{"id":573,"date":"2026-09-18T07:08:55","date_gmt":"2026-09-18T07:08:55","guid":{"rendered":"https:\/\/www.techmagify.com\/blog\/?p=573"},"modified":"2026-09-22T07:30:40","modified_gmt":"2026-09-22T07:30:40","slug":"zoho-people-and-payroll-setup","status":"publish","type":"post","link":"https:\/\/www.techmagify.com\/blog\/zoho-people-and-payroll-setup\/","title":{"rendered":"Zoho People & Payroll Setup for Indian Companies: A Practical 2026 Guide"},"content":{"rendered":"\n

It’s the 28th of the month. Attendance is sitting in one Excel sheet, leave approvals are buried in someone’s WhatsApp, and the accounts team is still asking HR which three people joined mid-month. Payroll has to go out in two days.<\/p>\n\n\n\n

Most growing Indian companies know this feeling far too well.<\/p>\n\n\n\n

A proper Zoho People and Payroll setup<\/strong> fixes this by putting HR data and salary processing on one connected system. Zoho People handles the employee side: records, attendance, leave, shifts and performance. Zoho Payroll takes that data and runs salaries with PF, ESI, Professional Tax and TDS built in. When the two are connected correctly, loss-of-pay days, new joiners and exits flow straight into the pay run without anyone re-typing a thing.<\/p>\n\n\n\n

This guide walks through how to set both up for an Indian company, what to configure first, and where businesses usually go wrong. It’s written from the implementation work Tech Magify, a Zoho Advanced Partner with over two decades in business software, has done for HR and finance teams across India.<\/p>\n\n\n\n

In this guide:<\/strong><\/p>\n\n\n\n

    \n
  1. What is the difference between Zoho People and Zoho Payroll?<\/li>\n\n\n\n
  2. What you need before you start<\/li>\n\n\n\n
  3. Setting up Zoho People<\/li>\n\n\n\n
  4. Setting up Zoho Payroll for Indian compliance<\/li>\n\n\n\n
  5. The 50% wage rule and your salary structure<\/li>\n\n\n\n
  6. Connecting People, Payroll and Books<\/li>\n\n\n\n
  7. Common setup mistakes<\/li>\n\n\n\n
  8. FAQs<\/li>\n<\/ol>\n\n\n\n

    What Is the Difference Between Zoho People and Zoho Payroll?<\/h2>\n\n\n\n

    Zoho People is an HR management system that stores employee records and manages attendance, leave, shifts, onboarding and performance. Zoho Payroll is a payroll system that calculates salaries, statutory deductions like PF, ESI, PT and TDS, and generates payslips and Form 16. Together, they cover the full employee lifecycle from joining to salary.<\/p>\n\n\n\n

    Think of it this way. People answers “who worked, and for how many days?” Payroll answers “how much do we pay them, and what do we owe the government?”<\/p>\n\n\n\n

    You can run them separately. But the real value shows up when they’re linked, because payroll depends entirely on the accuracy of HR data. A missed leave entry in People becomes a wrong salary in Payroll.<\/p>\n\n\n\n

    There’s also Zoho People Plus, which bundles HR, payroll and related apps into a single subscription. For companies that want the whole HR stack in one place, it’s often the simpler buy. If you’re already on Zoho One, both apps are included, and our complete guide to the Zoho ecosystem<\/a> explains how they sit alongside the rest of the suite.<\/p>\n\n\n\n

    What Do You Need Before Starting a Zoho Payroll Setup in India?<\/h2>\n\n\n\n

    Skip this part and you’ll end up redoing half the configuration later. Honestly, this is where most delays come from.<\/p>\n\n\n\n

    Before touching the software, collect your company PAN and TAN (TAN is needed for depositing TDS on salaries), your EPF establishment code and ESI registration number, and a clear list of the states where your employees work, since Professional Tax and Labour Welfare Fund rules change from state to state. You’ll also need your salary bank account details and, ideally, your current salary structures in a clean sheet.<\/p>\n\n\n\n

    Then there’s employee data. Names, dates of joining, PAN, UAN, ESI numbers, bank accounts, designations, reporting managers. Clean it first. Duplicate or half-filled records are the single biggest cause of wrong payslips in the first month.<\/p>\n\n\n\n

    One more thing worth deciding early: your go-live month. Starting at the beginning of a financial year (April) or a quarter makes TDS and quarterly returns far easier to reconcile.<\/p>\n\n\n\n

    Step 1: Setting Up Zoho People the Right Way<\/h2>\n\n\n\n

    Zoho People is the foundation, so build it carefully.<\/p>\n\n\n\n

    Organisation structure.<\/strong> Start with departments, designations, locations and reporting hierarchies. These drive approval workflows later, so a wrong reporting manager means leave requests going to the wrong person.<\/p>\n\n\n\n

    Employee records.<\/strong> Import your cleaned employee sheet. Map custom fields you actually need (UAN, blood group, emergency contact) and skip the ones you don’t. Fewer fields, fewer gaps.<\/p>\n\n\n\n

    Leave policies.<\/strong> Here’s where Indian companies get creative, and fair enough. Earned leave, casual leave, sick leave, comp-offs, maternity leave, carry-forward limits, encashment rules, probation restrictions. Set each one up as a separate leave type with its own accrual rules. Test it with two or three dummy employees before rolling it out.<\/p>\n\n\n\n

    Attendance and shifts.<\/strong> Decide how attendance will be captured: biometric device integration, web check-in, mobile app with geo-fencing, or a mix. Factories and field teams usually need different rules from office staff. Configure shift timings, grace periods, half-day rules and what counts as loss of pay.<\/p>\n\n\n\n

    Holiday calendars by location.<\/strong> A Mumbai office and a Chennai office don’t share the same holidays. Create location-wise calendars.<\/p>\n\n\n\n

    Onboarding and exit workflows.<\/strong> Offer letters, document collection, asset handover, full and final checklists. These save HR hours every single month.<\/p>\n\n\n\n

    And test. Then test again. It’s far cheaper to catch a leave rule error in a sandbox than in a salary slip.<\/p>\n\n\n\n

    Step 2: Zoho Payroll Setup for Indian Statutory Compliance<\/h2>\n\n\n\n

    Now the part that keeps finance teams up at night.<\/p>\n\n\n\n

    Zoho Payroll is built for Indian compliance, and it handles PF, ESI, Professional Tax, Labour Welfare Fund and TDS on salary under Section 192. But it only calculates correctly if you configure it correctly. The software isn’t the risk. The setup is.<\/p>\n\n\n\n

    Configure salary components<\/h3>\n\n\n\n

    Create your earnings (Basic, HRA, special allowance, conveyance, bonus), reimbursements, and deductions. Mark each component correctly as taxable or not, and as part of PF wages or not. Get this wrong and every downstream calculation is off.<\/p>\n\n\n\n

    Set up statutory components<\/h3>\n\n\n\n

    In the payroll settings, you’ll configure each statutory item:<\/p>\n\n\n\n

    Component<\/strong><\/td>Standard rule (verify for your case)<\/strong><\/td>Deposit due date<\/strong><\/td><\/tr><\/thead>
    EPF<\/td>12% employee + 12% employer on PF wages (\u20b915,000 statutory wage ceiling)<\/td>15th of following month<\/td><\/tr>
    ESI<\/td>0.75% employee + 3.25% employer, for gross wages up to \u20b921,000\/month<\/td>15th of following month<\/td><\/tr>
    Professional Tax<\/td>State-wise slabs (not every state levies it)<\/td>As per state rules<\/td><\/tr>
    LWF<\/td>State-wise, usually half-yearly or yearly<\/td>As per state rules<\/td><\/tr>
    TDS on salary<\/td>As per the employee’s chosen tax regime<\/td>7th of following month (30 April for March)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    A quick word of caution. Some companies contribute PF on actual Basic rather than capping at \u20b915,000. That’s a policy choice, and Zoho Payroll supports both. Just make sure the setting matches what’s written in your offer letters.<\/p>\n\n\n\n

    Tax regime and investment declarations<\/h3>\n\n\n\n

    Enable the IT declaration portal so employees can choose between the old and new tax regimes and submit investment proofs. Set proof submission windows (usually January to February) so TDS for the last quarter comes out right. This one step saves a lot of angry emails in March.<\/p>\n\n\n\n

    Pay schedule and first pay run<\/h3>\n\n\n\n

    Set your pay cycle, pay date and payslip template. Then run a parallel payroll: process one month in Zoho Payroll alongside your old system and compare every employee’s net pay. Differences will show up. That’s the point. Fix them before going live.<\/p>\n\n\n\n

    The 50% Wage Rule: Why Your Salary Structure Needs a Second Look<\/h2>\n\n\n\n

    This is new, and a lot of companies still haven’t caught up.<\/p>\n\n\n\n

    India\u2019s four Labour Codes came into effect on 21 November 2025, consolidating 29 older labour laws. The change that hits payroll hardest is the new definition of “wages.” Basic pay plus dearness allowance (and retaining allowance) must now make up at least 50% of total remuneration. If allowances go above 50%, the excess is added back to wages for calculating PF, gratuity and other statutory dues.<\/p>\n\n\n\n

    So what does that mean in practice?<\/p>\n\n\n\n

    Many Indian companies kept Basic at 30 to 40% of CTC to keep PF costs low. Under the new rule, that structure can push PF and gratuity liabilities up, and it usually reduces take-home pay slightly even when CTC stays the same. The draft rules on which allowances count toward the cap are still being finalised, so check the latest notifications from the Ministry of Labour and Employment<\/a> before locking your structure.<\/p>\n\n\n\n

    When you set up salary templates in Zoho Payroll, this is the moment to restructure. Build templates that keep Basic and DA at or above 50%, run a comparison of old versus new net pay for each employee, and communicate the change before the first payslip lands. Doing this inside a fresh Zoho People and Payroll setup is far easier than retrofitting it into a live system six months later.<\/p>\n\n\n\n

    Step 3: Connecting Zoho People, Zoho Payroll and Zoho Books<\/h2>\n\n\n\n

    Here’s where the whole thing starts paying for itself.<\/p>\n\n\n\n

    Once Zoho People is linked to Zoho Payroll, new joiners, exits, attendance and loss-of-pay days sync automatically to the pay run. HR stops sending spreadsheets to accounts. Accounts stops asking HR questions on the 29th.<\/p>\n\n\n\n

    Then connect Zoho Payroll to Zoho Books. After each pay run, salary expense and statutory liabilities (PF payable, ESI payable, TDS payable, PT payable) post to your ledger automatically. Your P&L reflects payroll costs in real time, and your CA gets clean books at quarter-end.<\/p>\n\n\n\n

    For project-based businesses like IT services, consulting firms and staffing agencies, there’s one more layer. Tech Magify built Propeoll<\/a>, a solution on top of Zoho Projects, People and Payroll that shows actual cost and profitability per project and per person. If your people are your product, that view changes how you price work.<\/p>\n\n\n\n

    Common Mistakes in Zoho People and Payroll Implementation<\/h2>\n\n\n\n

    We see the same handful again and again.<\/p>\n\n\n\n

    Importing messy data is the big one. Wrong UANs, missing PANs and duplicate employees create errors that repeat every month until someone cleans them. Close behind is copying an old salary structure straight into Zoho without checking it against the 50% wage rule, which quietly builds up compliance risk.<\/p>\n\n\n\n

    Then there\u2019s the “we\u2019ll configure leave later” approach. It never works. Payroll depends on leave data, so an incomplete leave setup means manual LOP corrections every month, which defeats the purpose.<\/p>\n\n\n\n

    Skipping the parallel run is another. It feels like a waste of time. It isn’t. One parallel month catches almost every configuration error before employees see it.<\/p>\n\n\n\n

    And finally, not training managers. If reporting managers don’t approve leave and regularise attendance on time, payroll inputs are wrong, no matter how perfect the setup is.<\/p>\n\n\n\n

    Should You Set It Up Yourself or Use a Zoho Partner?<\/h2>\n\n\n\n

    A 15-person startup with one office and a simple salary structure can often manage a basic Zoho Payroll setup on its own. Zoho’s documentation is good.<\/p>\n\n\n\n

    But once you have multiple states, shift-based staff, biometric devices, custom leave policies, integrations with Books, or a salary restructure under the new Labour Codes, the risk of getting it wrong goes up quickly. And payroll mistakes aren’t like CRM mistakes. They land in people’s bank accounts, and in statutory returns.<\/p>\n\n\n\n

    That’s where a certified partner earns its fee. Tech Magify is certified in both Zoho People and Zoho Payroll, and has implemented Zoho People Plus for companies like Edifice Consultants, covering leave, attendance, performance reviews and payroll aligned to their internal HR policies. You can read more about how we work across the country in our guide to Zoho partners in India<\/a>.<\/p>\n\n\n\n

    Frequently Asked Questions<\/h2>\n\n\n\n

    How long does a Zoho People and Payroll setup take?<\/h3>\n\n\n\n

    For a company with 50 to 200 employees in one or two states, a typical Zoho People and Payroll setup takes around three to six weeks, including data cleanup, configuration, testing and one parallel payroll run. Multi-state or multi-entity setups with biometric integrations can take longer.<\/p>\n\n\n\n

    Does Zoho Payroll handle PF, ESI and TDS automatically?<\/h3>\n\n\n\n

    Yes. Zoho Payroll calculates EPF, ESI, Professional Tax, Labour Welfare Fund and TDS on salary based on the rules you configure. It also generates payslips and Form 16. The calculations are only as accurate as your setup, which is why salary components and statutory settings need careful configuration.<\/p>\n\n\n\n

    Is Zoho Payroll free for small businesses in India?<\/h3>\n\n\n\n

    Zoho has offered a free plan for very small teams, with paid plans priced per employee per month. Plans and pricing change, so check the current options on the official Zoho Payroll India page<\/a> before deciding.<\/p>\n\n\n\n

    What is the difference between Zoho People and Zoho People Plus?<\/h3>\n\n\n\n

    Zoho People is the core HR app for employee records, attendance, leave and performance. Zoho People Plus is a bundle that combines HR, payroll and related apps under one subscription, which suits companies wanting a single HR stack.<\/p>\n\n\n\n

    Can Zoho Payroll handle the new 50% wage rule?<\/h3>\n\n\n\n

    Yes, but it doesn’t restructure salaries on its own. You design salary templates that meet the 50% wage requirement, and Zoho Payroll then calculates PF and other statutory dues on the correct wage base.<\/p>\n\n\n\n

    Can I migrate from Excel or another payroll tool mid-year?<\/h3>\n\n\n\n

    You can. You’ll need to import year-to-date salary and TDS figures for each employee so that annual tax calculations and Form 16 stay accurate. Starting from April or a new quarter is simpler, but mid-year migration is common.<\/p>\n\n\n\n

    Get Your Zoho People and Payroll Setup Right the First Time<\/h2>\n\n\n\n

    Payroll is one of those things nobody notices when it’s right. Everybody notices when it’s wrong.<\/p>\n\n\n\n

    A careful Zoho People and Payroll setup gives your HR team back hours every month, keeps PF, ESI and TDS filings on track, and prepares your salary structures for the new Labour Codes. Tech Magify has offices in Mumbai, Pune, Ahmedabad and Perth, and works with companies across India on complete HR and payroll implementations.<\/p>\n\n\n\n

    Talk to our team about your setup. As a certified Zoho partner in Mumbai<\/a>, we’ll help you plan, configure and go live without the month-end panic.<\/p>\n","protected":false},"excerpt":{"rendered":"

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