Keka Payroll Self-Onboarding Guide

 

 

Welcome to Keka! After completing the initial company setup and employee information configuration, the next major milestone in your journey with Keka is setting up Payroll. Payroll configuration is a vital part of managing your organization’s salary disbursements, contributions, and deductions while ensuring compliance with statutory requirements.

Keka offers a simple, four-step process for payroll setup, and this guide will walk you through each step, providing detailed instructions to ensure you complete the setup smoothly.

Table of Contents

1. Pay Schedule Configuration
2. Configure Contributions and Deductions
3. Define the Salary Structure
4. Review Declarations and Proof Submission Dates

5. Payroll Imports

Initial Overview: Payroll Setup on the Keka Dashboard

To begin the payroll setup process, navigate to the Payroll section from the Keka Setup dashboard. Click the Continue or Setup button especially if this is your first time accessing this section, you will be guided through four essential steps to successfully configure payroll.

Step 1: Pay Schedule Configuration

The first step in payroll setup is to define the pay schedule for your organisation. This ensures that your pay cycles align with your company’s policies and statutory requirements.

1. Access Pay Schedule Setup:

• To proceed, click on the Setup button located in the Pay Schedule section.
• A sidebar will open where you can define your company’s pay schedule.

2. Set the Payroll Start Date:

• Choose the date (1)  you wish to start using Keka Payroll. For instance, if you want to begin payroll from October 2024, select that date.

• Next, specify the pay schedule end date (2) for each pay cycle. It is advisable to select the last day of the month as the end date, as this practice not only adheres to standard compliance requirements but also ensures alignment with all relevant regulations.

3. Update Pay Schedule:

• After selecting your dates, click Update to save the pay schedule. You will now see a Complete status next to this step in the payroll setup progress.

Step 2: Configure Contributions and Deductions

Once the pay schedule is set, the next step is to set up Contributions and Deductions. This step ensures that your employees' payroll aligns with statutory obligations like Provident Fund, Employee State Insurance, and other applicable deductions.

1. Open the Contributions and Deductions Setup:

• On the payroll setup screen, click Setup Contributions and Deductions.

2. Select Statutory Contributions:

• You will be presented with a comprehensive list of potential contributions & deductions. Simply toggle the switches next to the contributions & deductions that your organisation is required to implement. By configuring these settings, you will automate the processing of these during payroll cycles. The contributions & deductions may include:
  
  • Provident Fund (PF): Toggle this if your employees are covered under the Provident Fund Scheme.
  • Employee State Insurance (ESI): Applicable if your organization is covered under the ESIC Scheme.
  • Labour Welfare Fund (LWF): Enable this if your organization contributes to the LWF.
  • Professional Tax (PT): Enable this option if your organization is required to pay Professional Tax, depending on the regulations applicable in your state.
    

Additionally, hovering your mouse over the information icon next to each contribution will display details on how that particular contribution is calculated.

2. Enter Filing Details for Each Contribution:

• Once you enable a contribution, it is essential to complete the Filing Details. This information is necessary for accurate payroll processing and for generating the required filing reports afterward. If you do not have these details readily available, you can add them later; however, it is crucial to ensure that they are entered before you process payroll.
• This involves:
  • Registration Number (Est ID): The official registration number for the contribution.
  • Registration Date: The date when the organization registered for the contribution.
  • Signatory: You can optionally add a signatory responsible for managing the contributions.
• Click Save & Close after filling in the necessary details.

3. Save the Contribution Configuration:

• Once you’ve enabled all applicable contributions and filled in the filing details, click Save to confirm your configuration.

Step 3: Define the Salary Structure

With contributions and deductions now configured, it's time to establish your organization's Salary Structure. This configuration is vital as it classifies employees into appropriate pay ranges, ensuring they receive the correct earnings and deductions.

Furthermore, once the Salary Structure is defined, onboarding new employees becomes streamlined. When a new hire joins, you simply need to input their annual salary, and the system will automatically generate the corresponding salary breakup based on the established structure.

1. Access the Salary Structure Setup:

• On the payroll setup page, click Setup. This opens the salary configuration window.

2. Set Salary Ranges:

• The salary ranges represent the different pay ranges within your organization. Keka may suggest default ranges like:
  • 0 - ₹6,00,000 (Class A)
  • ₹6,00,001 - ₹12,00,000 (Class B)
  • ₹12,00,001 - ₹25,00,000 (Class C)
  • ₹25,00,001 and above (Class D)
• You can either add new salary ranges (1) if your organisation has different bands or update the existing ranges (2). 
• When you add, delete, or update a salary range, the system automatically adjusts the other ranges to maintain logical consistency. It's important to note that the minimum amount for an old range cannot be modified, as it automatically recalibrates based on the maximum value of the preceding range.

• After making any changes to the salary range, a pop-up message will appear prompting you to confirm your action in the provided text box. Please be aware that if you delete any salary range, it will be merged with the subsequent range, and all employees assigned to the deleted range will adopt the salary structure of the new combined range.

Configuring Salary structure

Our system provides predefined structures that are designed to be the most tax-efficient for each range. If necessary, you can add or update components within these structures.

Furthermore, you can delve deeper into managing components for each of the salary ranges, which includes several sub-steps such as assigning a component to a salary range, selecting or creating a new component, and defining its value. You also have the option to edit or delete existing components as needed.

Salary components are the individual elements that make up an employee’s salary package. These could include basic salary, allowances, reimbursements, and deductions like taxes.

1. Add a Salary Component:

• After configuring the salary ranges, click on Add Salary Component  in the salary structure window.
• A sidebar will open where you can define the details of the salary component.

2. Assign the Component to a Salary Range:

• Once you click on Add Salary Component, the next step is to assign it to a specific salary range. You can choose the relevant range (such as Class A or Class B) for the component. Additionally, if the component applies to multiple ranges, you have the option to select all applicable ranges.
• If you select multiple salary ranges, the value specified will be applied uniformly across all chosen ranges. Should you need to make adjustments, these can be done individually for each specific range.

3. Choose or Create a Component:

• Utilizing the predefined list of salary components offers several advantages. These components are commonly used and designed to be tax-efficient, making them beneficial for both the organization and its employees. By choosing from this list, you can ensure compliance with prevalent regulations and standards, while also optimizing tax benefits. In contrast, creating custom components allows for greater flexibility to meet specific needs; however, they may not always align with the tax advantages that predefined components typically provide. Therefore, it is recommended to start with the predefined options before considering custom components.
• If the selected component is already included in any of the chosen salary ranges, it will not be updated or added again through this action. When selecting a component from the predefined list, users can only modify its value; they cannot alter its nature, taxability, or annual limit. If changes to these aspects are necessary, users should consider creating a custom component instead.
• You have the option to select from a range of predefined salary components, which include but are not limited to:
  • Medical Allowance
  • Conveyance Allowance
  • Professional Allowance
  • Travel Reimbursement (LTA)
  • And other similar components.

• Please note that you can only create earning or deduction components at this stage. If you wish to establish reimbursable components or reimbursements, or if you want to mark any of these as Flexible Benefit Plan (FBP) components, you can do so after completing the initial setup through the advanced component settings found in the payroll settings.
• Additionally, it is crucial to pay attention to the "max limit per annum" section. This field indicates the highest permissible amount for a component within a given year. It is essential to input this amount accurately; if the component value you enter exceeds the maximum limit, the system will automatically adjust it to reflect the maximum allowable amount instead of your calculated input. Even for components classified as non-taxable, this section plays a vital role in ensuring adherence to organisational policies and effectively managing overall compensation.

• Alternatively, you can create a custom component:
  • Enter the component name (e.g., "Special Allowance").
  • Specify whether it’s an earning or a deduction.
  • Define the max limit per annum for the component.
  • Indicate if the component is taxable or not.

4. Calculate Component Value:

Choose how you want the component value to be calculated:

• Fixed Amount: Set a specific amount (e.g., ₹15,000).

• Percentage of another component: Calculate the value as a percentage of the basic salary or another component.

• Custom Formula: Define a custom formula to calculate the component value.
• The value you input must be defined as an annual amount. Additionally, to utilize a component for defining the formula, you can select from the existing salary components that have been added to your salary range by clicking on the relevant component.

5. Save the Component:

• Once all the details are entered, click Save to finalise the component.

Salary Preview Feature

After configuring the salary structure and adding components, Keka provides a Salary Preview feature, which is a powerful tool to ensure that all the salary component values match the desired structure.

1. Enter a Sample Salary:

• Once your salary ranges and components are defined, you can input a salary figure in the Salary Preview section. For example, enter an annual salary of ₹5,00,000 in the input box.

2. View the Salary Breakup:

• Click View Breakup to see a detailed preview of the salary. The preview will show a breakdown of earnings and deductions as per your configuration. For example:

3. Adjust Based on the Preview:

• If the component values or structure do not match your expectations, you can go back and adjust the salary structure accordingly.
• The salary preview ensures that your payroll structure aligns perfectly with your organization’s requirements.

Step 4: Review Declarations and Proof Submission Dates

This step is essential to ensure that employees submit their investment and tax declarations on time as per your organisations policy. It provides a structured timeline for submission, helping both employees and payroll administrators adhere to tax filing regulations.

1. IT Declaration Due Date

• Set Monthly Declaration Window:
  • Define the period during which employees can submit their investment declarations each month.
  • For instance, as shown in the screenshot, you can set the Start Date as the 1st of the month and the End Date as the 22nd of the month. This gives employees a consistent window (1st to 22nd) every month to declare their investments and they cannot declare any investments after 22nd of the month.

• Financial Year Cutoff Date

• • Set the final date by which employees must submit their yearly tax declarations. In this example, the cutoff is set to 22nd January.
  • After this date, no further declarations can be made for that financial year.

2. Special Rule for New Joinees:

• For employees who join the organization after the defined financial year cutoff date, Keka offers added flexibility. These employees can submit their tax declarations within 30 days of their joining date or by the 22nd of February, whichever comes first. Please note that the 22nd of February serves as a default date and can be adjusted based on your organization's specific cutoff date.

3. Proof Submission Due Date

In addition to the declaration, employees must also submit proof of investments (such as receipts, statements, etc.) for them to be considered for tax calculations. 

Set the Proof Submission Deadline:

• • As per the example, the final Proof Submission Date is aligned with the Financial Year Cutoff Date, i.e., 22nd January. After this date, no additional proofs will be accepted for tax calculation purposes. Declarations without proofs will not be considered in tax computation after this date. 
  • Ensure employees are well-informed that failing to submit the necessary documents by this date will result in their investments not being considered for tax exemption.

By reviewing and finalizing the Declaration and Proof Submission Dates, you ensure that your payroll setup is fully compliant with statutory requirements, and your employees are aware of their obligations regarding tax filings.

Payroll Imports

Keka also provides a section for importing critical data to streamline the payroll process. After setting up the declaration dates, you can move on to Payroll Imports, where you can import various data files to ensure that payroll is processed smoothly.  If you do not currently have this data this can be updated later too. 

You can import the following:

1. Current Salaries: Add the current salaries of employees in bulk to process payroll.
2. Previous Salaries: To facilitate accurate tax calculations for the current year, it is essential to import the previous salaries of employees, especially for those transitioning in the middle of the year. This ensures that all relevant salary information is accounted for, allowing for precise tax assessments. Additionally, consolidating all employee data into a single system enhances organizational efficiency. It is worth noting that our platform permits the upload of salary data for the past seven years.
3. Financial Information: Import essential financial information of employees, such as bank details, PAN numbers, and provident fund details.
4. Investment Declarations: Import previously declared investment amounts to ensure accurate tax deductions. If employees are transitioning in the middle of the year and have already submitted their investment declarations, you can conveniently import this data instead of requiring them to resubmit their information. 

Finalizing Payroll Setup

After completing these four steps — pay schedule, contributions and deductions, salary structure, and salary components — your payroll setup in Keka will be complete. Ensure to review all settings for accuracy to avoid any discrepancies during payroll processing.

You can now run payroll smoothly, and Keka will handle the complex calculations, statutory filings, and salary processes for your organization.