India HRMS glossary
Every TDS, EPF, ESI, PT and payroll term an HR or finance leader in India needs — defined in one place.
- CTC (Cost to Company)
- The total annual cost the employer bears per employee — including basic, allowances, employer EPF, employer ESI, gratuity accrual and benefits. Not the same as gross or take-home.
- Earned Wage Access (EWA)
- Benefit that lets employees withdraw a portion of already-earned wages before the official payday. It is not a loan — settlement happens at payroll against the same month's salary.
- ECR (Electronic Challan-cum-Return)
- The monthly EPFO filing format that combines the contribution challan and return of wages/contributions. Due by the 15th of the following month.
- EDLI (Employees' Deposit Linked Insurance)
- Life insurance benefit linked to an employee's EPF account, funded by a 0.50% employer contribution on Basic + DA (capped at ₹75/month).
- EPF (Employees' Provident Fund)
- Mandatory retirement-savings scheme under the EPF Act, 1952. Applicable to establishments with 20+ employees. Employee and employer each contribute 12% of Basic + DA.
- EPS (Employees' Pension Scheme)
- The 8.33% portion of the employer's EPF contribution that goes into a pension fund, capped on a wage of ₹15,000/month (i.e., maximum ₹1,250 per month).
- ESI (Employees' State Insurance)
- Social-security and health-insurance scheme under the ESI Act, 1948. Mandatory for establishments with 10+ employees where employees earn up to ₹21,000/month (₹25,000 for persons with disabilities).
- Form 16
- TDS certificate issued by an employer to each salaried employee at the end of the financial year. Part A is downloaded from TRACES; Part B details salary, deductions and tax liability.
- Form 24Q
- Quarterly statement of TDS on salary filed by every Indian employer with the Income Tax Department. It powers Form 16 and the employee's 26AS.
- Gratuity
- Statutory terminal benefit under the Payment of Gratuity Act, 1972. Paid on resignation, retirement, death or disability after 5 years of continuous service at 15 days' wages per year.
- Gross Salary
- Salary before statutory deductions and income tax. Includes basic, HRA, special allowance, conveyance, LTA and other regular components.
- GSTIN
- 15-digit Goods and Services Tax Identification Number assigned to every GST-registered business. HRMS expense systems extract GSTIN from invoices for input tax credit tracking.
- HRA (House Rent Allowance)
- Component of salary paid to cover rent, exempt from tax up to the least of actual HRA, 50% of salary (40% in non-metros), or rent paid minus 10% of salary. Requires rent receipts and, for rent > ₹1 lakh/year, the landlord's PAN.
- IP Number (Insurance Number)
- Permanent identifier for ESI-covered employees. Issued via the ESIC portal at onboarding; portable across jobs.
- Leave Encashment
- Payment for unused earned leave at the end of a financial year or on exit. Tax treatment differs for government vs non-government employees under Section 10(10AA).
- LTA (Leave Travel Allowance)
- Tax-exempt allowance for domestic travel with family, claimable twice in a block of four calendar years. Does not cover international travel or non-shortest-route expenses.
- LWF (Labour Welfare Fund)
- Optional state-level welfare fund for workers. Applicable in Maharashtra, Karnataka, Kerala, Tamil Nadu, Gujarat, West Bengal, Delhi and others. Contribution is small — typically ₹12–₹60 per half year — but penalty for non-deposit is steep.
- Net / Take-Home Salary
- The amount credited to the employee's bank account after deducting employee EPF, employee ESI, TDS, Professional Tax, and any voluntary deductions.
- NPS (National Pension System)
- Retirement-savings scheme. Under Section 80CCD(1B), contributions up to ₹50,000 are deductible over and above the Section 80C limit. Employer's NPS contribution is additionally deductible under 80CCD(2).
- OCR (Optical Character Recognition)
- Technology that extracts text from images of documents. In HRMS expense modules, OCR auto-extracts vendor, amount, date and GSTIN from receipt photos.
- PAN (Permanent Account Number)
- 10-character identifier issued by the Income Tax Department. Employees without a valid PAN have salary TDS deducted at 20% (Section 206AA).
- PT (Professional Tax)
- State-level tax on employment income levied by 18 Indian states/UTs. Slabs and deposit cadence vary by state; employers need PTEC and PTRC registrations.
- PTEC / PTRC
- Professional Tax Enrollment Certificate (the employer's own PT) and Professional Tax Registration Certificate (for deducting PT from employees). Both are state-issued.
- Section 192
- The Income Tax Act section that obliges every employer paying salary in India to deduct income tax at source, based on the employee's estimated annual income and chosen tax regime.
- Section 80C
- Deduction of up to ₹1.5 lakh for investments in EPF, PPF, ELSS, life insurance premia, NSC, ULIPs, principal repayment on home loans, and tuition fees. Available only in the old tax regime.
- Standard Deduction
- Flat deduction from salary income under Section 16(ia). ₹50,000 under the old regime and ₹75,000 under the new regime (FY 2024-25 onwards).
- TAN (Tax Deduction and Collection Account Number)
- Unique 10-character alphanumeric identifier issued to every entity that deducts or collects tax at source. Required for filing 24Q and depositing TDS.
- TDS (Tax Deducted at Source)
- Income tax withheld at the point of payment and deposited with the government by the payer. For salaries, TDS is governed by Section 192 of the Income Tax Act.
- TRACES
- TDS Reconciliation Analysis and Correction Enabling System — the Income Tax Department portal used for 24Q filings, Form 16 Part A downloads, and correction statements.
- UAN (Universal Account Number)
- Permanent 12-digit identifier assigned by EPFO to every EPF member. It is portable across jobs and consolidates multiple PF accounts.
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