Payroll Cycle
A payroll cycle is the recurring schedule and process by which an organisation calculates, processes, and disburses employee salaries, including all statutory deductions and compliance filings. Most Indian companies follow a monthly payroll cycle, running from the 1st to the last day of the calendar month.
A typical payroll cycle involves three stages: the pre-payroll stage (collecting attendance, leave, and variable pay inputs), the payroll processing stage (calculating gross pay, deductions, and net pay), and the post-payroll stage (disbursing salary, generating payslips, and filing statutory returns like PF, ESI, and TDS).
Key points
- ✓ Most Indian companies run a monthly payroll cycle (1st to last day of the month)
- ✓ Three stages: pre-payroll (inputs), processing (computation), post-payroll (disbursement & compliance)
- ✓ Involves collecting attendance, LOP, reimbursements, and new joiner/exit data each cycle
- ✓ Ends with statutory compliance activities: PF/ESI remittance, TDS deposit, payslip generation
- ✓ Payroll software automates most steps to reduce errors and ensure on-time compliance
Example
A company running a monthly payroll cycle collects attendance and LOP data by the 25th, processes salary calculations by the 28th, disburses salary on the 1st of the following month, and remits PF/ESI/TDS by their respective statutory due dates.
Frequently asked questions
What are the stages of a payroll cycle?
Can a company have a payroll cycle other than monthly?
Why is payroll software important for the payroll cycle?
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