What are the steps in payroll processing?

Close attendance, collect inputs, update master data, calculate, pre-check, approve and lock, pay, send payslips, book entries and file statutory returns.

How long does payroll processing take?

Manual payroll can take days. With attendance linked to software and pre-checks, a run can be reviewed in hours.

When should payroll be processed?

After attendance is final, with enough time before the salary date for approval and bank processing.

What is a payroll pre-check?

A validation that flags missing or inconsistent data before the run, such as duplicate PAN or missing IFSC.

Payroll Processing in India: Step-by-Step Guide

Payroll processing is the monthly cycle that turns attendance and salary structures into paid salaries and filed returns. Here is the complete sequence for an Indian business, with what to check at each step.

The monthly payroll cycle

Freeze attendance and leave. Close the month: resolve missing punches, approve corrections and leave. Days with no record should follow your written policy (paid or unpaid).
Collect inputs. Overtime, incentives, reimbursements, arrears, loan EMIs, joiner and leaver details, and salary revisions effective this month.
Update master data. New employees with PAN, bank, UAN and ESI numbers; changes in bank accounts or tax regime.
Run the calculation. Payable days, earnings, then PF, ESI, Professional Tax, TDS and other deductions, giving net pay.
Pre-check. Look for duplicate PAN/bank accounts, missing IFSC or UAN, zero or negative net pay, unusual jumps from last month.
Approve and lock. A reviewer and an approver sign off; the month is locked so figures do not change.
Pay. Generate the bank file, test with a small file if the bank is new, and release salary by the due date.
Send payslips. Email or share PDFs; employees can also download from a portal.
Book entries. Post the salary journal in your accounting system (for example a Tally journal voucher).
File and deposit. PF and ESI contributions and returns, PT in applicable states, TDS deposit, and quarterly TDS return data.

Typical monthly deadlines to track

Item	Usual timing
PF contribution and ECR	By the 15th of the following month
ESI contribution	By the 15th of the following month
TDS on salary deposit	By the 7th of the following month
Professional Tax	State-specific monthly or annual dates
TDS return	Quarterly
Statutory bonus	Within the statutory period after the accounting year

📌 Dates and penalties are set by law and can change. Treat this table as a prompt to check current rules with your CA.

Common processing mistakes

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Late attendance

Payroll started before attendance is final leads to corrections after salary is paid.

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Missing UAN or ESI number

Contributions are deducted but the ECR or challan cannot include the employee.

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Unlocked months

Edits after payslips are issued create disputes and audit gaps.

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Bank file errors

A wrong IFSC fails a row or a whole batch. Preview before upload.

How software shortens the cycle

NexoraHRMS presents these steps as one screen, Payroll Step by Step: Attendance, Adjustments, Pre-check, Approval, Payslips, Bank file and Lock. Each stage shows what is done and what is pending. See payroll management software and how to automate monthly salary processing.