Does Zoho Payroll support PF and ESI compliance in India?

Yes. Zoho Payroll automatically calculates and deducts Provident Fund (PF) at 12% of basic salary for eligible employees, and ESI at the applicable rate for employees earning below the threshold. It generates ECR (Electronic Challan cum Return) files for PF filing and ESI contribution reports for monthly submission to the respective authorities.

How does Zoho Payroll handle TDS for Indian employees?

Zoho Payroll calculates TDS on salary based on each employee's declared investments under Section 80C, 80D, HRA exemption, and other deductions. Employees can submit investment proof via the employee portal. At year end, Zoho Payroll generates Form 16 for each employee and provides the data needed for TDS return filing under Form 24Q.

Can Zoho Payroll process payroll for contract employees in India?

Zoho Payroll handles both permanent employees and contract workers. Contract employees can be set up with a different pay structure (no PF/ESI if below threshold, TDS under Section 194C), and their payslips reflect the applicable deductions. The system distinguishes between payroll employees and contractors in its reports.

How does Zoho Payroll integrate with Zoho People and Zoho Books?

Zoho Payroll integrates natively with Zoho People, pulling attendance, leave, and overtime data automatically before payroll is processed. After payroll approval, it pushes salary entries to Zoho Books as journal entries, maintaining accurate accounting records without manual data entry. This three-way integration eliminates the need for separate HR, payroll, and accounting systems.

Zoho Payroll for Indian Businesses: PF, ESI, TDS Setup Guide

Managing payroll in India means handling PF, ESI, TDS, professional tax, LWF, and state-specific levies, all while generating salary slips, challans, and year-end Form 16. Zoho Payroll India is built specifically for this. This guide walks through setting it up correctly from scratch, with common configuration mistakes to avoid.

Scope: Zoho Payroll for Indian private limited companies, LLPs, and proprietorships with salaried employees. Covers PF, ESI, TDS (Section 192), professional tax, and salary slip generation.

Zoho Payroll: What Is Included

Feature	Details
Salary components	Basic, HRA, Special Allowance, LTA, Medical, custom components
Provident Fund (PF)	12% employee + 12% employer; EPF + EPS split; ECR file generation
ESI	0.75% employee + 3.25% employer for eligible employees; monthly challan
TDS (Section 192)	Monthly TDS computation; Form 16 Part A and B at year-end
Professional Tax	Maharashtra, Karnataka, West Bengal, and other states
Salary slips	PDF salary slips emailed to employees automatically
Bank transfer file	NEFT payment file in bank-specific format
Reports	Payroll register, statutory reports, cost center reports

Step-by-Step: Setting Up Zoho Payroll for Your Company

Company Setup Enter company name, registered address, PAN, TAN, PF registration number, ESI code, and professional tax registration. These appear on all statutory challans and Form 16.

Pay Schedule Define your pay period (monthly is standard in India). Set pay date (e.g., last working day of the month or 1st of the following month). Zoho will remind you to run payroll before each pay date.

Salary Components Configure your salary structure: Basic (typically 40-50% of CTC), HRA (50% of basic in metro, 40% in non-metro), Special Allowance (balance), and any other components your company offers. Mark each as taxable or exempt.

PF Settings Enable PF. Set the PF wage ceiling (currently Rs 15,000/month for ESI, Rs 15,000 for PF statutory rate). Decide if you will cap PF on Rs 15,000 or contribute on actual basic salary. Employee PF includes VPF option.

ESI Settings Enable ESI for employees with gross salary up to Rs 21,000/month. Zoho automatically excludes employees above this threshold. ESI is computed on gross less some allowances.

Add Employees Enter each employee: name, DOB, PAN, Aadhaar, bank account, UAN, ESIC number, salary structure, date of joining. Zoho computes CTC and net take-home based on the salary structure assigned.

Run Payroll At month-end, click “Run Payroll.” Zoho processes all employees, computes PF, ESI, TDS, PT, and generates the payroll summary. Review for anomalies before approving.

Pay and File Download the bank transfer file and upload to your bank portal. Download ECR file for PF portal. Download ESI challan. Pay TDS via challan. Zoho tracks all these compliance payments.

TDS on Salaries: How Zoho Handles It

Zoho Payroll computes TDS under Section 192 based on the employee’s projected annual income. The computation considers:

Gross salary minus standard deduction (Rs 75,000 under new tax regime)
HRA exemption (under old tax regime if employee opts for it)
Declared investments: 80C, 80D, HRA, LTA, housing loan interest
Tax slab rates (old or new regime as chosen by employee)

New vs old tax regime: Employees must declare their preferred tax regime at the start of the financial year. Zoho Payroll supports both regimes. The employee can declare investments in Zoho’s employee portal, and TDS adjusts automatically each month.

Common Configuration Mistakes to Avoid

Mistakes that cause payroll errors:

Setting PF on total CTC instead of basic salary: PF is computed on basic + DA only
Not updating the TAN before running payroll: TAN appears on TDS challans and Form 16
Forgetting Professional Tax for Maharashtra: PT slab in MH is Rs 200/month for salaries above Rs 10,000
Not marking outstation allowances as exempt: travel allowances paid for official duty are not taxable
Running payroll before attendance is finalized: LOP (Loss of Pay) deductions must be entered before running payroll

Integration with Zoho People for Attendance

Zoho Payroll integrates with Zoho People (HRMS). When connected:

Attendance data from Zoho People flows to Payroll automatically
Approved leaves deduct from monthly working days
LOP (Loss of Pay) days are computed and salary is reduced proportionally
New joiners added in Zoho People HR management appear in Payroll automatically

Integration with Zoho Books accounting features

Zoho Payroll connects to Zoho Books for Zoho Books accounting setup. When payroll is approved:

Salary expense journal entry is posted to the correct cost centers in Zoho Books
PF and ESI liability accounts are credited
TDS payable is tracked as a current liability until challan is paid
No manual journal entries needed for payroll accounting

Frequently Asked Questions

Does Zoho Payroll handle gratuity calculations?

Zoho Payroll tracks gratuity eligibility (employees completing 5 years of service) and shows the accrued gratuity liability. However, actual gratuity payment must be recorded manually as a separate payroll item when the employee leaves.

Can employees view their payslips in Zoho?

Yes. Zoho Payroll has an employee self-service portal. Employees log in to view their salary slips, Form 16, investment declarations, and leave balances. Payslips are also emailed automatically after each payroll run.

Does Zoho generate Form 24Q for quarterly TDS filing?

Yes. Zoho Payroll generates Form 24Q quarterly data for TDS returns. You can export this to your TDS filing software (e.g., TRACES or your CA’s tool) or file directly if Zoho adds direct filing in future updates.

What is the cost of Zoho Payroll in India?

Zoho Payroll starts at approximately Rs 50 per employee per month. For companies already on Zoho One, Payroll is included at no extra cost. Check the Zoho pricing calculator for your team size.

Bottom line: Zoho Payroll is well-suited for Indian SMEs managing PF, ESI, TDS, and professional tax without dedicated payroll staff. When connected to Zoho People and Books, it eliminates duplicate data entry across HR and accounting. Setup takes 2-4 hours for most companies.

Talk to Aaxonix to get Zoho Payroll configured correctly for your company in Pune or anywhere in India.

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