HRMS and payroll software
Moving payroll from Excel to software: a checklist for HR teams in India
When to move payroll out of Excel, what data to collect first, how to handle PF, ESI, PT and TDS, and how to run a safe first month on payroll software.
Plenty of companies run payroll on a spreadsheet for years. It is cheap, flexible and familiar. But as headcount grows, the spreadsheet quietly turns into the riskiest file in the company: one broken formula, one person on leave at month-end, or one change in statutory rules, and salaries go out wrong.
This checklist covers when to switch, what to prepare, and how to make the first month on payroll software go smoothly.
Signs you have outgrown the spreadsheet
- Only one person really understands the payroll file, and month-end stops when they are away.
- Attendance comes from a biometric export that someone pastes in and adjusts by hand.
- Leave balances live in a different sheet, or in someone's email.
- Every change in statutory rules means rewriting formulas.
- Payslips are made and emailed one by one.
- There is no record of who changed a salary, or when.
- Loans and advances are tracked in a separate notebook.
If three or more of these sound familiar, it is time to move.
Step 1: Choose your start date
The cleanest time to switch is at the start of a financial year, because there are no year-to-date figures to carry across. The next best is the start of a quarter.
If you switch mid-year, you will need each employee's year-to-date earnings, deductions and TDS so that tax for the rest of the year is calculated correctly. Make sure your new software can take these opening figures.
Step 2: Clean up your employee data
Payroll software is only as good as the data you put in. Before migrating, collect and check the following for every employee:
| Data | Why it matters |
|---|---|
| Name, employee code, date of joining | Basic identity and service calculations |
| PAN | Required for TDS |
| UAN | Required for PF |
| ESI number (if covered) | Required for ESI |
| Bank account and IFSC | Salary transfer |
| Department, designation, location | Reports, approvals and professional tax by state |
| Current salary structure | Earnings and deductions each month |
| Leave balances | Carried into the new leave module |
| Outstanding loans and advances | Recovered through payroll |
| Tax regime and declarations | Correct TDS for the year |
Missing PANs, UANs and bank details are the most common cause of delays. Fix them before go-live, not during it.
Step 3: Define your salary structures
Write down each salary component and how it is calculated: basic, HRA, allowances, bonus, overtime and so on. Group employees into grades where you can, so a structure is defined once and applied to many people.
India's labour codes change how "wages" are defined for PF, gratuity and some other calculations. Make sure your structures follow the current rules, and that your software can be updated as rules are notified.
Step 4: Configure statutory deductions
This is where spreadsheets most often go wrong. For each deduction, confirm the current rule with your accountant or consultant, then set it up in the software:
- Provident Fund (PF): the contribution rate, the wage ceiling, and whether contributions are on actual wages or capped.
- Employees' State Insurance (ESI): which employees are covered, based on the current wage threshold, and the employee and employer rates.
- Professional Tax (PT): slabs differ by state, and some states have none. If you have staff in more than one state, check each one.
- TDS on salary: each employee's tax regime and declarations.
Rates and thresholds change from time to time, so avoid software that hard-codes them. You should be able to update them yourself.
Step 5: Connect attendance and leave
Much of the benefit of payroll software comes from not re-entering attendance. Check that you can:
- Import punches from your biometric devices, or connect to them directly.
- Apply shift timings, late marks, early exits and overtime rules automatically.
- Set up your leave types, balances, carry-forward and encashment rules.
- Let managers approve leave and attendance corrections, so HR only handles exceptions.
Step 6: Run a parallel month
For the first month, run payroll in both the spreadsheet and the software, and compare every employee's net pay. Differences will usually point to a wrong structure, a missed deduction or a data error, and it is far better to find them before salaries are paid.
Only switch fully once both runs match, or every difference is explained.
Step 7: Set up payslips, bank files and reports
Before go-live, make sure the software produces everything your month-end needs:
- Payslips in PDF, emailed or available on an employee portal.
- A bank transfer statement or upload file for your bank.
- PF contribution data in the format needed for the EPFO ECR upload.
- ESI contribution data.
- Professional tax and TDS summaries.
- A salary register and department-wise cost report for management.
Step 8: Give employees self-service
An employee portal where people can download payslips, apply for leave and check attendance removes a large share of routine questions to HR. It also means employees spot errors in their own data early.
A quick go-live checklist
- Start date chosen, and year-to-date figures ready if mid-year
- Employee data complete: PAN, UAN, ESI, bank details
- Salary structures and grades defined
- PF, ESI, PT and TDS configured and checked with your accountant
- Attendance import and leave rules tested
- One parallel month completed and reconciled
- Payslip, bank and statutory outputs tested
- Employees given portal access
Where People CODE fits
People CODE is our HRMS and payroll software. It imports biometric attendance, applies your leave rules, runs payroll in one step with PF, ESI, PT and TDS from settings you control, and gives employees a self-service portal. It runs in the browser on Oracle APEX.
If you are planning a move away from Excel, book a free demo and bring a copy of your current payroll sheet. We will show you how it maps across.
POS Code