Salary Components

A salary comprises of several different earning, deduction and reimbursement components. In this section of settings, you can:

Note:  After payroll is set up for the components you’ve associated with one or more employees, you can only edit the Name and Amount/Percentage. The changes made to Amount/Percentage will apply only to new employees.


Add Earning

Any money that an employee receives as an income is termed as an earning. Some of the common earning components are Basic Pay, House Rent Allowance (HRA), and Dearness Allowance. 

All fixed earnings will be included as part of the CTC, will be considered as taxable, and will be shown in the payslip as per the Government norms.

FBP allows your employees to personalise their salary structure by choosing how much they want to receive under each component. This helps them reduce their income tax.

Add Earning

Note: You can add up to 5 earnings of the same component type for Basic, HRA, Conveyance Allowance, etc. You can add any number of earnings for Custom Allowance and Bonus. You cannot add multiple earnings for Leave Encashment, Notice Pay, Gratuity, and Fixed Allowance.


Add Deduction

Deduction is money that’s taken from your employees’ monthly pay. There are two types of deductions,


Pre-tax

A pre-tax deduction is money taken out of the employee’s pay before income tax is calculated. As a result, they reduce the employee’s net taxable income and thereby reduce income tax. An example is deductions made towards schemes like National Pension Scheme (NPS) or Voluntary Provident Fund (VPF).

Note: Zoho Payroll does not deposit the deductions to the vendors on your behalf. You would have to deposit the deductions by yourself.

Add Pre-tax Deduction

You can associate this deduction to your employees from the employee details page or during pay runs.


Post-tax

A post-tax deduction is money deducted from your employees’ pay after the income tax has been calculated. This does not affect the net taxable income of the employee. For example, purchases made in the company grocery store or food court are post-tax deductions. 

Note: Post-tax deductions are one-time. They won’t recur in subsequent pay runs

Add Post-tax Deduction

You can associate this deduction to your employees from the employee details page or during pay runs.


Add Correction

Once you’ve associated recurring earnings like Basic, HRA, DA etc. to employees, you won’t be able to edit them. In such cases, you can create a one-time correction component to make corrections to an earning component.

Add Correction

You can now add these correction components if needed for specific employees while processing your monthly pay runs.


Edit Component

You can edit salary components, provided it isn’t involved in any pay runs. If you have pay runs in draft or approved status, delete them and then edit salary components.  To edit component:

Edit Earning
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