Last Updated: March 2026 Reviewed by CA & CS Team · Patron Accounting LLP

Payroll Cost Calculator — Employer Cost India 2026

TL;DR

This Payroll Cost Calculator shows the true cost of employing someone in India — not just CTC, but the full picture: employer EPF (12% + admin), ESI (3.25% if applicable), gratuity (4.81%), EDLI (0.5%), statutory bonus, and professional tax. Enter the gross salary and team size to see per-employee and total annual payroll cost. Employer statutory costs typically add 18-22% above gross salary. Built for HR managers, founders, and CFOs planning workforce budgets.

Calculate Total Employer Payroll Cost

Monthly Gross Salary (₹)

Fixed monthly salary (excl. bonus/variable)

Basic Salary (% of Gross)

EPF Contribution

Professional Tax State

Number of Employees

For total team cost projection

Include Statutory Bonus?

Understanding Employer Payroll Costs in India

When you hire an employee in India, the actual cost to the company extends well beyond the gross salary. The EPFO, ESIC, and various labour laws mandate contributions that typically add 18-22% to the gross salary. Here is what makes up the total employer cost:

Total Employer Cost = Gross Salary + Employer Contributions

Employer EPF: 12% of Basic (3.67% to EPF + 8.33% to EPS)
EPF Admin Charges: 0.5% of Basic (min ₹75/mo)
EDLI: 0.5% of Basic (capped at ₹15,000)
Employer ESI: 3.25% of Gross (if wages ≤ ₹21,000)
Gratuity Provision: ~4.81% of Basic
Statutory Bonus: 8.33% of Basic (if applicable)

Typical overhead: 18-22% above gross salary

Why CTC ≠ Total Employer Cost

CTC (Cost to Company) as stated in offer letters usually includes employer EPF, gratuity, and bonus. But it often excludes EPF admin charges (0.5%), EDLI (0.5%), and sometimes ESI employer share. The true employer cost can be 2-5% higher than the stated CTC. This matters when budgeting for new hires, especially at scale. Under the new Code on Wages, basic salary must be at least 50% of CTC, increasing the EPF and gratuity base and further raising statutory costs.

CA Tip: When comparing hiring costs across India versus other countries, always use the total employer cost — not CTC or gross salary. A ₹12 LPA CTC employee actually costs the employer approximately ₹13.5-14 LPA when including all statutory overheads, admin charges, and compliance costs. Factor this into your annual workforce budget. Verify current rates at the EPFO contribution rate chart.

Monthly Payroll Compliance Deadlines

Missing deadlines attracts penalties and interest. Here are the critical dates every employer must track:

Obligation	Deadline	Penalty for Delay
Salary Payment	7th of next month (< 1,000 employees)	Prosecution under Payment of Wages Act
TDS Deposit	7th of next month	1.5%/month interest + ₹200/day penalty
EPF/EDLI Payment	15th of next month	12% p.a. interest + damages up to 100%
ESI Payment	15th of next month	12% p.a. simple interest
Professional Tax	State-specific (usually month-end)	1-1.5%/month interest + penalty
TDS Return (24Q)	31 days after quarter-end	₹200/day late fee
Form 16	15th June annually	₹100/day per employee

Employers operating in multiple states must track different professional tax rates, minimum wages, and Shops & Establishments Act requirements for each location. This is where professional payroll services provide significant value — ensuring compliance across jurisdictions without the employer needing to track changing regulations in each state.

Outsource Payroll vs In-House: Cost Comparison

For most Indian SMEs, outsourcing payroll to a CA firm or payroll provider is more cost-effective than managing it in-house:

Factor	In-House	Outsourced (CA Firm)
Payroll Person	₹25,000-50,000/mo	Included
Software	₹50,000-2,00,000/yr	Included
Per Employee Cost	₹500-1,500/mo (amortised)	₹200-600/mo
Multi-State PT	Manual tracking	Automated
Compliance Risk	Owner bears penalty	Shared accountability
Best For	50+ employees	5-50 employees

Let Us Handle Your Payroll. Patron Accounting provides end-to-end payroll processing — salary computation, EPF/ESI challan filing, TDS deposit, professional tax across states, Form 16, and payslip generation. We serve startups to mid-size companies across Pune, Mumbai, Delhi, and Gurugram. Get a payroll quote →

Frequently Asked Questions About Payroll Costs

Employer costs add 18-22% above gross salary: EPF at 12% of basic + 0.5% admin charges, ESI at 3.25% of gross (if eligible), gratuity at 4.81% of basic, EDLI at 0.5%, and statutory bonus at 8.33%. Some of these are included in CTC, but admin charges and EDLI are often excluded, making the true cost 2-5% higher than stated CTC.

Employer EPF is 12% of basic + DA: 8.33% to EPS (capped at ₹15,000 basic = max ₹1,250/mo) and 3.67% to EPF. Plus 0.5% EDLI insurance and 0.5% admin charges (min ₹75/mo). Total employer EPF ecosystem cost is approximately 13% of basic. All paid via the monthly EPFO ECR challan by the 15th of next month.

ESI applies when gross wages are ₹21,000/month or below for establishments with 10+ employees. Employer pays 3.25% of gross wages. For a ₹18,000 salary, that is ₹585/month or ₹7,020/year per employee. ESI does not apply if the employee earns above the ceiling from the joining date — this is a significant cost factor when structuring salaries just above or below the threshold.

Gratuity provision is ~4.81% of basic salary set aside annually. Formula: Basic × 15 ÷ 26 per year of service. Though paid only after 5 years at separation, employers must provision it annually per accounting standards. For ₹25,000 basic, the annual provision is ~₹14,423. Under the new Labour Codes, gratuity may apply after just 1 year for fixed-term contracts.

Yes — under the Payment of Bonus Act, minimum 8.33% of basic (or ₹7,000, whichever is higher) must be paid to employees earning up to ₹21,000/month. Maximum is 20%. This is usually included in CTC but is a real employer cost. Employees above the threshold may receive ex-gratia bonus at the employer's discretion, which is an additional optional cost.

PT is an employee deduction (max ₹2,500/year), not an employer cost. However, some employers bear it as a benefit — adding ₹2,500/year per employee. The real employer cost is the compliance burden: registration in each state, monthly deduction computation, timely deposit, and return filing. For multi-state companies, this is significant.

EDLI (Employees Deposit Linked Insurance) is 0.5% of basic (capped at ₹15,000) providing life insurance of up to ₹7 lakh on death during service. EPF admin charges are 0.5% of basic (min ₹75/mo). Both are employer-only costs paid with the EPF challan. They are often excluded from CTC but are real costs that add to the employer's total payroll liability.

Enter the headcount in our calculator to multiply per-employee costs. For a team of 10 at ₹30,000 gross, the total annual cost includes 10 × gross salary + 10 × employer EPF + 10 × ESI (if applicable) + 10 × gratuity + bonus + EDLI. The team multiplier at the bottom of our results shows the total annual payroll budget needed for your entire workforce.

Monthly: salary by 7th, TDS deposit by 7th, EPF/ESI by 15th, PT per state rules. Quarterly: TDS return (24Q) within 31 days. Annual: Form 16 by 15th June, EPF annual return, ESI half-yearly returns by 12th Nov/May. Late EPF attracts 12% interest + damages up to 100%. Late TDS attracts 1.5%/month interest + ₹200/day penalty.

Code on Wages mandates basic + DA ≥ 50% of CTC, increasing the EPF and gratuity base by 10-25% for companies currently at 40% basic. This raises employer statutory costs by 3-5% of CTC. Employee take-home decreases but retirement corpus grows significantly. States are progressively notifying implementation rules — check your state's status.

For fewer than 50 employees, outsourcing is typically cheaper: ₹200-600/employee/month vs hiring a dedicated payroll person at ₹25,000-50,000/month. Outsourcing also covers compliance across EPF, ESI, PT, and TDS without the employer tracking regulatory changes. For 50+ employees, in-house with payroll software may become viable. Many companies use a hybrid model.

Yes — we provide end-to-end payroll: salary computation, EPF/ESI challan filing, TDS deposit, multi-state PT, Form 16, payslips, and compliance calendar management. We serve startups to mid-size companies across Pune, Mumbai, Delhi, and Gurugram. Monthly payroll processing with full statutory compliance at competitive rates.