Payroll Processing in Raipur

What has changed, and why salary structures need revisiting

The 50 per cent basic wage rule. Under the Code on Wages, basic pay and dearness allowance together must constitute at least half of an employee's total remuneration. Many salary structures built over the years minimise the basic component deliberately, to reduce the provident fund contribution calculated on it — a practice the new rule directly targets, since PF and gratuity are both computed as a percentage of basic pay. A structure with a low basic component now needs to be redesigned, and the redesign itself changes the PF contribution, the gratuity provision, and quite possibly the net take-home pay employees have grown used to, which is worth communicating carefully rather than allowing employees to discover as a surprise on their payslip.

Full and final settlement on separation must now be completed within two working days. This is a considerable tightening from the informal thirty-to-forty-five-day timelines many employers previously treated as normal, and it covers outstanding salary, leave encashment, gratuity where eligible, and statutory bonus, together with the documents an outgoing employee needs — Form 16 (now renumbered, see below), PF and ESI records, and any experience or relieving letter due.

Digital record-keeping is now mandatory rather than merely conventional. Wage registers, attendance records, and statutory contribution records must be maintained digitally, month-wise and employee-wise, and payslips must carry prescribed information including gross wages, deductions and contributions individually stated.

State rules are still being finalised as these central codes bed in during 2026, so a business should expect further state-specific notifications rather than treat the framework as fully settled.

The recurring statutory obligations

Provident Fund and ESI, once the relevant employee thresholds are crossed, are dealt with in full on our PF & ESIC Registration page. Payroll processing feeds these obligations directly — the wage figures used for PF and ESI contributions come from the payroll run itself, which is why errors in salary structuring surface as PF and ESI errors downstream.

Tax deducted at source on salary, deposited by the 7th of the following month (the 30th of April for the month of March), with quarterly statements filed on the form that replaced Form 24Q from April 2026. The annual salary certificate — the document long known as Form 16, now issued under a new form number following the same renumbering — must be issued to every employee by 15 June following the financial year.

Professional tax, levied by state governments where applicable, with rates, slabs and filing frequency that differ by state — a genuine complication for any employer with staff in more than one state, and worth confirming for the specific state rather than assuming a figure carried over from elsewhere.

Labour Welfare Fund contributions, required only in states that levy them, typically modest in amount but still a compliance obligation in its own right where applicable, with its own filing calendar.

Statutory bonus, under the Payment of Bonus Act, for eligible employees within the prescribed wage limit, calculated and paid annually within the time the Act allows.

Gratuity, for employees completing five years of continuous service, calculated at fifteen days' wages for every completed year of service, based on the last drawn basic salary — which is precisely where the new 50 per cent basic wage rule has a direct financial effect, since a higher mandated basic component increases the gratuity liability accrual going forward.

Where payroll most often goes wrong

Salary structures minimising the basic component, now squarely targeted by the Code on Wages and requiring genuine restructuring rather than a label change.

Treating professional tax and Labour Welfare Fund as an afterthought, particularly for businesses operating across more than one state, where the rates and even the applicability differ and a single payroll template cannot simply be copied across locations.

Underestimating gratuity as a real, growing liability rather than a distant contingency — with the basic-pay rule now increasing the underlying calculation base, provisioning for it monthly rather than discovering the obligation at an employee's departure is worth doing properly.

Missing the tightened final settlement timeline. Two working days is materially shorter than the informal practice many employers have followed, and a delayed settlement is now a compliance failure in a way it may not have been treated as before.

Payslips that do not carry the prescribed level of detail, now a specific requirement rather than a matter of good practice alone.

Scope of our work

We compute monthly payroll, including gross-to-net calculation, statutory deductions and employer contributions; advise on salary structuring to meet the 50 per cent basic wage requirement, including the downstream effect on PF and gratuity; deposit and file TDS on salary, professional tax and Labour Welfare Fund contributions where applicable; calculate statutory bonus and provision for gratuity; process full and final settlements within the required timeline on separation; issue the annual salary certificate to employees by the due date; and maintain the digital wage and attendance records the current framework requires.

Payroll is handled alongside our general bookkeeping work for a client, since the two draw on the same underlying data and are more accurate and more efficient run together than run separately.