← Back to all Ask a CA questions
Common questions on payroll, salary structuring, EPF, ESI and gratuity – answered by a practising Chartered Accountant.
Payroll, EPF & ESIHow is bonus calculated under the Payment of Bonus Act?Bottom line: Employees earning up to ₹21,000 a month get a statutory bonus of 8.33% to 20% of wages. 1. Eligibility Applies to employees drawing basic plus DA…Payroll, EPF & ESIWhat is the difference between CTC, gross salary and net salary?Bottom line: CTC is the employer's total cost, gross is before deductions, and net is your in-hand pay. 1. CTC Everything the employer spends on you, including its…Payroll, EPF & ESIHow much employer NPS contribution is deductible under Section 80CCD(2)?Bottom line: In the new regime, your employer's NPS contribution is deductible up to 14% of your basic plus DA. 1. New regime The limit was raised to…Payroll, EPF & ESIIs notice-pay recovery taxable when my employer deducts it?Bottom line: The position is unsettled — the tax department taxes full salary, but several tribunals have allowed the recovered amount to be excluded. 1. Department's view Salary…Payroll, EPF & ESIIs gratuity above ₹20 lakh taxable, and does the limit apply across employers?Bottom line: Gratuity is exempt up to ₹20,00,000, and that limit is a lifetime total across all employers. 1. The exemption Least of the actual gratuity, ₹20 lakh,…Payroll, EPF & ESIThe new wage definition under the Code on Wages — how it affects PF and gratuityBottom line: The Code on Wages, in force from 21 November 2025, requires basic wages to be at least 50% of pay — which raises PF and gratuity.…Payroll, EPF & ESIHow is leave encashment taxed for private employees?Bottom line: For non-government employees, leave encashment at retirement or resignation is exempt up to ₹25,00,000. 1. The limit The Section 10(10AA) exemption was raised to ₹25 lakh…Payroll, EPF & ESIHow do I withdraw my EPF online using Form 19 and Form 10C?Bottom line: You withdraw your PF with Form 19 and your pension part with Form 10C, online through the EPFO member portal. 1. The forms Form 19 settles…Payroll, EPF & ESIHow is EPS pension calculated and when am I eligible?Bottom line: You need 10 years of service to draw an EPS pension from age 58, based on a simple formula. 1. The formula Monthly pension = pensionable…Payroll, EPF & ESIIs VPF interest taxable above ₹2.5 lakh?Bottom line: Yes — interest on your own PF plus VPF contributions above ₹2,50,000 in a year is taxable. 1. The threshold From FY 2021-22, interest on employee…Payroll, EPF & ESIIs gratuity taxable, and what is the Rs 20 lakh exemption limit?For employees covered by the Payment of Gratuity Act, gratuity is exempt from income tax up to Rs 20 lakh under Section 10(10). The exempt amount is the…Payroll, EPF & ESIWhat is the ESI wage limit and contribution rate, and who is covered?ESI covers employees earning gross wages up to Rs 21,000 per month (Rs 25,000 for employees with disabilities) in establishments registered under the ESI Act. The contribution is…Payroll, EPF & ESIWhat is the EPF contribution rate and how much do I and my employer pay?Both you and your employer contribute 12% of your basic pay plus dearness allowance to EPF each month. Your full 12% goes into your EPF account. Your employer…Payroll, EPF & ESIIs EPF deducted on full salary or only up to the Rs 15,000 wage ceiling?EPF is statutorily mandatory only up to a wage ceiling of Rs 15,000 of basic plus DA. If your basic exceeds Rs 15,000, the employer is legally required…Payroll, EPF & ESIHow do I calculate my in-hand (take-home) salary from my CTC?Your in-hand salary is CTC minus the parts that never reach your bank account. Start with CTC, remove the employer PF and gratuity contributions to get gross salary.…Payroll, EPF & ESIHow is gratuity calculated and when am I eligible after 5 years of service?You become eligible for gratuity after 5 years of continuous service with the same employer (the 5-year rule is waived in case of death or disablement). For establishments…Payroll, EPF & ESIWhat is the EPF and ESI payment due date each month for employers?Both EPF and ESI contributions must be deposited on or before the 15th of the following month. For example, contributions deducted from March salaries are due by 15…Payroll, EPF & ESIIs EPF withdrawal taxable if I withdraw before completing 5 years?Yes. EPF withdrawal is taxable if you withdraw before completing 5 years of continuous service (service across employers counts if the balance was transferred). The employer contribution and…Payroll, EPF & ESIWhat is Form 16, what are Part A and Part B, and when must my employer give it to me?Form 16 is the annual TDS-on-salary certificate your employer issues, confirming the tax deducted from your salary and deposited with the government. It has two parts: Part A…Payroll, EPF & ESIWhat is professional tax in my salary and what is the maximum I can be charged?Professional tax is a state-level tax on employment deducted by your employer from your salary and paid to the state government. It is not a central tax, so…
Have a different question? Ask a Chartered Accountant – it is free and answered by a practising CA.
Professional Tax (a state payroll deduction): see state-wise PT slabs, due dates & calculator (FY 2026-27) →