Statutory components are the mandatory deduction that is deducted from the employee’s salary by every month. The employer calculates the deduction amount of every employee and the corresponding employer contribution and then process the net salary to the employees. This deduction will vary based on the salary of employees as per the slabs and limits specified by each statutory rule. It is a statutory obligation from the employer to comply with the rules and regulations, failing which the employer will face the consequences such as heavy penalties with interest.
The following are the statutory components that are deducted from the employee’s salary.
- Employee Provident Fund (EPF)
- Employee State Insurance (ESI)
- Professional Tax (PT)
- Labor Welfare Fund (LWF)
To view the Statutory components, navigate to Settings> Payroll settings> CTC Components > Statutory components.