Payroll Calculator
Calculate net salary from gross with PF, ESI, Professional Tax & TDS deductions.
Payroll Details
Provident Fund & ESI
Tax Details
Payroll Breakdown (Monthly)
Cost to Employer (Monthly)
Understanding Payroll in India
Payroll processing in India involves calculating the net take-home salary from the gross salary by accounting for various statutory deductions and contributions. For any HR professional or business owner, understanding payroll components is essential to ensure compliance with Indian labour laws and to provide transparent salary structures to employees.
The gross salary is the total monthly earnings before any deductions. It is typically structured into components like Basic Salary (usually 40% of gross), House Rent Allowance or HRA (50% of basic), and Special Allowance (the remaining balance). Each component serves a specific purpose — Basic forms the core of salary and is used for calculating PF and gratuity, HRA provides tax benefits for those paying rent, and Special Allowance balances the salary structure.
From the gross salary, several statutory deductions are made to arrive at the net or in-hand salary. These include Employee Provident Fund (EPF) at 12% of basic salary (capped at ₹15,000 basic), Employee State Insurance (ESI) at 0.75% of gross (applicable if gross is below ₹21,000/month), Professional Tax (a state-level tax up to ₹200/month), and Income Tax deducted at source (TDS) based on the employee's tax slab and declared investments.
Key Payroll Deductions Explained
Provident Fund (PF): Both employee and employer contribute 12% of basic salary to EPF. The employee's 12% is deducted from salary, while the employer's 12% is an additional cost (part of CTC but not gross). The employer's contribution is split: 8.33% goes to EPS (pension, capped at ₹15,000 basic) and 3.67% goes to EPF. PF is mandatory for establishments with 20+ employees where basic salary is ≤ ₹15,000.
Employee State Insurance (ESI): ESI is applicable when gross monthly salary is ≤ ₹21,000. The employee contributes 0.75% and the employer contributes 3.25% of gross salary. ESI provides medical, disability, and maternity benefits to employees. Once an employee's salary exceeds ₹21,000, ESI contributions stop.
Professional Tax (PT): PT is levied by state governments and varies by state. Maharashtra charges ₹200/month for gross > ₹10,000. Karnataka, Gujarat, Andhra Pradesh, and Telangana charge a flat ₹200/month. West Bengal has a slab-based system from ₹110 to ₹200. The maximum annual PT is ₹2,500, which is deductible from taxable income.
TDS (Tax Deducted at Source): Employers are required to deduct income tax from salary each month based on the employee's estimated annual income, tax regime chosen (old or new), and declared investments. TDS is calculated at the beginning of the financial year and spread equally across 12 months. Employees must submit investment proofs and declarations to optimize TDS.
How to Use This Payroll Calculator
- Enter gross salary — Input the monthly gross salary (before deductions).
- Set salary structure — Adjust Basic percentage (default 40%) and HRA percentage of basic (default 50%). Add any special allowance amount.
- Select PF & ESI applicability — Check the boxes if PF and ESI apply to the employee.
- Choose PT state and tax regime — Select the state for Professional Tax calculation and the income tax regime (New or Old).
- Click Calculate — View the complete payroll breakdown with net salary, all deductions, and employer cost.
Optimizing Salary Structure for Maximum Take-Home
Employers can structure salaries to maximize employee take-home pay while remaining compliant. Key strategies include: keeping basic salary at 40% of gross (lower basic means lower PF deduction but also lower HRA exemption), maximizing HRA for employees paying rent in metro cities, using tax-free components like meal coupons (up to ₹50/meal), LTA for domestic travel, telephone reimbursement, and uniform allowance. Choosing the right tax regime (old vs new) can also significantly impact net salary depending on the employee's investment profile and deductions.
Payroll Deduction Rates in India
Understanding statutory deduction rates is essential for accurate payroll processing. Here are the current rates for mandatory contributions:
| Deduction | Employee Share | Employer Share | Applicable If |
|---|---|---|---|
| EPF | 12% of Basic | 12% of Basic | Basic ≤ ₹15,000 |
| EPS | — | 8.33% of Basic | Basic ≤ ₹15,000 |
| ESI | 0.75% | 3.25% | Gross ≤ ₹21,000 |
| Professional Tax | ₹0 - ₹200/month | — | Varies by state |
| TDS | As per slab | — | Income above threshold |
Payroll Compliance Calendar
Employers must deposit statutory deductions within prescribed deadlines to avoid penalties and interest charges. Here are the key due dates for payroll compliance in India:
| Compliance | Due Date | Penalty for Delay |
|---|---|---|
| EPF Deposit | 15th of next month | 12% interest per annum |
| ESI Deposit | 15th of next month | 12% interest per annum |
| Professional Tax | Varies by state | Varies by state |
| TDS Deposit | 7th of next month | 1.5% per month interest |
| TDS Return (Quarterly) | 31st of month after quarter | ₹200/day delay |
| EPF Return (Monthly) | 25th of next month | ₹25/day per employee |