Payroll Processing
Unapproved Leaves
Leave Without Pay
Unsolicited absent
Leave beyond eligibility limit

Payroll Processing
Payroll Processing
Leave Carry Forwarding

Payroll Processing
 Any Earned leaves/Privilege leaves are the leaves which are earned in the previous
year and enjoyed in the preceding years
 Privilege leaves can be carry forwarded for the quantum upto the total of three years
and vary from state to state as per the shop and establishment act

Payroll Processing
Payroll Processing
Leave Encashment

Payroll Processing
 Employee gets cash payments for unavailing of allowed leaves in each year that he has
accumulated
 Monitory payment availed by the employee in return of the unavailed leave is known
as leave encashment
 Applicable on unavailed privilege leaves

Payroll Processing
Payroll Processing
Definition of
Payroll Management

Payroll Processing
The administration of the financial record
of employees' salaries, allowances and deductions

Payroll Processing
Payroll Processing
Input and Output of
Payroll Management

Input
Payroll file including all the
details of different monthly
component
Payroll Processing
Output
Pay slip including all the
details of the salary of the
month

Payroll Processing
Payroll Processing
Introduction to
Monthly Payroll Processing

Payroll Processing
 Calculating and processing monthly payroll
 Calculating number of days Present and Absent
 Monthly Components like Basic, HRA and Allowances are considered

Payroll Processing
 Components like PF (Employer's Contribution), ESI (Employer's Contribution), and
Gratuity, Not included
 Employee’s Contribution of PF and ESI will get deducted
 Professional tax deduction done as per Professional Tax slab

Payroll Processing
 Payroll is calculated on Salary Days
 Salary Days = Total days in a month – days absent + paid leaves
 Issuing payslip as a salary proof and explanation

Payroll Processing
Monthly
components amount
X
No. of
working days in the
monthTotal no. of
days in the month

Payroll Processing
Payroll Processing
Professional Tax Slab

Payroll Processing
West Bengal Professional Tax Slab
Monthly gross salary Deduction amount
0 – 10,000 NIL
10,001 – 15,000 Rs. 110
15,001 – 25,000 Rs. 130
25,001 – 40,000 Rs. 150
Above 40,001 Rs. 200

Payroll Processing
Odisha Professional Tax Slab
Up to 13,304 NIL
13,305 – 25,000 Rs. 125
25,001 and Above
Rs. 200 and Rs. 300
[P Tax will be payable Rs. 200 for first 11
months and Rs. 300 in the last month]

Payroll Processing
Telangana Professional Tax Slab
Up to 15,000 NIL
15,001 – 20,000 Rs. 150
20,001 and Above Rs. 200

Payroll Processing
Payroll Processing
Net or Take Home Salary

Payroll Processing
 Net salary, more commonly known as Take-Home Salary, is the income that the
employee actually takes home once tax and other such deductions are carried
over with
 It refers to the in-hand figure that is calculated after deducting Income tax at
source (TDS) and other deductions as per the relevant company policy

Payroll Processing
Payroll Processing
Payroll Processing
Example

Payroll Processing
Convert yearly amount to monthly amount: divided by 12
Convert monthly amount to daily amount: divided by no. of days in a month
Daily amount * Number of salary days
Calculation to be done for each monthly component of CTC
Components Yearly Monthly (30 days) Daily
Basic 3,00,000 25,000 833
HRA 1,20,000 10,000 333
LTA 1,00,000 8,333 278
Conveyance 20,000 1,667 56
MR 20,000 1,667 56
Other Allowance 2,170 180 6
PF (employer’s) 23,400 - -
Gratuity 14,430 - -
Monthly deduction of employee’s PF (12%) N/A 1,800 60
Total 6,00,000 45,047 1,502

Payroll Processing
Lets assume an employee has worked only 25 days in a month of 30 days
He had 2 approved paid leaves which he has taken that month
So salary will be calculated: days in month – total absent + no. of approved paid
Leaves = 30 - 5 + 2= 27
Components Daily Payout Salary Days Monthly Payout
Basic INR. 833 27 INR. 22,491
HRA INR. 333 27 INR. 8,991
LTA INR. 278 27 INR. 7,506
Conveyance INR. 56 27 INR. 1,512
MR INR. 56 27 INR. 1,512
Other Allowance INR. 6 27 INR. 162
Deduction of employee’s PF INR. 60 27 INR. 1,620
Net Salary INR. 40,554

Payroll Processing
Payroll Processing
Class Activity

Payroll Processing
Monthly Payroll Processing Calculation
All Students will be asked to make CTC designing, calculate yearly gross
salary, monthly gross salary, monthly net salary for different Metro and Non
metro locations.
1.CTC 2,50,000; location Kolkata; Basic 35%
2.CTC 3,25,000; location Bhubaneswar; Basic 45%
3.CTC 4,75,000; location Hyderabad; Basic 55%
Calculate the net salary for June where LWP is 0 and net salary of July
where
LWP is 2 for above CTC.
Individual Activity: 120 min

Guide to payroll processing and monthly calculations

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Guide to payroll processing and monthly calculations