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.

Zoho Payroll India PF ESI TDS
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

FeatureDetails
Salary componentsBasic, HRA, Special Allowance, LTA, Medical, custom components
Provident Fund (PF)12% employee + 12% employer; EPF + EPS split; ECR file generation
ESI0.75% 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 TaxMaharashtra, Karnataka, West Bengal, and other states
Salary slipsPDF salary slips emailed to employees automatically
Bank transfer fileNEFT payment file in bank-specific format
ReportsPayroll register, statutory reports, cost center reports
HR payroll processing India

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

1
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.
2
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.
3
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.
4
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.
5
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.
6
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.
7
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.
8
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:

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:

Integration with Zoho Books accounting features

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

For a detailed walkthrough of PF, ESI, and professional tax configuration, see our Zoho Payroll PF and ESI compliance guide. If your company uses Microsoft Azure AD for single sign-on, the Zoho People and Azure AD integration guide covers automated user provisioning and SSO setup.

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.

Is PF mandatory for every employee, regardless of salary?

PF is compulsory for employees whose basic salary plus dearness allowance is at or below the statutory wage ceiling of Rs 15,000 a month, the same ceiling this guide’s PF settings step refers to. Zoho Payroll lets you choose whether to cap the employer’s PF contribution at that ceiling or calculate it on the employee’s actual basic salary for those earning more. Employees above the ceiling can still be enrolled voluntarily if company policy covers them.

Can Zoho Payroll handle employees on both the old and new tax regimes at the same time?

Yes. Zoho Payroll supports the old and new tax regimes side by side, since each employee declares a preferred regime individually at the start of the financial year. Investment declarations under the old regime are entered through the employee self-service portal, and TDS under Section 192 is computed monthly based on that individual choice. If an employee updates their declared investments during the year, Zoho recalculates the remaining months automatically.

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.