Payroll Software Costs, Features and 2026 Rules
Payroll and HR software comparison in India: types, pricing models and the 2026 rules to check
Compare payroll and HR software types for Indian MSMEs by statutory depth, pricing model and 3-year cost, with the labour code, EPF, ESI and TDS rules for 2026.
The useful way to compare payroll and HR software in India is by type and fit, not by a league table. Decide first which kind of solution you need (a payroll feature in your accounting software, a payroll-only SaaS, a payroll-plus-HR suite, a full HRMS, an ERP module or an outsourced bureau), then check that it applies the 2026 rules correctly, then compare the three-year cost on your own headcount. The rules matter more than ever this year: the four labour codes came into force on 21 November 2025, the final central rules followed in May 2026, the EPF wage ceiling rose to ₹25,000 from 17 September 2026, and salary TDS moved to the Income-tax Act, 2025 with new form numbers.
This overview links to every guide in the section. We do not rank or score products, and every price below is an illustrative range, not a vendor quote.
The six types of payroll solution
| Type | What you get | Usually priced | Typical fit |
|---|---|---|---|
| Accounting software payroll feature | Salary calculation, payslips and basic statutory reports next to your books | Flat licence or add-on | Under about 25 staff, one state, simple structures |
| Payroll-only SaaS | Statutory payroll, payslips, challans and return files, basic self-service | Per employee per month (PEPM), often with a base fee | 10–200 staff who want correct payroll without a full HR suite |
| Payroll plus core HR suite | Payroll with leave, attendance, onboarding, documents, approvals and mobile self-service | PEPM in tiers or module bundles | Growing MSMEs with shifts, several sites or managers approving leave |
| Full HRMS or HCM | Adds performance, recruitment, learning, complex workflows and analytics | PEPM or per employee per year, implementation fees | Multi-entity groups, a few hundred staff and up |
| ERP payroll module | Payroll inside the ERP that runs inventory and accounts | Per user or per app | Businesses already committed to an ERP |
| Outsourced payroll bureau | A provider processes payroll from your inputs and files returns | PEPM or per payslip, plus filing fees | Firms without payroll staff, high churn or many locations |
The compare page adds open-source software and contract-labour providers, with examples of each category. For the pricing logic behind each row, read payroll software pricing models.
What payroll software must get right in 2026
A payroll tool is a statutory calculator first and an HR app second. Before you look at dashboards, check that it handles the following, with your salary data.
- Labour code wages. The Code on Wages, 2019 and the Code on Social Security, 2020 use a uniform definition of wages: if excluded components such as HRA and other allowances exceed 50% of total remuneration, the excess is added back to wages. See labour codes and payroll.
- EPF. 12% employee and 12% employer contributions on wages up to the ceiling, now ₹25,000 a month from 17 September 2026, with the EPS share, EDLI and the monthly ECR file. See EPF in payroll software.
- ESI, professional tax and LWF. ESI at 0.75% employee and 3.25% employer for wages up to ₹21,000; professional tax and labour welfare fund by state. See ESI, PT and LWF.
- TDS on salary. Section 392 of the Income-tax Act, 2025, the new regime as default, employee claims on Form 124, quarterly returns on Form 138 and certificates on Form 130. See TDS on salary under the 2025 Act.
- Registers, payslips and self-service. Wage registers, attendance and muster rolls and wage slips in prescribed formats, kept electronically. See registers and employee self-service.
- Settlements. Full and final wages within two working days of an exit, gratuity (including fixed-term staff after one year), bonus and leave encashment. See gratuity, bonus and leave encashment sums.
How the price is built
Most payroll SaaS bills per employee per month, but the invoice usually has more lines:
- a base fee or minimum billing (for example, billed as if you had at least 25 employees);
- modules such as attendance, leave, expenses, performance or recruitment, sometimes per employee, sometimes flat;
- one-time charges for implementation, data migration, biometric integration and training;
- billing cycle effects: annual prepayment is often cheaper per month than monthly billing;
- a renewal uplift, and 18% GST on top.
Illustrative example. A business with 60 employees looks at a payroll-only SaaS quoted at ₹60–₹180 PEPM plus a ₹2,000 base fee. Monthly cost = 60 × ₹60 + ₹2,000 = ₹5,600 at the low end and 60 × ₹180 + ₹2,000 = ₹12,800 at the high end, before GST. Try your own numbers in the cost per employee estimator, then read billing, renewal uplift and GST.
The subscription is rarely the biggest cost over three years. Implementation, the parallel run and your team's monthly processing time often matter more; the 3-year TCO example shows how.
Choosing by fit, not by ranking
Use four questions to narrow the type before you look at products:
| Question | If the answer is… | Lean towards |
|---|---|---|
| How many people, in how many states? | Under 25, one state | Accounting payroll feature or payroll-only SaaS |
| 25–300, several states | Payroll-only SaaS or payroll + HR suite with multi-state PT and LWF | |
| Who processes payroll? | No payroll person | Outsourced bureau, or SaaS with a managed-payroll option |
| Do you have shifts, overtime or daily-rated workers? | Yes | Suite with attendance and shift rosters integrated with payroll |
| Do you already run an ERP? | Yes, and it is localised for India | Test the ERP module before buying a separate tool |
Then follow the best-fit selection method and the selection checklist. If you are moving away from a bureau or spreadsheets, the payback calculator shows how quickly a switch pays for itself.
Common mistakes when comparing
- Comparing PEPM prices without checking the minimum headcount and base fee.
- Assuming "statutory compliance included" covers every state you operate in.
- Testing only a clean monthly salary and not a leaver, a mid-year joiner or an employee crossing the ESI limit.
- Ignoring how attendance gets into payroll; most errors start there.
- Signing without a written commitment on statutory update timelines and error responsibility. See contract and SLA terms.
The failure patterns guide covers these in more depth.
When to get professional help
Restructuring salaries to meet the 50% wage definition affects PF, gratuity, bonus and take-home pay. Do it with a CA or labour law adviser, not with software settings alone. The same applies to contract labour, retrenchment and multi-entity payroll.
Frequently asked questions
Is payroll software mandatory in India?
No law requires software, but the labour codes, EPF, ESI and income-tax rules require accurate calculations, registers, returns and payslips. Beyond a handful of employees, doing that by hand becomes error-prone.
Does the software make the vendor responsible for errors?
No. The employer remains responsible for deducting and depositing contributions and tax. A contract can allocate costs of vendor errors, but not your legal duty.
Can one tool handle employees in several states?
Many can, but coverage of professional tax, labour welfare fund and state leave rules varies. Ask for a written list of supported states.
Are the prices on this site real quotes?
No. They are illustrative ranges to show the arithmetic. Always check the vendor's current price page and get a written quote.
Sources
- Ministry of Labour and Employment — labour codes, central rules and FAQs
- EPFO — EPF contributions, wage ceiling notices, ECR
- ESIC — ESI contribution rates and wage limit
- Income Tax Department — TDS on salary, Forms 124, 130 and 138
- e-Gazette of India — official notifications
