Category: Small Business Resources

The central government has revised the Employee State Insurance applicability norms for employees.

Effective 1 May 2010, units which are under ESIC coverage will have to start making ESI contributions for all employees whose gross monthly wages are Rs. 15,000 or below. Earlier ESI contributions for entities under coverage was mandatory for only those employees whose monthly gross wages were Rs. 10,000 or below.

The amended notification was released by the ministry of labour and employment on 28 April 2010. This is a positive step that will benefit thousands of employees who will now have access to various benefits provided by the Employee State Insurance Corporation (subject to conditions):

  1. Medical Benefits
  2. Sickness Benefits
  3. Maternity Benefits
  4. Disablement Benefit
  5. Dependants’ Benefits
  6. Funeral Expenses

In addition, the scheme also provides some other need based benefits (subject to conditions) to insured workers such as:

  1. Rehabilitation allowance
  2. Vocational Rehabilitation
  3. Unemployment Allowance (Under Rajiv Gandhi Shramik Kalyan Yojana)

This notification will however lead to higher costs for employers as they will need to bear 4.75% of Gross Wages for the additional employees who will come under coverage, as employer contribution towards overall ESI contributions.
(Employee contribution is 1.75% of Gross Wages.)

Team eVetan

EPFO, Employees Provident Fund Organization is considering increasing the minimum wage limit from Rs. 6,500 per month for mandatory deductions in Provident Fund by employers to Rs. 15,000 per month.

What does this mean for employers?

Currently if you have employees with monthly wages (Basic + DA) less than Rs 6,500 per month, it is mandatory for you to make PF deductions (12% employee contribution + 12% employer contribution + 1.61% as PF administration charges). EPFO intends to increase this limit per month to Rs. 15,000. So PF deductions become mandatory if any of your employees have monthly wages less than Rs. 15,000.

eVetan’s take

A progressive step especially for millions of workers who gain access to assured retirement benefits, which otherwise becomes difficult for workers to subscribe themselves.

-Vineet Pandey
(Vineet is a co-founder with He can be reached at:

Professionals in Delhi earning over Rs 30,000 per month may now have to pay a ‘professional tax’ of up to Rs. 200 under the new tax proposal presented by Municipal Corporation of Delhi in its budget for 2010-2011.

The tax will be imposed on all professions, trade callings and employments.


Salary and wage earners may have to pay PT as per the following structure:

Salary/Wage Earned (Monthly) PT
Between 30,000 and 40,000 100
Between 40,000 and 50,000 110
Between 50,000 and 60,000 120
Between 60,000 and 70,000 130
Between 70,000 and 80,000 140
Between 80,000 and 90,000 150
Between 90,000 and 100,000 160
Between 100,000 and 110,000 170
Between 110,000 and 120,000 180
Between 120,000 and 130,000 190
Above 130,000 200

Even those people who are living in Gurgaon and Noida but are working in Delhi will be liable to pay this tax. However as mandated by the Central Government, the tax will not exceed Rs. 2,500 per annum. will keep you updated with when and if the proposal is accepted and implemented.

In case the proposal is accepted, our customers need not worry, the online payroll engine will have the changes incorporated so that you have a hassle free and most relevant payroll experience.

-Vineet Pandey
(Vineet is a co-founder with He can be reached at:

Payroll Calendar (Download) contains a yearly calendar that will help you manage your payroll function by setting reminders for various payouts as well as statutory compliances.

Assuming your salary date as the 7th of every month, which may change from organization to organization, the attached document outlines the cut-off dates every month of statutory compliances (monthly PF, ESI, PT, TDS payments) as well as the cut-off dates for quarterly, half-yearly and yearly return filings.

  • PF – Annual Return Filings
  • ESI – Half Yearly Return Filings
  • TDS – Quarterly Return Filings
  • PT – Annual Return Filings

Download Payroll Calendar for companies in India

As your organization grows, the demands on your operations ensure you hire human resources and pay them salaries based on their responsibilities and deliverables. Salaries may be fixed or based on performance or a combination of both. Additionally you need to conform to various labor laws that ensure employee benefits.

As the number of variables grows each time you are processing salaries, the chances of errors creeping in increase. You need to keep a track of all your employee details, their attendance, Overtime, performance linked incentives, leaves, expense reimbursements as well as various deductions mandated by labor and income tax laws such as PF, ESI, PT, and Income Tax deductions.

Your salary calculations should be efficient enough to provision for any investments that your employees make and which entitle them to various tax exemptions provided by the Government.

The entire process becomes extremely cumbersome and any errors have serious implications in terms of interest and penalties for delayed statutory compliances as well low employee morale.

Eventually every organization outgrows Excel. In fact, it’s never too early to move to an automated payroll system. Below are key advantages that should be the key motivators for you to establish a professional and automated payroll system:

  • Simplifies data entry, saves time and helps reduce errors.
  • Processing payroll becomes fast and easy compared to manual systems; save on time and extra manpower costs
  • Employee Self-help tools helps enhance productivity across the board; employees can view their pay slips, apply for leaves, reimbursements and declare investments without eating into your quality HR time
  • All payroll information remains in one location, giving you extreme control over your payroll systems
  • Auto calculates all deductions related to labor laws and income tax, and ensures you meet all your statutory compliances
  • All government reporting becomes easy, such as filing PF, ESI returns accurately and on time which is India’s first pay-per-use online payroll software helps you automate all your payroll tasks in quick easy steps from employee records, attendance management, salary processing and disbursement, to statutory compliances; at rates which the smallest of businesses can afford.

When you hire employees for your company, it is mandatory to conform to various central and state regulations that ensure employees are well protected and have access to various benefits – from retirement funds, medical insurance, bonuses, to gratuity. Additionally, the government expects you to collect taxes from employees and remit the Tax Deducted at Source on fixed dates. If your hiring needs change as per your business cycles, you may choose to avail of human resources from a labour / manpower contractor. There are regulations that you need to conform to when you hire such contracted labour.

Broadly, whenever you hire employees, statutory compliances (governed by various Central and State Acts) can be categorized into the following groups: (Key Acts are listed within each category)

1) Laws related to wages

  1. The Payment of Wages Act, 1936; The Payment of Wages Rules, 1937; The Payment of Wages (Amendment) Act, 2005
  2. The Minimum Wages Act, 1948; The Minimum Wages (Central) Rules, 1950
  3. The Payment of Bonus Act, 1965; The Payment of Bonus Rules, 1970

2) Laws related to Working Hours, Conditions of Services and Employment

  1. The Factories Act, 1948
  2. The Contract Labour (Regulations and Abolition) Act, 1970
  3. Shops and Establishment Act

3) Laws related to Equality and Empowerment of Women

  1. The Maternity Benefits Act, 1961
  2. The Equal Remuneration Act, 1976

4) Laws related to Social Security

  1. The Workmen’s Compensation Act, 1923; The Workmen’s Compensation (Amendments) Act, 2000
  2. The Employees’ State Insurance Act, 1948
  3. The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952; The Employees’ Provident Fund & Miscellaneous Provisions (Amendment) Act, 1996
  4. The Payment of Gratuity Act, 1972

It is critical that you consult with your Chartered Accountant and/or Labour Consultant to accurately interpret the various laws applicable to your organization before hiring employees.

It is desirable that you move to an automated payroll system, such as,  that gives you the option to auto calculate deductions mandatory as per various labour laws such as PF, and ESI deductions. which is India’s first pay-per-use online payroll software helps you manage all your statutory compliances (PF, ESI, PT, TDS) including monthly deductions and annual filings.

The following are the changes proposed in the Budget for FY 2009-10 that have an impact on Payroll:

Tax Slabs:

In Case of General Assesses:

Income Bracket Rate
0 to Rs. 1,60,000 0   %
Rs. 1,60,001 to Rs. 3,00,000 10 %
Rs. 3,00,001 to Rs. 5,00,000 20 %
Above Rs. 5,00,000 30 %

In Case of Women Assesses:

Income Bracket Rate
0 to Rs. 1,90,000 0   %
Rs. 1,90,001 to Rs. 3,00,000 10 %
Rs. 3,00,001 to Rs. 5,00,000 20 %
Above Rs. 5,00,000 30 %

In Case of Senior Citizens:

Income Bracket Rate
0 to Rs. 2,40,000 0   %
Rs. 2,40,001 to Rs. 3,00,000 10 %
Rs. 3,00,001 to Rs. 5,00,000 20 %
Above Rs. 5,00,000 30 %

* On final tax amount, a surcharge of 3 %
**No surcharge above 10 lacs.


1) 80 C Limit Unchanged

2) 80 D

Mediclaim Premium on the Health of Investment limit
a)     Self Spouse and Children Rs. 15,000
b)    Parent/Parents Rs. 15,000
c)     If Parent/ Parents Senior citizen Rs. 20,000

3) Section 80DD

  1. Exemption was given for Expenditure made for a disabled dependant towards Medical Treatment/Training/Rehabilitation. It also includes the LIC/insurance paid towards maintenance of such dependant.
  2. Such exemption was up to 50,000 in case of normal disability and 75,000, in case of severe disability.
  3. This limit has been kept the same 50,000 in case of normal disability, but increased to Rs. 1 Lakh in case of severe disability.
  4. Applicable for AY 2010-11 (FY 2009-10)

4) Section 24(1)(vi)

Housing loan interest.
Maximum Investment Limit 1,50,000 (for loans taken after 1 April 1999, for loans before that Maximum Investment Limit 30,000).

5) 80DDB

Expenditure incurred on specified disease or ailments such as cancer/aids
Maximum Investment Limit – 40,000
In case of senior citizen; Maximum Investment Limit – 60,000

6) 80U

Permanent disability benefit (Self) – adhoc amount
Maximum Investment Limit – 50,000
In case of disability exceeding 80%, Maximum Investment Limit – 75,000

7) Section 80E

  1. Earlier it was applicable only for Graduate / Post-Graduate, Fulltime studies
  2. Now all studies after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.
  3. Applicable for AY 2010-11 (FY 2009-10).

8 ) 80CCD:

Contribution to NPS and returns on NPS tax free, but withdrawal still taxable

9) 100% exemption on donation to political parties

10) Fringe Benefit Tax

  1. FBT was introduced in 2005.
  2. FBT is now completely withdrawn.
  3. Consequently, the fringe benefits will be taxed as perquisites in the hands of the employees.
  4. Superannuation – Any contribution made by a company to superannuation fund above Rs. 1,00,000 taxable in the hands of the employee
  5. Applicable for AY 2010-11 (FY 2009-10).