Frequently Asked Questions
FAQ
Welcome to our PayrollRabbit FAQ section! This FAQ is here to help answer common questions about our our free payroll tools, pricing, and general information about PayrollRabbit. If you are looking for a step-by-step guide on how to set up your paid PayrollRabbit account, please go to our Setup Guide.
Still have questions? Get in touch with Frederic, Co-Founder of PayrollRabbit.
What organisation can use PayrollRabbit?
We mainly support smaller companies to up to 20 employees. For larger teams, upgrade to our premium plan.
Do I have to install any software?
No installation needed. PayrollRabbit runs fully in your browser.
Which languages are supported for payslip PDFs?
We support English, Spanish, French, German, and more. Contact us for the full list.
Can I add multiple companies?
Yes, you can manage multiple companies from a single account.
Do I need special paper to print payslips?
No, standard A4 or letter-size paper works perfectly.
Can I set different pay periods for employees?
Yes, you can customize pay periods per employee.
Is my data secure with PayrollRabbit?
Yes. We use industry-standard encryption and follow best security practices.
Does PayrollRabbit support direct deposit?
Not directly. We generate payslips only; payment must be handled separately.
What payment methods do you accept?
We accept major credit/debit cards and PayPal.
Do you offer customer support?
Yes. Free users get email support; premium users receive priority support.
What are the benefits of the premium plan?
Premium includes unlimited employees, automatic payslip emailing, and priority support.
Is the free plan really free?
Yes. It's free for up to 90 employees with no credit card required.
What is a payslip?
A payslip (also called pay stub or salary slip) is an official document that shows an employee's earnings, deductions, and net pay for a specific period. It serves as proof of income and employment.
How do I generate a payslip?
Simply fill in your company details, employee information, earnings, and deductions in our free generator. The tool automatically calculates net pay and creates a professional payslip that you can download as PDF.
What is the importance of a payslip?
Payslips are legally required documentation that help employees verify their salary, apply for loans, file taxes, and maintain financial records. For employers, they ensure transparent payroll practices and compliance.
What are the typical components of a payslip?
A standard payslip includes employee details, pay period, gross earnings (salary, allowances, bonuses), deductions (taxes, insurance, loans), and net pay. It may also show paid days and leave information.
What is a salary slip format and why do I need one?
A salary slip format is a pre-designed template that provides the standard structure for creating employee payslips. It includes all essential fields like employee details, earnings, deductions, and net pay, ensuring professional and consistent documentation.
Can I get a free payslip template for download?
Yes! We offer free payslip template downloads in both Word and Excel formats. These editable payslip templates are professionally designed and can be customized with your company branding and employee information.
What's the difference between payslip template Excel and Word formats?
Our editable payslip templates are available in .docx and .xlsx formats. Both formats are compatible with Microsoft Office, Google Workspace, and other popular office applications. You can easily open and edit these templates on any device.
Are these simple payslip template Excel files easy to customize?
Absolutely! Our simple payslip template Excel free download options are fully editable. You can easily modify company details, add your logo, adjust calculation formulas, and customize the layout to match your organization's requirements.
What is GST?
GST (Goods and Services Tax) is a comprehensive indirect tax levied on the supply of goods and services in India. It replaced multiple indirect taxes and came into effect on July 1, 2017.
Is GST direct or indirect tax?
GST is an indirect tax. It is collected by businesses from customers and then paid to the government, rather than being directly paid by individuals to the government.
How many types of GST?
There are 4 types of GST: CGST (Central GST), SGST (State GST), IGST (Integrated GST), and UTGST (Union Territory GST). The type depends on whether the transaction is intra-state, inter-state, or involves union territories.
How to calculate GST?
For tax exclusive: GST Amount = (Amount × GST Rate) ÷ 100. For tax inclusive: GST Amount = Amount - [Amount × (100 ÷ (100 + GST Rate))]. Then add or subtract from the original amount accordingly.
What is gratuity?
Gratuity is a monetary benefit paid by employers to employees who have completed at least 5 years of continuous service. It's governed by the Payment of Gratuity Act, 1972, and serves as a form of retirement benefit or end-of-service compensation.
Who is eligible for gratuity?
Employees who have completed at least 5 years of continuous service with the same employer are eligible for gratuity. This applies to both organizations covered and not covered under the Payment of Gratuity Act, 1972.
When is gratuity paid?
Gratuity is paid when an employee leaves the organization after completing 5 years of service, retires, dies while in service, or becomes disabled. It must be paid within 30 days of becoming due.
How is gratuity calculated?
Gratuity is calculated using the formula: (Last drawn salary × 15 × years of service) ÷ 26. Last drawn salary includes basic salary plus dearness allowance. For employees covered under the Act, the maximum amount is capped at ₹20 lakhs.
How are partial years counted in gratuity calculation?
For gratuity calculation, if the months of service in the last incomplete year are 6 months or more, it's rounded up to the next complete year. If less than 6 months, it's ignored in the calculation.
Which organizations are covered under the Gratuity Act?
Organizations with 10 or more employees are mandatory covered under the Payment of Gratuity Act, 1972. This includes private companies, government organizations, educational institutions, hospitals, factories, and plantations. Smaller organizations (less than 10 employees) can voluntarily offer gratuity but are not legally required to do so.
What's the difference between covered and not covered under the Gratuity Act?
Covered organizations must follow the Act's provisions: ₹20 lakh maximum limit and (salary × 15 × years) ÷ 26 formula. Non-covered organizations offering voluntary gratuity typically use (salary × 15 × years) ÷ 30 formula with no maximum limit, though they can choose any calculation method.
Is gratuity taxable?
Gratuity is partially taxable. For government employees, it's completely exempt. For private sector employees covered under the Act, gratuity up to ₹20 lakhs is exempt. Any amount above this limit is taxable as salary income.
What is HRA (House Rent Allowance)?
HRA is a component of your salary provided by employers to help cover rental expenses. It's a tax-beneficial allowance under Section 10(13A) of the Income Tax Act, 1961, that can be partially or fully exempt from income tax if you live in rented accommodation.
How is HRA exemption calculated?
HRA exemption is calculated as the minimum of three values: (1) Actual HRA received from employer, (2) Rent paid minus 10% of salary (Basic + DA), (3) 50% of basic salary for metro cities or 40% for non-metro cities. The lowest amount among these three is exempt from tax.
Is HRA exemption available under the new tax regime?
No, HRA exemption is only available under the old tax regime. If you choose the new tax regime, you cannot claim HRA exemption under Section 10(13A). This is one of the key factors to consider when deciding between old and new tax regimes.
Which cities are considered metro cities for HRA calculation?
Metro cities for HRA calculation include Delhi, Mumbai, Kolkata, and Chennai. Employees living in these cities can claim HRA exemption up to 50% of their basic salary, while those in non-metro cities can claim up to 40% of basic salary.
What documents are required to claim HRA exemption?
You need rent receipts as proof of rent payment. If your annual rent exceeds ₹1 lakh, your landlord's PAN (Permanent Account Number) is mandatory. For rent below ₹1 lakh, a rent agreement is not mandatory, but rent receipts are advisable as supporting documents.
Can I claim HRA exemption if I live in my own house?
No, you cannot claim HRA exemption if you live in your own house. HRA exemption is only available if you live in rented accommodation. If you live in your own property, the entire HRA received from your employer will be fully taxable.
Can I claim both HRA exemption and home loan deductions?
Yes, you can claim both HRA exemption and home loan deductions simultaneously if you live in a rented property while also paying a home loan for another property you own. However, you need to justify why you're not living in your owned property with valid reasons.
What does 'p.a.' mean in the HRA calculator?
P.a. stands for 'per annum', which means annually or per year. When using our HRA calculator, enter all amounts as yearly figures. For example, if your monthly rent is ₹15,000, enter ₹1,80,000 (₹15,000 × 12 months) in the calculator.
Can I pay rent to my parents and claim HRA exemption?
Yes, you can pay rent to your parents and claim HRA exemption, provided your parents are the house owners and they declare this rent as income from house property in their income tax returns. You must have proper rent receipts and rental agreement as supporting documents.
What is the salary component used for HRA calculation?
For HRA calculation, 'salary' typically includes basic salary plus dearness allowance (DA). The 10% calculation is done on this combined amount (Basic + DA), not on the gross salary. Other allowances like conveyance allowance or special allowances are generally not included in this calculation.
Is there a maximum limit on HRA exemption?
There is no specific maximum limit on HRA exemption amount. However, the exemption is naturally limited by the calculation formula - it cannot exceed the actual HRA received, rent paid minus 10% of salary, or 40%/50% of basic salary, whichever is lowest.
When should I choose old tax regime vs new tax regime?
Choose the old tax regime if you have significant deductions like HRA exemption, Section 80C investments, or Section 80D medical insurance premiums. Choose the new tax regime if you have minimal deductions and want to benefit from lower tax rates and higher standard deduction of ₹75,000.
What is a Statutory Bonus?
A statutory bonus is an annual or monthly incentive given to employees who receive less than ₹21,000 a month. It is a way of sharing the company's profits with their employees as mandated by the Payment of Bonus Act, 1965.
What is the Statutory Bonus Calculator?
The Statutory Bonus Calculator is a free tool developed by PayrollRabbit to calculate the amount of statutory bonus that an eligible employee can get in a financial year. It uses the employee's basic salary, dearness allowance, minimum wage in the state, and the statutory bonus percentage to compute the bonus.
Who is eligible to get a statutory bonus?
Employees who have been employed for more than 30 days and receive less than ₹21,000 per month are eligible to receive a statutory bonus. This applies to establishments with 20 or more employees on any day during an accounting year.
How is statutory bonus calculated?
Employers can give between 8.33% and 20% of salary (Basic + DA or minimum wage) per month to the employee as a bonus, depending on the profits they have accrued that financial year. The formula is: Statutory bonus = Higher of (Basic + DA or Minimum Wage) × Percentage of bonus. If Basic + DA is higher than minimum wage, the former is considered up to ₹7,000 for bonus calculation.
When should the statutory bonus be disbursed to employees?
The statutory bonus can be paid as a one-time earning or every month, as part of the employee's payroll. As a one-time earning, it is usually disbursed during the festivals in October or November, within 8 months from the close of the accounting year.
Can an employee take an advance on the statutory bonus?
Yes, employees can claim an advance on the statutory bonus and it can be adjusted against the actual payment when it is paid to the employee. This is subject to company policy and availability of allocable surplus.
What is In-Hand Salary?
In-hand salary, also known as take-home salary or net salary, is the actual amount an employee receives after all deductions such as income tax, employee provident fund, employer provident fund, professional tax, and other deductions have been subtracted from the gross salary.
What is the In-Hand Salary Calculator?
The In-Hand Salary Calculator is a free tool developed by PayrollRabbit to calculate your actual take-home salary from your Cost to Company (CTC). It helps you understand the difference between CTC, gross salary, and in-hand salary by factoring in all statutory and voluntary deductions.
What is the difference between CTC, Gross Salary, and In-Hand Salary?
CTC (Cost to Company) is the total amount a company spends on an employee including salary, benefits, and bonuses. Gross salary is calculated as CTC minus bonus. In-hand salary is what you actually receive after all deductions. Formula: Gross salary = CTC - Bonus, then In-hand salary = Gross salary - (Professional tax + Employee PF + Employer PF + Insurance + Income tax + Other deductions).
What deductions are typically made from gross salary?
Common deductions include: Professional Tax (varies by state, maximum ₹2,500 per year), Employee Provident Fund contribution (typically 12% of basic salary), Employer Provident Fund contribution (typically 12% of basic salary), Employee Insurance premiums, Income Tax (TDS) based on tax slabs, and other voluntary deductions like NPS. These deductions reduce your gross salary to arrive at the in-hand amount.
Why is my in-hand salary much lower than my CTC?
Your in-hand salary is lower than CTC because the calculation includes bonus removal from CTC and various statutory deductions including both employee and employer PF contributions, professional tax, insurance, and income tax. Typically, in-hand salary is 70-80% of CTC depending on your tax bracket and deductions. Understanding this breakdown helps in better financial planning.
How can I increase my in-hand salary?
You can increase your in-hand salary by: Maximizing tax-saving investments under Section 80C (like PF, ELSS, PPF), claiming HRA exemption if applicable, utilizing other tax deductions like medical insurance premiums under Section 80D, and structuring your salary to include tax-free allowances. Proper tax planning can significantly increase your take-home amount.
Why do some salaries have income tax deductions while others don't?
Income tax deductions depend on your annual taxable income and applicable tax slabs. For example, employees with ₹4 LPA may have minimal or no income tax liability if their taxable income falls below the exemption limit (around ₹2.5-3 lakh depending on tax regime). However, employees with ₹10 LPA will have significant income tax liability and TDS deductions. The tax amount depends on your total taxable income, chosen tax regime, and available deductions.
Automise your payroll. Start using PayrollRabbit today.
Instantly compliant. Highly accurate. On every hop.