Indian payroll & HR terms, explained
Plain-English definitions of the payroll, tax and compliance terms Indian HR teams deal with every day — from Form 16 to gratuity, PF and CTC.
Attrition Rate
Attrition rate, also called employee turnover rate, measures the percentage of employees who leave an organisation (through resignation,…
ReadBasic Salary
Basic salary is the fixed, core component of an employee's pay structure, excluding any allowances, bonuses, or benefits.…
ReadCTC (Cost to Company)
CTC, or Cost to Company, is the total amount an employer spends on an employee in a year,…
ReadDearness Allowance (DA)
Dearness Allowance (DA) is a cost-of-living adjustment allowance paid primarily to government employees and pensioners to offset the…
ReadEPF (Employees' Provident Fund)
The Employees' Provident Fund (EPF) is a retirement savings scheme under the Employees' Provident Funds and Miscellaneous Provisions…
ReadEPS (Employees' Pension Scheme)
The Employees' Pension Scheme (EPS), 1995, is a social security scheme administered by the EPFO that provides a…
ReadESIC (Employees' State Insurance)
The Employees' State Insurance Corporation (ESIC) scheme is a self-financing social security and health insurance scheme for Indian…
ReadForm 12BB
Form 12BB is a statement that employees submit to their employer to claim deductions and exemptions on various…
ReadForm 16
Form 16 is a certificate issued by an employer under Section 203 of the Income Tax Act, 1961,…
ReadForm 24Q
Form 24Q is the quarterly statement employers (deductors) must file with the Income Tax Department, reporting TDS deducted…
ReadForm 26AS
Form 26AS is a consolidated annual tax statement, available on the income tax e-filing portal, that shows all…
ReadFull & Final (F&F) Settlement
Full and Final (F&F) settlement refers to the process of calculating and paying all dues owed to an…
ReadGratuity
Gratuity is a statutory lump-sum benefit paid by an employer to an employee as a token of appreciation…
ReadGross vs Net Salary
Gross salary is the total amount an employee earns before any deductions, including basic pay, HRA, dearness allowance,…
ReadHRA (House Rent Allowance)
House Rent Allowance (HRA) is a salary component paid by employers to help employees meet the cost of…
ReadLeave Encashment
Leave encashment refers to the payment an employee receives for unused earned/privilege leave, either during service (as per…
ReadLeave Types (EL, CL, SL)
Indian companies typically structure employee leave into three core categories. Earned Leave (EL), also called Privilege Leave (PL),…
ReadLOP (Loss of Pay)
LOP, or Loss of Pay, refers to the deduction from an employee's salary for days of absence that…
ReadMinimum Wages Act
The Minimum Wages Act, 1948, is a central legislation that empowers state and central governments to fix minimum…
ReadNotice Period
Notice period is the length of time an employee or employer must give as advance intimation before terminating…
ReadPayroll Cycle
A payroll cycle is the recurring schedule and process by which an organisation calculates, processes, and disburses employee…
ReadPerquisites
Perquisites, commonly called 'perks,' are benefits or amenities provided by an employer to an employee in addition to…
ReadProbation Period
Probation period is the initial phase of employment during which a new hire's performance, conduct, and cultural fit…
ReadProfessional Tax
Professional tax is a tax levied by state governments in India on income earned through salary, trade, or…
ReadSalary Arrears
Salary arrears refer to unpaid or pending salary amounts owed to an employee for a previous period, paid…
ReadSpecial Allowance
Special allowance is a catch-all, fully taxable component of salary that companies use to balance the overall CTC…
ReadStatutory Bonus
Statutory bonus is a mandatory annual payment made by employers to eligible employees under the Payment of Bonus…
ReadTDS on Salary
Tax Deducted at Source (TDS) on salary is the tax an employer deducts each month from an employee's…
ReadUAN (Universal Account Number)
The Universal Account Number (UAN) is a unique 12-digit identifier assigned by the EPFO to every EPF member,…
ReadVPF (Voluntary Provident Fund)
Voluntary Provident Fund (VPF) is an extension of the EPF scheme that allows an employee to voluntarily contribute…
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