How to Get Payroll Processing in India
Setting up payroll processing in India requires strict adherence to the Income Tax Act and various labor laws. In 2026, businesses must ensure accurate computation of salaries, deductions under Section 194J for professional fees if applicable, and timely disbursement via Form 24Q. With PNPC Global's expertise spanning over four decades across India and the UAE, we streamline these complex regulatory requirements so you can focus on growth rather than compliance headaches.
Before you start
- Valid PAN number of the employer
- PAN numbers for all employees to be included in payroll
- Bank account details (NEFT/RTGS) with IFSC codes ready for disbursement
- Form 16A and Form 24Q access credentials prepared by your CA or finance team
Step-by-step
Determine Payroll Structure & Compliance Needs
Identify the number of employees, their employment types (regular vs. contract), and applicable benefits like PF, ESI, and gratuity to determine your specific compliance obligations.
Register for Statutory Deductions if Applicable
Ensure mandatory registrations are active: Provident Fund (PF) via EPFO portal, Employee State Insurance (ESI), Professional Tax at the state level, and Shop & Establishment Act compliance.
Prepare Employee Master Data
Collect accurate bank details, PAN numbers, Aadhaar-linked KYC documents, and appointment letters for every employee to ensure seamless tax filing later in Form 24Q.
Configure Salary Components & Deductions
Map basic salary, HRA, special allowance, and perquisites against the applicable limits under Section 10 of the Income Tax Act to calculate taxable income accurately.
Submit Quarterly TDS Returns (Form 24Q)
File Form 24Q by the 30th day of May, August, November, and February every year. Ensure challan details are uploaded correctly to avoid interest penalties under Section 216A.
Issue Monthly Payslips & Annual Forms
Generate digital payslips for transparency and issue Form 16 by the due date (typically June/July) so employees can file their ITR without errors.
Common mistakes to avoid
- Failing to update bank details in advance, leading to failed NEFT transactions.
- Incorrect calculation of TDS under Section 192 resulting in employee complaints or penalties.
- Delaying Form 24Q filing beyond the due date which attracts interest charges.
Frequently asked questions
What is the deadline for filing quarterly payroll returns?
Form 24Q must be filed by the 30th day of May, August, November, and February every year. Late filings attract interest under Section 216A.
Do I need to register for PF if my employees earn less than ₹15,000?
Yes, registration is mandatory regardless of salary threshold in most cases, though contribution rates differ. However, ESI applies only up to a specific wage ceiling.
How often should I reconcile payroll with bank statements?
It is best practice to reconcile monthly immediately after disbursement to catch any failed transactions or duplicate payments before the next cycle begins.
Prefer we handle Payroll Processing & Salary Computation?
Our team in India & UAE completes every step above for clients daily — accurately and on time.