HRTech India Glossary, Encyclopedia,
& Compliance Handbook (2026)

Absconding

Definition: When an employee leaves duty without notice, approval, or formal resignation and remains unreachable for work communication.

Use scenario: HR uses this term during disciplinary review, unpaid absence tracking, and final settlement decisions where company policy requires a show-cause process before separation.

Arrears

Definition: Additional salary paid later for a past period because of revision, missed input, increment backdating, or payroll correction.

Use scenario: A payroll team runs arrears when a salary revision effective from April is entered in June and the difference for April and May must be paid in the next payroll cycle.

Assessment Year (AY)

Definition: The income-tax year in which income earned in the previous financial year is assessed to tax.

Use scenario: Payroll teams use AY while communicating Form 16, TDS workings, and annual tax proofs to employees.

Attendance Regularization

Definition: A process through which an employee corrects missed punches, wrong shifts, or attendance anomalies after manager approval.

Use scenario: HRTech systems use attendance regularization workflows before payroll lock so that payable days and overtime are computed correctly.

Basic Salary / Basic Pay

Definition: The fixed core component of salary on which many payroll calculations are built; in India it often serves as the base for EPF, gratuity, bonus eligibility logic, and some leave encashment calculations.

Use scenario: Compensation teams define basic pay while structuring CTC because a higher basic usually increases retirement and terminal benefit cost exposure.

Bonus (Statutory / Performance)

Definition: Bonus may refer either to a statutory payment governed by bonus law for eligible employees or to a company performance-linked payout outside statutory bonus design.

Use scenario: Payroll teams separate statutory bonus logic from annual incentive logic because eligibility, calculation basis, and compliance treatment differ.

Break in Service

Definition: A discontinuity in service tenure caused by resignation, unauthorized absence, or other conditions that interrupt continuous service.

Use scenario: HR reviews break in service while checking eligibility for gratuity, leave encashment, long-service awards, or rehire benefits.

Cost to Company (CTC)

Definition: The total annual employer cost of employing an individual, including fixed pay, variable pay, and employer-side benefits or contributions where included by company policy.

Use scenario: Offer letters in India often present compensation as CTC, while payroll must still translate it into monthly earnings, deductions, and net pay components.

Compliance Calendar

Definition: A month-wise schedule of statutory deposit dates, return due dates, certificate issuance timelines, and annual filing obligations.

Use scenario: HR and finance teams rely on a compliance calendar to avoid interest, damages, or penalties on PF, ESI, TDS, PT, LWF, and Form 16 issuance.

Conveyance Allowance

Definition: A salary allowance meant to cover commuting or transport-related employee expenses, now usually treated as part of taxable salary unless structured under a specific exempt reimbursement policy.

Use scenario: Compensation teams include or replace conveyance allowance depending on tax policy, remote work practices, and reimbursement design.

Dearness Allowance (DA)

Definition: A cost-of-living linked salary component more common in government and traditional industrial setups, and relevant in several statutory definitions such as EPF contribution basis when paid.

Use scenario: Payroll teams include DA with basic wages where law or policy requires contribution calculations on Basic plus DA.

Deduction

Definition: Any amount subtracted from employee earnings during payroll, such as PF, ESI, PT, TDS, salary advance recovery, loan recovery, or loss of pay impact.

Use scenario: Payroll registers classify deductions separately to maintain audit trails and explain take-home changes.

Digital Signature Certificate (DSC)

Definition: A digital authentication method used for secure submission or approval in several government or regulated filings

Use scenario: Organizations use DSC for authorized online compliance actions, including certain payroll or tax-related submissions.

Earnings

Definition: The payable salary heads before deductions, such as basic, HRA, special allowance, bonus, arrears, overtime, and reimbursements where payroll-processed.

Use scenario: Payroll software groups earnings heads separately from deductions to produce a compliant pay slip and audit-ready payroll register.

Employee Deposit Linked Insurance (EDLI)

Definition: A social security-linked insurance component associated with EPF-covered employment, funded by employer-side contribution as prescribed.

Use scenario: Employers factor EDLI cost into payroll compliance because it sits alongside EPF and EPS within the EPFO framework.

Employee Self-Service (ESS)

Definition: A portal or app where employees access payslips, tax declarations, reimbursement claims, attendance, leave, and personal data updates.

Use scenario: ESS reduces HR operations workload by shifting routine requests and document access to employees.

Employees’ Pension Scheme (EPS)

Definition: The pension component within the EPF structure funded from the employer contribution at the prescribed rate and subject to statutory limits.

Use scenario: Payroll teams split the employer PF contribution correctly between EPF and EPS while processing monthly remittances.

Employees’ Provident Fund (EPF)

Definition: A retirement savings social security scheme under which covered employers and employees contribute a prescribed percentage of wages. A common payroll reference point is 12 percent employee contribution and 12 percent employer contribution on Basic plus DA, subject to applicable rules and establishment practices.

Use scenario: Indian payroll systems compute EPF every month, generate contribution data, and support deposit and return processes with EPFO.

Employees’ State Insurance (ESI / ESIC)

Definition: A social security and medical benefit framework for eligible employees under the ESI scheme. Common payroll references show employee contribution at 0.75 percent and employer contribution at 3.25 percent, with coverage tied to the notified wage ceiling.

Use scenario: Payroll checks wage eligibility, calculates monthly contributions, and tracks contribution-period continuity for covered employees.

Financial Year (FY)

Definition: In India, the yearly accounting and tax period from 1 April to 31 March.

Use scenario: Salary structures, annual tax declarations, investment proofs, and payroll reconciliations are typically organized by financial year.

Form 16

Definition: The TDS certificate issued to salaried employees showing salary paid and tax deducted by the employer.

Use scenario: Payroll issues Form 16 after year-end so employees can reconcile salary income and file their personal income-tax returns.

Full and Final Settlement (FnF)

Definition: The final payroll settlement at separation, covering unpaid salary, leave encashment where applicable, bonus or incentives due, recovery items, and statutory deductions.

Use scenario: HR, payroll, finance, and IT coordinate FnF after resignation, termination, or retirement to close all employee balances.

Gig Worker

Definition: A worker engaged for task-based, flexible, or platform-linked work rather than standard long-term payroll employment.

Use scenario: HRTech products serving modern workforces often distinguish gig-worker workflows from regular employment workflows because benefits, tax, and compliance models differ.

Gratuity

Definition: A terminal benefit payable under qualifying conditions for completed service, commonly calculated as last drawn wages multiplied by 15 by 26 multiplied by years of service. Commentary around labour code-aligned wage definitions notes that a wider wage base can increase gratuity outgo, while the core formula remains the same.

Use scenario: HR and payroll teams calculate gratuity during exit settlement, cost projections, and compensation design for long-tenure roles.

Gross Salary

Definition: Total salary earnings before employee-side deductions such as PF, ESI, PT, TDS, loan recovery, or other deductions.

Use scenario: Offer discussions may focus on CTC, but payroll explanation to employees often starts with gross salary and then walks down to net pay.

House Rent Allowance (HRA)

Definition: A salary allowance paid to employees to help meet rented accommodation costs; under the old tax regime, eligible HRA exemption can reduce taxable salary if conditions are met.

Use scenario: Payroll collects rent and landlord details where needed for tax computation and compares HRA exemption against taxable salary rules.

HRIS / HCM Platform

Definition: A software system for managing employee records, workflows, payroll integrations, and reporting across the employee lifecycle.

Use scenario: In India, HRIS design must often integrate attendance, payroll, compliance, and employee tax declaration modules.

Income from Salary

Definition: The taxable head under the Income-tax framework that includes salary, allowances, perquisites, bonus, commissions, and certain retirement-related receipts subject to exemptions and deductions

Use scenario: Payroll annual tax computation begins by mapping compensation components into income from salary and then adjusting for allowable deductions or exemptions.

Increment

Definition: An increase in fixed salary, usually annual or promotion-linked.

Use scenario: When increment effective dates precede payroll processing dates, systems calculate arrears automatically.

Joining Bonus

Definition: A one-time payment made to attract a new hire, often with a clawback condition if the employee leaves before a defined period.

Use scenario: HRTech offer workflows store joining-bonus approval, payout timing, and recovery rules so payroll and finance can execute them correctly.

Labour Welfare Fund (LWF)

Definition: A state-specific statutory contribution framework applicable in certain states, with its own rates, employee-employer share rules, and periodic return requirements.

Use scenario: Multi-state employers configure LWF by state because applicability, frequency, and amount are not uniform across India.

Leave Encashment

Definition: Payment made for eligible unused leave, either during service as per policy or at separation, and subject to payroll and tax treatment rules.

Use scenario: FnF payroll includes leave encashment for unused earned leave where company policy and law permit it.

Loss of Pay (LOP)

Definition: Reduction in salary because payable days are fewer than scheduled paid days due to unauthorized absence or exhausted leave balance.

Use scenario: Attendance and leave data flow into payroll so that LOP is computed before statutory deductions and TDS.

Medical Bonus

Definition: A maternity-related statutory payment in specified circumstances where the employer does not provide free pre-natal and post-natal care. The Labour Ministry handbook notes a medical bonus of Rs. 3,500 for eligible women employees under the compliance guidance cited.

Use scenario: HR compliance teams include this check while administering maternity benefit obligations for covered employees.

Minimum Wages / Minimum Wage

Definition: The legally prescribed floor wage for scheduled employment or category, often varying by state, skill level, and location class.

Use scenario: Payroll validations compare structured pay against applicable minimum wage notifications before release.

Net Pay / Take-Home Pay

Definition: The final salary amount paid to the employee after all deductions.

Use scenario: Employees usually compare payroll outcomes through net pay, so variance analysis often begins there and then traces back to earnings and deductions.

Notice Pay / Pay in Lieu of Notice

Definition: Amount paid or recovered when notice period terms are not served as per contract or policy.

Use scenario: FnF processing applies notice recovery when an employee exits early, or pay in lieu when the company waives service but compensates the employee.

Overtime (OT)

Definition: Extra payment for eligible work performed beyond standard working hours or shift rules as per law and policy.

Use scenario: Time and attendance systems send approved OT hours into payroll as a separate earnings head.

Payroll

Definition: The end-to-end process of calculating employee pay, deductions, statutory contributions, tax withholding, disbursement, payslips, and employer filings.

Use scenario: In India, payroll is tightly linked to attendance, leave, tax declarations, EPF, ESI, PT, LWF, and TDS compliance obligations.

Payroll Head

Definition: A named earning or deduction component used in salary structuring and payroll calculation.

Use scenario: Common earning heads include basic, HRA, special allowance, bonus, overtime, and arrears; common deduction heads include PF, ESI, PT, TDS, and recoveries.

Payable Days

Definition: Number of days for which salary is payable in a payroll period after adjusting for attendance, leave, joining date, or exit date.

Use scenario: Payroll prorates earnings and sometimes deductions based on payable days.

Perquisite (Perk)

Definition: A benefit or amenity provided by the employer that may have tax implications, such as car benefit, concessional loans, or accommodation.

Use scenario: Payroll tax engines classify perquisites separately because taxable value may differ from cash salary treatment.

Previous Year (PY)

Definition: The financial year in which income is earned, for tax purposes.

Use scenario: Employee tax declarations and proofs refer to investments and salary paid in the previous year that maps to the assessment year.[cite:11]

Professional Tax (PT)

Definition: A state-level tax on professions, trades, and employment, applicable in notified states with state-specific slabs, registration rules, and payment frequencies.

Use scenario: Payroll deducts PT from employee salary where applicable and the employer deposits it according to the state calendar.

Reimbursement

Definition: Repayment of approved employee expenses such as travel, mobile, fuel, meals, or internet, usually processed based on bills and policy rules.

Use scenario: HRTech expense modules route reimbursement claims for approval and then pass approved amounts to payroll or accounts payable.

Return Filing

Definition: Submission of prescribed statements, challan-linked returns, or annual returns to statutory authorities within due dates.

Use scenario: Payroll and compliance teams maintain filing trackers for TDS, PT, LWF, and other recurring obligations.

Salary Breakup

Definition: The detailed composition of an employee’s compensation across earnings and deductions.

Use scenario: Salary breakup design affects tax efficiency, social security cost, gratuity basis, and perceived take-home pay.

Section 80C

Definition: A deduction section under the old tax regime that allows specified investments and payments up to the prescribed limit, commonly shown as Rs. 1.5 lakh in current summaries.

Use scenario: Employees declare 80C investments for lower TDS under the old regime, and payroll verifies proofs near year-end.

Section 80D

Definition: A deduction section under the old tax regime for eligible health-insurance premium and specified medical payments subject to limits.

Use scenario: Employees opting for the old regime submit eligible 80D evidence so payroll can adjust TDS correctly.

Special Allowance

Definition: A residual salary component used to balance total fixed pay after allocating specific heads like basic and HRA.

Use scenario: Compensation teams often use special allowance to arrive at target gross salary, but they also review its impact under wage-definition-driven benefit calculations.

Standard Deduction

Definition: A flat deduction from salary income available under current tax rules, shown in recent summaries as Rs. 50,000 under the old regime and Rs. 75,000 under the new regime for FY 2025-26 references.

Use scenario: Payroll uses the standard deduction automatically during annual tax estimation before monthly TDS is spread across the remaining payroll months.

Statutory Compliance

Definition: Employer adherence to labour, social security, tax, wage, and recordkeeping laws applicable to employees and establishments.

Use scenario: HRTech compliance dashboards track registration, due dates, contribution amounts, filings, notices, and proof of payment to avoid non-compliance.

Tax Deducted at Source (TDS)

Definition: The mechanism through which the employer deducts income tax from salary at the time of payment and deposits it with the government.

Use scenario: Payroll estimates annual taxable salary, considers regime choice and declarations, computes annual tax liability, and spreads TDS over the remaining months of the year.

Tax Regime (Old vs New)

Definition: The employee’s chosen income-tax framework for salary taxation, with the new regime as the default in recent summaries and the old regime allowing broader exemptions and deductions.

Use scenario: Payroll asks employees to declare their intended regime because HRA exemption, Section 80C, Section 80D, and standard deduction treatment differs by regime.

Time and Attendance (T&A)

Definition: The process and system used to capture employee work time, shifts, lateness, overtime, weekly offs, and leave.

Use scenario: T&A is the main operational input for payroll in shift-based, attendance-driven organizations.

UAN (Universal Account Number)

Definition: The member identification number used within the EPFO ecosystem to link PF accounts across employments.

Use scenario: During onboarding, payroll collects or generates UAN details to ensure PF contributions map to the correct member account.

Variable Pay

Definition: Compensation linked to performance, targets, incentives, commissions, or business results rather than fixed monthly salary.

Use scenario: HRTech compensation modules keep variable pay plans separate from fixed pay because eligibility and payout timing differ.

Wages

Definition: A legally significant compensation concept used across labour and social security laws; recent labour-code commentary highlights that the standardized definition of wages can widen the base used for gratuity and certain benefits.

Use scenario: Compensation structuring in India increasingly tests how allowances and basic pay interact with wage-definition-based compliance exposure.

Wage Slip / Payslip

Definition: The monthly statement showing salary heads, deductions, employer contributions where displayed, and net pay. The Labour Ministry handbook notes that employers must issue wage slips in the prescribed form to workers.

Use scenario: HRTech ESS modules distribute digital payslips every month as a core employee service and compliance record.