Glossary · Indian payroll & HR terms

Every term you need, defined.

The complete glossary for Indian HR, payroll, compliance, and benefits terminology — from PF to POSH, ECR to EOSG, Labour Code 2025 to DPDP Act.

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Aadhaar Data Vault: A separate encrypted store for Aadhaar numbers, with tokenisation. Per UIDAI mandate, Aadhaar should never be stored in main application databases — only tokens. PeopleOS uses an HSM-backed vault.
Annual CTC: Cost To Company. Total annual cost of employing someone — gross salary plus employer PF, EPS, gratuity provisioning, ESI (employer share), bonus, insurance, and any benefits. Always larger than the in-hand amount.

Basic Salary: The fixed component of salary on which most statutory deductions are calculated (PF, gratuity). Under Labour Code 2025, Basic + DA + Retaining Allowance must be ≥ 50% of total remuneration.
Bonus Act: Payment of Bonus Act 1965 — mandates statutory bonus to eligible employees (currently those earning ≤ ₹21,000/month basic). Bonus is between 8.33% and 20% of annual wages, tied to the company's allocable surplus.

DA: Dearness Allowance. Cost-of-inflation supplement, mostly seen in PSUs and government employment. Forms part of "wages" under Labour Code 2025.
DPDP Act: Digital Personal Data Protection Act 2023. India's comprehensive data privacy law. Defines Data Fiduciary (employer), Data Processor (PeopleOS), and consent requirements for processing employee personal data.

ECR: Electronic Challan-cum-Return. The PF contribution file uploaded to the EPFO portal each month. Single file containing all contributing employees' data + total challan amount.
EOSG: End of Service Gratuity. Used in GCC countries (UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, Oman) for the equivalent of Indian gratuity. Calculated based on years of service and final basic.
EPF: Employees' Provident Fund. The retirement savings scheme administered by the EPFO. Employee contributes 12% of Basic + DA (capped at Basic ₹15,000), employer contributes equal amount split between EPF (3.67%) and EPS (8.33%).
EPS: Employees' Pension Scheme. The pension portion of employer PF contribution — 8.33% of Basic + DA, capped at ₹15,000 wage ceiling (so max EPS contribution is ₹1,250/month).
ESI: Employees' State Insurance. Mandatory health insurance for employees earning ≤ ₹21,000/month gross. Employee contributes 0.75%, employer contributes 3.25% of gross. Administered by ESIC.

FBP: Flexible Benefit Plan. A salary structure that lets employees allocate part of their CTC to tax-efficient categories: meal vouchers, fuel reimbursement, internet allowance, books & periodicals, etc. Reduces taxable income.
FnF: Full and Final settlement. The exit payroll calculation for departing employees: notice pay, leave encashment, pending reimbursements, gratuity (if eligible), final TDS, minus any recoverable amounts.
Form 12BB: Statement of investment proof submitted by employees to their employer for income tax purposes. Required to claim deductions under sections 80C, 80D, HRA exemption, etc.
Form 16: TDS certificate issued annually by employers to employees. Contains gross salary, deductions, taxable income, and tax deducted. Required for filing personal income tax returns.
Form 24Q: Quarterly TDS return filed by employers to the Income Tax Department. Reports salary TDS deducted in each quarter. Q4 is the annual reconciliation.

Gratuity: Lump sum payment by employer to employees who complete ≥ 5 years of continuous service. Formula: 15 days × (Basic + DA) × years of service ÷ 26. Capped at ₹20 lakh tax-free under Section 10(10).

HRA: House Rent Allowance. A taxable salary component, partially exempt under Section 10(13A) if the employee actually pays rent. Standard structure: 40% of Basic for non-metros, 50% for metros (Mumbai, Delhi, Kolkata, Chennai).

IR Code: Industrial Relations Code 2020. One of four codes consolidating 29 labour laws. Covers trade unions, standing orders, industrial disputes.

KYC: Know Your Customer. For PF specifically, KYC means linking Aadhaar, PAN, and bank account to the UAN. Required for hassle-free withdrawals.

Labour Code 2025: Collective term for the four consolidated labour codes operationally in effect: Code on Wages 2019, Industrial Relations Code 2020, Code on Social Security 2020, OSH Code 2020.
LOP: Loss of Pay. Days where the employee was absent without approved leave or paid leave balance. Salary is reduced proportionally for LOP days.
LWF: Labour Welfare Fund. State-level levy for labour welfare schemes. Half-yearly contribution — varies by state (Maharashtra ₹6 employee + ₹18 employer, Karnataka ₹20 employee + ₹40 employer, etc.). Not all states have LWF.

NPS: National Pension System. Voluntary retirement savings scheme. Employer contribution up to 10% of Basic + DA is tax-free under Section 80CCD(2). Employees can claim deduction under Section 80CCD(1B) for personal contribution up to ₹50,000.

OSH Code: Occupational Safety, Health & Working Conditions Code 2020. Consolidates 13 labour laws including Factories Act, Plantation Labour Act, Mines Act. Caps working hours at 48/week.

PAN: Permanent Account Number. 10-character alphanumeric identifier issued by the Income Tax Department. Mandatory for any salary > ₹2.5 lakh/year for TDS purposes. Format: ABCDE1234F.
PEPM: Per Employee Per Month. SaaS pricing model where vendors charge a monthly fee per active employee. Standard for Indian payroll/HRMS — PeopleOS Starter is ₹49 PEPM.
POSH: Prevention of Sexual Harassment at the Workplace Act 2013. Mandatory Internal Committee (IC) for all establishments with ≥ 10 employees. Annual POSH report to the Local Committee required.
PT: Professional Tax. State-level tax levied on professionals and salaried employees. Varies by state — Karnataka ₹200/month, Maharashtra ₹200–₹2,500/year, West Bengal ₹110–₹200/month, etc. 22 states + 3 UTs levy PT.

SDL: Skills Development Levy. Singapore equivalent of training-related employer contributions — 0.25% of monthly wages.
Standing Orders: Service rules formally certified by labour authorities under the IR Code. Mandatory for industrial establishments with ≥ 300 workers (raised from 100 under Labour Code 2025).

TDS: Tax Deducted at Source. Income tax deducted by the employer from salary each month and deposited with the government. Computed under Section 192 of Income Tax Act. Both Old and New regimes available — employee can choose.

UAN: Universal Account Number. 12-digit unique identifier issued by EPFO to every PF subscriber. Stays the same across employer changes — enables PF transfers and consolidated balance views.

Wage Definition (50% rule): Under Labour Code 2025, "wages" must be at least 50% of total remuneration. Basic + DA + Retaining Allowance combined cannot fall below this floor. The single biggest payroll-restructuring change in Indian history.
WPS: Wages Protection System. UAE/Saudi/GCC equivalent of mandatory salary disbursement through approved bank channels. All payments must flow through WPS-registered accounts.