India HR & Payroll Glossary

A mandatory retirement savings scheme where both employer and employee contribute a share of wages every month into an EPFO-administered account.

A social security scheme giving lower-wage employees access to medical care and cash benefits, funded jointly by employer and employee contributions.

A state-levied tax on salaried income and professions, deducted by the employer — but the slabs, thresholds, and even whether it exists at all vary by state.

The income tax an employer deducts every month from an employee's salary and deposits with the government on their behalf, under Section 192 of the Income Tax Act.

A lump-sum payment employers make to employees who complete a minimum period of continuous service, under the Payment of Gratuity Act, 1972.

A small, state-administered welfare fund that some — not all — state governments require employers to contribute to, alongside a smaller employee contribution.

A state-level law regulating working conditions — hours, holidays, leave, and registration — for shops, commercial establishments, and offices.

A law requiring eligible employers to pay employees an annual statutory bonus, calculated as a percentage of wages within a legally defined band.

A law regulating the employment of contract workers — requiring registration by the principal employer and licensing of labour contractors above a headcount threshold.

The total amount a company spends on an employee in a year — not the amount that lands in their bank account, which is usually meaningfully lower.

The annual TDS certificate an employer must issue to every employee, summarizing the salary paid and the tax deducted and deposited on their behalf during the year.

The final payroll process that runs when an employee exits — settling every rupee owed to and by them before their record is closed.

A salary component that lets employees claim tax exemption on actual travel costs for personal trips within India, within defined limits.

A salary component meant to offset rental costs, with a tax exemption calculated as the smallest of three specific amounts — available only under the old tax regime.

A low-cost life insurance benefit bundled automatically with EPF membership, paying a lump sum to an employee's nominee in the event of death while in service.