Indian income tax law provides statutory exemptions for specific earning components. HRA exemption is governed by Section 10(13A), LTA by Section 10(5), and Conveyance by a flat Rs 1,600 per month rule. Zoho Payroll applies these exemptions automatically when computing monthly TDS, provided the component is correctly tagged in Settings.
PF contributions are calculated on ‘PF Wages’, which typically include Basic and Dearness Allowance. ESI is computed on ‘ESI Gross’, which includes most earning components except statutory exclusions. Zoho Payroll allows you to tag each earning component as PF-applicable or ESI-applicable, ensuring correct statutory computation.
Each earning component appears as a separate line on the payslip. The order and grouping of components on the payslip follows the sequence configured in the salary structure. Clear labeling helps employees understand their compensation and supports transparency during audits.
An earning component is any pay element that adds to gross salary, such as Basic, HRA, or Special Allowance. In Zoho Payroll, each earning component is configured with a calculation method and tax treatment so that payslips and TDS computations are accurate.
HRA (subject to least-of-three conditions), LTA (for actual travel twice in four years), Conveyance (up to Rs 1,600 per month under old regime), and certain other allowances have statutory exemptions. Zoho Payroll applies these when the components are correctly tagged and employee declarations are submitted.
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