Payroll Outsourcing
What is Payroll Outsourcing?
Payroll outsourcing is the process of delegating salary calculations, tax deductions, compliance, payslips, and employee benefits to a third-party provider. It helps businesses save time, reduce errors, and stay compliant with PF, ESIC, labor laws, and other statutory requirements. A fully digital payroll system removes paperwork, ensures accurate salary payments, and keeps employees satisfied. By making payroll processes easier and more organized, organizations can spend more time on their main business activities while keeping payroll efficient and error-free.
Benefits of Payroll Outsourcing
By managing your daily HR activities, HRTailor’s Full HR Outsourcing Services excel in helping businesses in achieving their goals.
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Advantages with HRTailor
Dedicated Online
HR Manager
You will receive a Dedicated Online HR Manager from HRTailor specifically for you and your business.
Organizational Growth
With HRTailor efficient HR processing, HRTailor will assist you in growing your firm.
Saving
Time
HRTailor will free up your valuable time so you can concentrate on your main tasks.
Security of
AWS
You’ll get AWS security with HRTailor. Data security is something not to be concerned about.
How HRTailor Payroll Outsourcing Process Work?
Payroll Outsourcing Process
- HRTailor’s Online HR Manager handles monthly payroll, including incentives, bonuses, appraisals, and salary restructuring.
- Employee attendance is tracked, and payroll proceeds only after confirmation to ensure accuracy.
- Draft pay sheets are prepared and salary slips are uploaded once confirmed.
- All payroll-related employee queries are addressed, ensuring tasks are completed smoothly and on time.
Employee Self - Service
- With our HRMS system, Employee’s can see or download their pay slips.
- All the documents uploaded during the induction process are available for them to view or download from any location at any time on any device.
- Managers are granted administrative access, enabling them to approve or reject requests for attendance or reimbursement of expenses.
Compliance
- Hrtailor continuously updates and improves compliance processes to stay aligned with current regulations and best practices.
- Prepares detailed reports on Tax Deducted at Source (TDS) for monthly deductions and payments, ensuring accurate and timely compliance.
- Prepares employee salary details, bank account information, and transfer amounts to facilitate easy and accurate bulk salary transfers according to client instructions.
- Provides Form-16, a certificate of TDS, to employees as required, ensuring they have the necessary documentation for tax filing.
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Statutory Compliance Penalties in India — 2026 Reference
| Compliance Area | Violation | Penalty (First Offence) | Filing Deadline |
|---|---|---|---|
| PF — Late Payment | Delayed employer PF contribution | 12% p.a. interest + 5-25% damages | 15th of following month |
| PF — Non-registration | Failing to register (20+ employees) | ₹5,000-₹25,000 fine | Within 30 days |
| ESIC — Late Payment | Delayed ESIC contribution | 12% p.a. interest on arrears | 15th of following month |
| ESIC — Non-registration | Failing to register (10+ employees) | ₹5,000-₹25,000 fine | Within 15 days |
| Professional Tax | Delayed PT payment | Interest 1-2% per month (varies by state) | Monthly/Annual |
| Gratuity — Non-payment | Withholding gratuity | 10% p.a. interest from due date | Within 30 days |
| Minimum Wages | Paying below minimum wage | ₹500-₹10,000 fine per employee | Per pay period |
| POSH Compliance | No ICC or policy (10+ employees) | ₹50,000 fine | Immediate |
| TDS — Late Filing | Late TDS return filing | ₹200/day until filed | Quarterly |
| TDS — Non-deduction | Failing to deduct TDS from salary | 1% per month interest + TDS amount | At salary credit |
Penalties are indicative and may vary by state. Updated for 2026 regulations. For company-specific assessment, contact our compliance team.
Professional Tax Slabs by State — 2026
| State | Monthly Salary Slab | PT Amount (Monthly) | Annual Cap |
|---|---|---|---|
| Maharashtra | Up to ₹7,500 / ₹7,501-₹10,000 / Above ₹10,000 | Nil / ₹175 / ₹200 (₹300 in Feb) | ₹2,500 |
| Karnataka | Up to ₹15,000 / Above ₹15,000 | Nil / ₹200 | ₹2,500 |
| Gujarat | Up to ₹5,999 / ₹6,000-₹8,999 / ₹9,000-₹11,999 / Above ₹12,000 | Nil / ₹80 / ₹150 / ₹200 | ₹2,500 |
| Tamil Nadu | Up to ₹21,000 / ₹21,001-₹30,000 / Above ₹45,000 | Nil / ₹100 / ₹310 | ₹2,500 |
| Telangana | Up to ₹15,000 / ₹15,001-₹20,000 / Above ₹20,000 | Nil / ₹150 / ₹200 | ₹2,500 |
| West Bengal | Up to ₹10,000 / ₹10,001-₹15,000 / Above ₹40,000 | Nil / ₹110 / ₹200 | ₹2,500 |
| Delhi | Delhi does not levy Professional Tax | ||
| Haryana / UP / Rajasthan | These states do not levy Professional Tax | ||
Slabs verified for FY 2025-26. HRTailor manages PT compliance across all states.
Frequently Asked Questions — Payroll Outsourcing
Yes. We process payroll for companies with employees across all Indian states, handling state-specific professional tax slabs, labour welfare fund contributions, and Shops & Establishment Act compliance. Each state has different tax brackets and deadlines — our team manages all variations.
Payroll setup typically takes 5-7 business days. This includes employee data migration, salary structure configuration, statutory registration verification, and HRMS payroll module setup. Your first payroll cycle runs within 2 weeks of onboarding.
You receive monthly payroll summary, employee-wise salary breakup, PF/ESIC challan copies, professional tax payment receipts, TDS computation sheets, bank transfer files, and a compliance dashboard. All reports are accessible 24/7 through your HRMS portal.
Related HR Services
Payroll works best when backed by clear HR policy documentation that defines leave, attendance, and compensation rules.
Before processing payroll, we help you set up a tax-optimized salary structure design with proper CTC breakup for maximum take-home pay.
Accurate payroll depends on reliable leave and attendance management — our HRMS tracks both automatically and feeds data directly into payroll.
When employees leave, our payroll team handles the complete full and final settlement process including gratuity, leave encashment, and notice period adjustments.
Why payroll outsourcing matters more in India
Payroll outside India is mostly a calculation problem. Salary, tax, net pay, done. Payroll in India is a compliance plus calculation problem. The same monthly run has to handle Provident Fund (12% employee + 12% employer split across EPF, EPS, and EDLI with administrative charges, all filed to EPFO by the 15th), Employee State Insurance (0.75% + 3.25% for employees under ₹21k, filed to ESIC by the 15th), Professional Tax (state-specific slab, different rules in Maharashtra vs Karnataka vs West Bengal, filed monthly or quarterly depending on state), Labour Welfare Fund (state-specific, biannual or annual), Tax Deducted at Source (TDS) on salary computed under either the Old or New regime per employee election, and a half-dozen state-specific contributions.
Get any one of these wrong, and you’re looking at penalty interest of 12% per annum minimum on the missed contribution, plus damages under Section 14B of the EPF Act, plus reputation risk if an inspector audits. The math is brutal: a single missed PF return for 50 employees can cost ₹40,000–₹1,00,000 in penalties, far more than 12 months of outsourcing fees.
This is why payroll outsourcing in India isn’t a luxury — it’s a hedge against operational risk that compounds quietly until it explodes.
What’s included in HRTailor payroll outsourcing
Monthly salary processing. Variable pay, fixed pay, allowances, deductions, leave-without-pay adjustments, arrears, bonuses, settlement payouts — all computed and validated. Payslips generated and distributed via your HRMS or email by working day 5 of the month.
Statutory deductions and filings.
- PF: monthly ECR upload to EPFO, member registrations and exits, UAN coordination, transfer claims when employees join from previous employers.
- ESIC: monthly return filing, employee enrollments, dependent registrations, dispensary linkage.
- Professional Tax: state-by-state computation and filing. We handle Maharashtra, Karnataka, Telangana, Tamil Nadu, Andhra Pradesh, West Bengal, Gujarat, Kerala, Madhya Pradesh, Odisha, Punjab, and others. If your remote employees span 4 states, your single payroll handles 4 PT filings.
- TDS: monthly TDS computation under both Old and New regimes, quarterly 24Q filing, Form 16 generation at year-end.
- LWF: state-specific labour welfare fund contributions.
Reports and reconciliations. Monthly cost-to-company breakdown, statutory liability summary, employee-wise pay register, GL-ready journal entries for your finance team, year-on-year salary cost trend reports, audit-ready documentation.
Helpdesk for employees. Your team can ask payroll questions (HRA exemption, 80C declarations, payslip clarifications, missed reimbursement) directly to our team. We resolve, you don’t get pulled into it.
Multi-state payroll — built in, not extra
Post-COVID, most Indian companies have employees across multiple states. A 40-person team might have HQ in Bangalore but engineers in Pune, sales in Delhi, and customer success in Chennai. Each location triggers different compliance:
- Bangalore employees: Karnataka PT (slabs at ₹15k, ₹30k thresholds)
- Pune employees: Maharashtra PT (different slabs) + LWF (₹12 employee + ₹36 employer biannual)
- Delhi employees: No PT (Delhi is one of the few non-PT states) but specific S&E rules
- Chennai employees: Tamil Nadu PT (half-yearly, different structure entirely)
We handle all four in one payroll cycle. Your single monthly run produces compliant deductions and filings for every state your team sits in. No “we only do PT in 3 states” caveats. No “you’ll need to file Karnataka yourself” surprise.
The tooling — your HRMS or ours
HRTailor doesn’t sell HRMS software. We work with whichever platform you already use, or we set one up if you don’t have one.
Already on an HRMS? We integrate with Zimyo, Keka, GreytHR, Darwinbox, Pocket HRMS, PeopleStrong, Razorpay Payroll, Quickbooks Payroll, and most major Indian platforms. We pull attendance and leave data from your system, run payroll, push payslips and reports back.
No HRMS yet? As part of onboarding, we configure a cloud HRMS for you — typically Zimyo, Keka, or GreytHR depending on your team size and budget. Configuration is included in our setup fee. You own the HRMS subscription; we’re configured as your admin user.
Pure-spreadsheet shop? Also fine. We can run payroll from spreadsheets for very small teams, though we’ll typically recommend a cloud HRMS by month 3 because spreadsheet payroll doesn’t scale past ~20 employees.
Accuracy and SLA — what we commit to
Payroll accuracy SLA: zero errors on monthly cycles. If an error occurs (we own it — incorrect calculation, missed contribution, wrong filing), we remediate at our cost, including any penalty negotiation. We’ve maintained this SLA across 200+ clients.
Statutory filing SLA: all filings completed by the legal due date. PF by the 15th, ESIC by the 15th, PT by the state-specific date, TDS by the 7th of the following month, quarterly TDS returns by the quarterly due dates.
Payslip delivery SLA: payslips out by working day 5 of each month, assuming attendance and variable inputs are received by working day 28 of the previous month.
Query response SLA: employee queries acknowledged within 4 working hours, resolved within 1 working day for standard queries, 3 working days for complex ones (statutory clarifications, multi-month reconciliations).
Migrating from your current payroll provider
If you’re switching from another payroll provider or from in-house payroll, here’s how migration works.
Week 1. We collect your last 3–6 months of payroll runs, your statutory registration certificates (PF, ESIC, PT, S&E), your employee master data, your salary structure templates, and your TDS records. NDAs in place.
Week 2. We reconcile your statutory liability state — are PF challans paid up? ESIC current? PT state-wise paid? Any pending notices? We give you a one-page reconciliation report so you know exactly what you’re handing over.
Week 3. Parallel run — we compute the upcoming month’s payroll alongside your current provider so you can compare. Differences are documented and reconciled.
Week 4. Live cutover. We handle the live monthly cycle. Your previous provider is debriefed and any final returns from their period are filed cleanly.
Most clients are fully migrated within 30 days. No payroll cycles missed. No statutory filings dropped.
Pricing — scope-based, transparent
Payroll-only outsourcing (no broader HR services) starts at INR 5,000/month for small teams (up to 15 employees, single-state, basic statutory). Mid-tier (30–60 employees, multi-state, full statutory) typically runs INR 10,000–15,000/month. Larger SMEs (100+ employees, complex comp, multiple entities) range INR 20,000–35,000/month.
Most HRTailor clients buy payroll as part of a broader HR outsourcing engagement, where the blended price is lower than buying payroll-only plus separate HR services. We’ll scope both for you and recommend whichever is cheaper for your situation.
Frequently asked
Can you handle our existing PF/ESIC accounts or do we need new ones? Existing accounts are fine. We coordinate with your PF/ESIC consultant (if any) or take over the EPFO/ESIC portal access directly.
What about employees from other countries on Indian payroll? Yes — expat payroll with FRRO compliance, social security exemption certificates where applicable, and tax-equalisation calculations are all handled. Costs slightly more per expat employee due to complexity.
Do you process equity grants in payroll? We compute and report perquisite tax on ESOP exercises and RSU vests. We do not administer the ESOP plan itself — that’s typically handled by your CS or a dedicated ESOP administrator.
What’s your data security setup? All data resides on encrypted cloud storage with role-based access. Statutory portal credentials are rotated quarterly. We don’t share employee data with third parties. NDA signed with every engagement. ISO 27001 compliance roadmap underway.
Can you handle full-and-final settlements? Yes — F&F calculation, leave encashment, gratuity (if applicable), tax adjustment, statutory settlement, exit letter. Typically processed within 30 days of last working day.
