Payroll checklist for 2023

April 5, 2023

When processing payroll in India, there are certain procedures and processes to follow in order to ensure compliance. First, it is important to make sure all the information related to the payroll is accurate, such as salaries, deductions, benefits, and reimbursements. Additionally, make sure that the appropriate taxes and contributions are calculated, deducted, and remitted on time. It is also important to keep track of all payments and documents related to the payroll process. Finally, it is necessary to keep detailed records and documents related to payroll processing in India, as they are essential for filing taxes and other necessary filings. By following a payroll processing checklist, companies can ensure they are compliant with all Indian payroll regulations.

Reasons why a payroll checklist is necessary:

  • It makes payroll processing easier and more efficient.
  • It helps to standardize your payroll processing.
  • You don’t have to rely on memory to ensure that you have gone through every step in the process.
  • Knowledge transfer of your firm’s payroll process between payroll professionals becomes easier.
  • It decreases the chances of calculation errors.

Here comes the short brief checklist for the payroll processing:

Verify employee information:

Although you collect employee payroll information before the payroll process, reviewing and verifying it during payroll processing is critical.

This step is crucial to ensure that all employees are paid accurately. It will also ensure that taxes are deducted accurately. Once your employee information is up-to-date, you can proceed with the next step of the checklist.

Lock previous period payroll:

Before starting the new payroll, locking the previous month’s payroll will ensure that there are no errors or disturbances while payroll processing for the current month.

Once you have completed the one-time steps mentioned above, you can take the following six steps to process payroll regularly. One of the most common frequencies for processing payroll is monthly, so the following checklist is also called a monthly payroll checklist. The six steps are –

New employee additions:

Here you have to update all information about the new employees such as,

  • Name and address of the employee
  • Whether they are working or not, if working then, independent contractors or employees according to law.
  • Information of tax
  • Bank details
  • Insurance

Calculate rate of attrition:

Calculate the percentage of staff leaving the company over a certain period of time, in comparison to the total number of staff.

Calculation of PF and ESI:

Calculate and review employer and employee contributions to social security, such as the Employees’ Provident Fund (EPF) and the Employee State Insurance (ESI).  Verify all the deductions made from employees’ salaries, and their deductions from EPF, ESI, and tax returns.

Update full and final settlements:

In that, you can update the full and final settlement of those employees who are marked as separated or as part of the month’s payroll.

Calculate monthly salary:

Here you have to calculate the right amount for the employees based on all income and deductions and have to transfer the amount to the employees’ accounts. Once all the salary and tax details are collected, employers must accurately calculate the net pay due to each employee and confirm that all deductions have been properly accounted for.

Generate payslip:

As an income proof, you need to generate payslips of the employees and disburse via email or have to give a hardcopy in hand with seal and sign. Run payroll calculations with updated salary information to produce pay slips and bank files.

Statutory payment and filing:

Under the statutory payment, you have to make payments towards PF, ESI, PT& TDS as well as file their returns. Create payroll in accordance with statutory requirements, including bonuses, allowances, statutory deductions and tax savings opportunities. Store all necessary payroll information and records for statutory compliance and future audits.

Collect documents from each employee:

Employees in India should provide the following documents to employers prior to the start of the payroll process: government-issued photo ID (passport, driving license, or PAN card); bank account details; and proof of current address.

Confirm compliance with labor regulations:

Employers should check the regulations and policies in their local state and city as they may differ in certain requirements. This includes local minimum wage requirements, leave policies, payment frequency, etc. Obtain applicable statutory information from all employees, including PAN and Aadhaar numbers, bank account details, emergency contact information, etc.

Gather salary and tax details:

Employers should collect the following salary and tax details from each employee: hourly wage, fixed salary, deductions (insurance, PF, etc.), taxable earnings, income tax liability, and other compensation like bonus, etc.

Read more: (Payroll and its components)

Provide payroll reports and updates:

Finally, employers should keep all payroll information up-to-date, produce periodic reports for accounting and financial management, and issue appropriate government and income tax forms to their employees. Produce accurate and timely payroll reports for the organization

Read more:(5 Important Reasons to Outsource Your Payroll Processing)


By following a well-designed payroll processing checklist, organizations can streamline their payroll operations, minimize errors and compliance risks, and increase the efficiency of their payroll staff.

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