Zoho Payroll classifies components as Earning or Deduction. Earnings add to gross salary; deductions reduce take-home pay. Within earnings, components can be marked taxable or tax-exempt. Within deductions, components can be flagged as statutory (PF, ESI, PT) or voluntary (loans, salary advances).
Each component supports three calculation modes: flat amount (e.g., Conveyance at Rs 1,600 per month), percentage of a base component (e.g., HRA at 50% of Basic), or a custom formula (e.g., Special Allowance = CTC minus sum of all other components). Formula components auto-adjust when other values change.
Marking a component as taxable ensures Zoho Payroll includes it in TDS computation and reports it under ‘Income from Salary’ in Form 16 Part B. Exempt components (within statutory limits) are excluded from taxable income, reducing the employee’s TDS liability.
A salary component is a single pay element within a salary structure, such as Basic Salary, HRA, or PF deduction. It defines what the element represents, how it is calculated (flat, percentage, or formula), and whether it is taxable.
Go to Settings > Payroll Settings > Salary Components, click Add Component, choose Earning or Deduction, set the calculation type, configure tax treatment, and then add it to the relevant salary structures.
Aaxonix is a certified Zoho implementation partner based in Pune. Architecture-first, no surprises.