A step-by-step checklist for Indian MSMEs choosing payroll and HR software: statutory engine, attendance, integrations, data, pricing and contract.
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Use this checklist while you shortlist and test payroll and HR software. Work through it in order: requirements first, then the statutory engine, records, attendance, integrations, employee self-service, data protection, migration, and finally pricing, contract and exit terms. Tick an item only when you have seen it work with your own salary data in a demo or trial, or have it in writing in the proposal or order form. A sales deck is not evidence.
How to use it. Prepare five test employees before any demo: one monthly-salaried employee whose allowances exceed half of pay, one daily-rated worker with overtime, one employee near the ESI limit, one person who joined mid-year with salary from a previous employer, and one leaver needing a full and final settlement within two working days. Ask each vendor to run all five. Compare EPF, ESI, PT, TDS, overtime and net pay line by line with your own calculation.
Limits. The checklist does not replace advice from a payroll consultant, labour law adviser or CA, especially for salary restructuring under the labour codes or contract labour. Rules change by notification, so confirm current figures on EPFO, ESIC and the Ministry of Labour. The best-fit selection guide explains each step.
Cost Examples, TCO and Selection Checklists
A seven-step best-fit method for choosing payroll and HR software in India, with weighted criteria, five test employees, cost comparison and a checklist.
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How payroll software must calculate EPF in 2026: 12% contributions, the ₹25,000 ceiling from 17 Sep 2026, code wages, voluntary PF, the split September ECR and tests.
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How payroll software should calculate gratuity (including fixed-term staff after one year), statutory bonus at ₹21,000 eligibility and leave encashment, with worked rupee examples.
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The four labour codes in force since 21 Nov 2025 and the May 2026 central rules, explained for payroll: 50% wage rule, 2-day settlement, overtime, bonus, gratuity, registers.
Failure Patterns, Migration and Official Sources
The official portals Indian employers and payroll teams should check in 2026 for labour codes, EPF, ESI, professional tax, LWF, salary TDS, GST and data protection rules.
Failure Patterns, Migration and Official Sources
How the DPDP Act 2023 and DPDP Rules 2025 apply to payroll and HR data in India: employment as legitimate use, vendor as processor, safeguards, breach notice and the 2027 timeline.
