Question 1

Which statutory deductions apply to Indian payroll?

Accepted Answer

The core deductions are: Provident Fund (12% employee + 12% employer, mandatory once headcount crosses 20 under the EPF Act, 1952), ESI (0.75% employee + 3.25% employer, for employees earning up to ₹21,000/month under the ESI Act, 1948), Professional Tax (state-specific, roughly ₹200/month where applicable), and TDS on salary under Sec. 192 of the Income Tax Act. Contract or gig workers have different rules.

Question 2

When is PF registration mandatory for a startup?

Accepted Answer

EPF registration is mandatory the moment your headcount crosses 20 employees (including contract and interns) under Sec. 1(3) of the EPF Act. Voluntary registration is allowed below 20 and is common for startups that want to offer PF as a benefit. Once registered, PF applies to every employee whose 'basic + DA' is ≤ ₹15,000/month, with voluntary contribution allowed above that.

Question 3

What is Form 16 and when must it be issued?

Accepted Answer

Form 16 is the annual TDS certificate issued by the employer to every salaried employee under Sec. 203 of the IT Act, showing gross salary, exemptions claimed, and tax deducted. It must be issued by 15 June following the financial year (i.e., by 15 June 2026 for FY 2025–26). Form 16 is generated from TRACES only after the Q4 Form 24Q is filed and processed.

Question 4

How do you handle new joiners and full-and-final settlements?

Accepted Answer

New joiners are onboarded within the same payroll cycle — KYC collected, UAN generated or linked, ESIC added, and CTC structured tax-efficiently. Exits are settled within 15 days of last working day: pending salary, leave encashment, gratuity (if 5+ years under the Payment of Gratuity Act, 1972), notice-period recovery, and Form 16 plus relieving letter.

Accounting & Bookkeeping

What we handle across accounting

Monthly Accounting

Reconciliation

Payroll & Employee Benefits

Preparation of Financial Statements

Other Custom Reports