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Short answer: Good payroll software for a small Indian business does four things reliably: it pulls attendance and leave automatically, calculates salary with your statutory deductions, pays on time and produces payslips and reports you can hand to an auditor. Since the labour codes came into effect on 21 November 2025, on-time payment and clean records matter more than ever, so choose a tool built around one employee record rather than a standalone salary calculator.
Most small businesses start payroll in Excel. It works until headcount, shifts or salary components grow, and then month end turns into days of copying attendance, fixing formulas and answering salary questions on WhatsApp. This guide explains what to look for when you move to payroll software. For the wider decision about HR systems, read our guide on whether to build or buy an HRMS.
What payroll software should do
- Use attendance and leave automatically. Days worked, approved leave and overtime should flow in from your attendance system, not be re-typed.
- Handle your salary structure. Basic, allowances, deductions, bonuses and arrears, with the ability to change components when rules or policies change.
- Apply statutory deductions such as PF, ESI, professional tax and TDS where they apply to your business.
- Generate and share payslips with every employee each month, on phone or email.
- Produce reports for management, your accountant and inspections, exportable without manual clean-up.
- Keep an audit trail of who changed a salary or approved a run.
Why timing now matters
Section 17 of the Code on Wages sets time limits for paying wages. For a monthly wage period, wages are due before the end of the seventh day of the following month. When an employee is removed, dismissed, retrenched or resigns, wages are due within two working days. Software that waits for someone to compile attendance by hand makes these dates hard to hit. Look for a fixed monthly cut-off, automatic attendance lock and an exit workflow that triggers a final settlement straight away. Confirm state-specific rules with your payroll or legal adviser.
Standalone payroll vs payroll inside an HRMS
| Standalone payroll tool | Payroll inside an HRMS | |
|---|---|---|
| Attendance and leave | Imported or typed in | Flows in automatically |
| Employee records | Kept separately | One profile from joining to exit |
| Exits and final settlement | Manual follow-up | Triggered by the exit checklist |
| Best for | Very small teams with fixed salaries | Growing teams, shifts, several locations |
Questions to ask before you choose
- How does attendance reach payroll, and can a manager correct it before the cut-off?
- Can we change salary components ourselves when policies or rules change?
- How are payslips delivered, and can employees download past ones?
- Who can see salaries, and is every change logged?
- Can we export all payroll history if we move to another system?
- What does pricing look like when our headcount doubles?
Our approach
Our HRMS portal includes payroll, payslips, punch in and out, leave, documents and assets on one employee record. We configure it for your departments and salary structure. It costs ₹10,000 a month for up to 1,000 employees.
Frequently asked questions
Can we move payroll from Excel without losing history?
Yes. Clean the employee master first: IDs, joining dates, bank details and salary structure. Import it, run one parallel month against your spreadsheet and fix differences before going live.
Is payroll software mandatory in India?
No law requires software. The law requires timely payment and accurate records, and software makes both easier to achieve and to prove.
How long does setup take?
Most of the time goes into cleaning employee data and agreeing salary components. A configured system can usually run its first payroll within one or two cycles.
Sources
- Ministry of Labour and Employment, Labour Codes
- Press Information Bureau, Government makes the four labour codes effective
Yatin Chaudhary
BBA · MBA · AI & ML
Yatin Chaudhary is the founder of Digital Marketing By OG and a Delhi NCR-based digital marketing specialist (BBA, MBA, AI & ML). Since 2022 he has run SEO, Google Ads, Meta Ads and LinkedIn Ads for brands in healthcare, nutrition, real estate, education and IT services, and builds the WordPress sites those campaigns send traffic to.
- Technical SEO
- Local SEO
- Google Ads
- Meta Ads
- LinkedIn Ads
- Lead generation
- WordPress development
- Conversion optimisation
Selected work: exuverse.com and exuversespaces.com (design, build and SEO), an HRMS portal, GST billing software and paid campaigns across India, the US and the UK.
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