Customise salary components and tax deductions with RazorpayX Payroll’s settings

The Salary Component Library in RazorpayX Payroll is a structured repository that standardises salary components. It categorises additions and deductions so you can easily define and manage salary components. It also ensures compliance with tax and statutory regulations.

When setting up payroll, different components make up an employee's salary—some add to their pay like bonuses, while others deduct from it like ad-hoc damage repairs. In RazorpayX Payroll, you can customise both addition and deduction components to suit your organisation’s salary structure.

Features

A Custom Addition Component is any salary element that increases an employee’s total earnings.

By defining addition components, you can ensure employees receive the right benefits while maintaining compliance with tax rules. You also get to standardise salary components so that similar components are treated the same way for all employees.

To add a new custom addition component:

Navigate to the Settings→Salary Component Library→Edit.
Click Create component and select Earning from the dropdown.
Fill in the General & Pay Configuration details:
- Enter a Component name (make sure it's unique as two components cannot be of the same name).
- Add a Display name in payslip and salary register(this will show up in payslip and reports).
- Write a Component Description to explain what it is used for.
Set up Prorations and Arrears:
Click Next: Taxation to Navigate to tax settings.
Configure taxation details as per your organisation's policies.
- Review everything to make sure it's correct.
- Click Next: Review to check the customisations added to the salary component.
Review all the customisations added in the salary component.
- Click Create component to add the new component you just created.

To modify a custom addition component:

Navigate to the Salary Component Library.
Select the component you want to edit.
Click View details to open the component settings.
Click Modify and make the necessary changes.
Click Save Component to modify the component.

To disable a custom addition component:

Follow steps 1-3 from the modification process.
Click the Disable button.

Watch Out!

If the component is included in a current payroll that has not yet been executed, it cannot be disabled. Otherwise, it can be disabled.

Adding Components to Salary

Once you’ve created and configured your custom salary components, you can apply them while executing payroll for your employees. RazorpayX Payroll ensures that only the amount of these components can be edited during payroll execution—the name and taxability remain fixed to maintain consistency and compliance.

To add an addition component:

Navigate to Pay Employees → Run Payroll.
Select the employee whose salary you want to update.
Click the Edit button next to the employee's salary details.
In the edit screen, go to the Addition section.
Choose the predefined component from the dropdown.
Enter the amount for the selected component.
Save the changes.

The selected addition will now appear in the employee’s salary details next to the monthly CTC.

Similarly, to add a deduction component:

Navigate to Pay Employees → Run Payroll.
Select the employee whose salary you want to update.
Click the Edit button next to the employee's salary details.
In the edit screen, go to the Deduction section.
Choose the predefined component from the dropdown.
Enter the amount for the selected component.
Save the changes.

Watch the video below to know how Salary Component Library Works: