
When we think about payroll software, we usually assume that all it has to do is to process payroll. Practically, making the work a little bit easier than back then when it was fully manual and error-prone.
Well, if you think that way, you are several years behind the times. Today, we have HR payroll software with several attractive and extended features beyond payroll processing. For instance, easy integration with HR tools, compliance management etc. to name a few.
In this blog, we are introducing 8 must-haves in payroll software for small businesses in India that can make your work a lot easier, straightforward, and faster.
Understanding the Unique Challenges of Payroll Processing for Businesses in India
In the unique context of Indian businesses, payroll processing has its own set of complexities due to the diverse regulatory environment. Because, with 28 states and 8 union territories, each with unique laws for provident fund (PF), Employee State Insurance (ESI) and taxes, the struggles and confusion payroll processing can cause to an HR payroll admin are countless.
Adding to this challenge are the different job types – regular, freelancers, contract workers and remote workers. For each, you are required to run separate payroll cycles. So more than just basic payroll administration capabilities, you will need extra features that specifically address each of these challenges.
8 Must-Have Functionalities in Payroll Software for Indian Companies

Here are 8 critical payroll software features to consider for your business in India, regardless of its size—small, medium, or large—or industry.
- Payroll administration
- Direct Salary Deposit
- Compatibility with Multiple Pay Cycles
- Tax Reporting and Adherence to laws
- Employee Self-service
- Attendance and Leave Module Integration
- One-click Payroll Automation
- Detailed Analytics and Reporting
Payroll Administration:
Certainly, the first and most important feature must-have in your HR payroll software is payroll administration. The broad term administration implies accurate payroll calculations and all the accounting procedures that follow them.
The complications of payroll administration can differ on grounds of factors like the industry, business type - whether it is a small-scale business or large – location etc. Your payroll software should be designed to handle all the different components of the salary like deductions, taxes etc. with maximum accuracy.
Direct Salary Deposit:
We asked businesses what the reason behind looking for more advanced and cloud based payroll software. For most, it was the lack of the direct salary deposit option in their current system. Even after paying so much for payroll software, if you still have to switch back to checks or DDs for payouts, the whole purpose of payroll automation becomes pointless.
India is far ahead of several other countries in terms of digital payments. So, why not make the salary deposit too fully digital and directly via the HR payroll software? Employees get their salary on time and employers don’t have to wait and bother about complex record keeping.
Compatibility with Multiple Pay Cycles:
If the payroll system supports just one pay cycle, you will have great trouble calculating salaries for your diversified workforce. Many Indian companies, especially those in the construction or manufacturing sector, may have temporary contract workers in addition to their permanent staff. The company, while making its annual return filing needs to show how much was spent on employee compensation and benefits.
When using payroll software that doesn’t support the pay cycles of temporary work, it becomes another headache to prepare the report for the same. So, if you tend to have a diversified workforce, make sure your HR payroll software can handle multiple pay cycles as well.
Tax Reporting and Adherence to Laws:
Each year, after the annual central government budget is passed, there might be changes in the tax slabs and laws regarding EPF, ESI and benefits. So, the payroll software you are using must have solid features to simplify these compliances and ensure that any latest changes in the laws regarding employee compensation can be instantly updated in the system to avoid any sort of penalties.
Employee Self-service:
Don't assume that paying employees on time is all there is to it. Employees are entitled to a proper breakdown of their salary, understanding how they were paid for overtime, what deductions were made, and under which categories. To avoid constant hand-holding by payroll or HR personnel, businesses should look for advanced payroll software for small businesses with comprehensive employee self-service (ESS) options that provide transparent and detailed compensation information.
Attendance and Leave Module Integration:
Rather than a standalone payroll software, many businesses today are opting for integrated attendance and payroll software. This is because the number of working hours and days of absence directly impact compensation data. In a separate payroll system, HR teams must manually compile this data and then input it into the software. This fragmented process can increase the risk of errors and incorrect payouts.
One-click Payroll Automation:

Payroll processing has become so advanced and automated today that advanced payroll software can get the work done with a single click. So, why spend an entire day computing taxes and benefits, leaves, and working hours when all of these steps can be done with just a click of a button on the software? When upgrading your payroll system, make sure it offers the latest industry innovations and technologies.
Detailed Analytics and Reporting:
A good payroll software should be designed to give you detailed analytics and reporting features. As far as payroll processing is concerned, you will require two distinctive types of reports: standard and custom. Ready-made reports give you quick insights into essential payroll information, while custom reports let you analyse exactly what matters to your business based on specific metrics or criteria you want to use. Hence, look for software that has perfect analytics and reporting capabilities.
The Bottom Line
The challenges of payroll processing vary from country to country and industry to industry. In the specific context of India, the aforementioned must-haves in your payroll software can make the process easier, faster, and with minimal to zero errors and downtime. We hope this blog was worth your time and cleared up questions in your search for the right payroll system.
Don’t adjust your business to fit your payroll software—find one that fits you. Try Mewurk's advanced free payroll software for up to a year and see how it truly automates compensation management for your business in India.