Salary Slip and Payroll Journal Entry Generator

How the calculation works

1. Gross earnings = basic + HRA + allowances + bonus. Employee deductions = PF + ESI + professional tax + LWF + TDS + other.
2. Net pay = gross − employee deductions. Employer cost = gross + employer PF + employer ESI.
3. Journal: debit salary expense and employer contribution expense; credit net salary payable, PF, ESI, PT/LWF, TDS and other payables. The debit-credit difference must be zero.

Understanding the calculation

A complete payroll working has two sides

Gross earnings include basic pay, HRA, allowances and bonuses, but gross is not the cash paid to the employee. The employee’s PF, ESI, professional tax, TDS, LWF and authorised deductions reduce the net amount. Separately, employer contributions increase employer expense and create liabilities, not deductions from employee pay.

Worked month-end posting

Suppose gross earnings are ₹70,000: basic ₹40,000, HRA ₹18,000, allowance ₹10,000 and bonus ₹2,000. Employee PF ₹4,800, PT ₹200 and TDS ₹3,200 produce total deductions of ₹8,200, so net payable is ₹61,800. Employer PF ₹4,800 adds a separate expense and payable. Journal debits for gross salary and employer contribution must equal net salary and all statutory-payable credits.

Controls against double deduction

Never count employer PF as a deduction from the salary slip unless there is a separate legally documented arrangement. Do not apply LWF monthly when the relevant fund is annual. Confirm eligibility, contribution base, statutory thresholds, wage ceilings, correct payroll month and tax withholding. The engine uses user-entered deductions because employee-specific rules cannot be safely inferred from gross salary alone.

After the entry is posted

Reconcile payroll control accounts with the bank payment batch, PF/ESI contribution files, TDS remittances and outstanding deductions. Investigate negative or unusually high net pay, unapproved allowances and payroll adjustments. A generated internal slip does not replace statutory filings or employee-consent and privacy requirements.

Assumptions and what this calculator does not cover

• Amounts are entered, not derived: PF, ESI, professional tax, LWF and TDS must be verified against the current rules and the employee’s facts.
• It prepares a payroll working and journal. It does not file EPF, ESIC or TDS returns.
• Employer contributions are an expense and a payable; they are not deducted from the employee’s pay.
• Every deduction should be traced to payroll records, permissions and the applicable statutory schedule.
• The journal must balance: debit employee gross + employer charges against net payroll and all payables.
• Salary TDS, PF/ESI and professional tax are not derived by this tool; users supply verified amounts.

Official sources and further reading

• EPFO: official portal
• Income Tax Department: e-filing portal

Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.