A working glossary of the terms that come up constantly in Indian HR and payroll — the vocabulary, not the full mechanics. Where a term has more nuance than fits here, we link to the guide that covers it properly.
Compensation terms
CTC (Cost to Company). The total annual cost of employing someone — basic, allowances, employer PF and ESI contributions, gratuity provision, and any benefits, all added together. CTC is not what lands in the bank account; it is what the company spends. See the free CTC calculator.
Gross salary. Total earnings before statutory deductions — basic plus all allowances (HRA, conveyance, special allowance, etc.), but before PF, ESI, professional tax and TDS are deducted.
Net salary (take-home). Gross salary minus all deductions. What is actually paid out. Check with the salary calculator.
Basic pay. The base component of salary, usually 40-50% of CTC. It is the reference figure for PF, gratuity and leave encashment, which is why understating it (to shrink statutory contributions) is both a common shortcut and a compliance risk under the Code on Wages' definition of "wages."
HRA (House Rent Allowance). An allowance intended to offset rent, and partly tax-exempt when the employee actually pays rent and can support the claim.
Statutory deductions
PF (Provident Fund) / EPF. A retirement savings scheme under the EPF Act. Employee and employer each contribute (commonly 12% of basic + DA, subject to the scheme's wage ceiling), with the employer's share splitting between EPF and EPS (pension). Applies once a company crosses the employee-count threshold. Calculator: PF calculator.
ESI / ESIC (Employees' State Insurance). A health-insurance and cash-benefit scheme for employees below a monthly wage ceiling (₹21,000 gross, at the time of writing — verify the current figure). Employee and employer both contribute, at rates set by ESIC. Calculator: ESI calculator, explained further in ESI calculation explained.
Professional Tax (PT). A small, state-levied tax on employment, capped at ₹2,500/year per person under Article 276 of the Constitution. Slabs and applicability vary by state. Full explanation: professional tax in Indian payroll.
TDS (Tax Deducted at Source). Income tax the employer deducts monthly on behalf of the employee, based on their declared regime and investment declarations, and deposited to the tax authorities.
Gratuity. A lump-sum payment under the Payment of Gratuity Act to employees who complete the qualifying period of continuous service, calculated on basic + DA. Calculator: gratuity calculator.
Attendance and leave terms
Payable days. The number of days in a period an employee is actually paid for — present days plus paid leave and paid holidays, minus loss-of-pay days. Every salary line is really a daily rate multiplied by payable days, which is why attendance and payroll have to agree on this one number. See why payable days never match.
LOP (Loss of Pay). An absence with no leave balance to cover it, deducted from payable days. Not a leave type — the absence of one.
Earned leave / privilege leave. Leave that accrues with service, is usually carry-forwardable up to a cap, and is typically the only leave type that can be encashed. See the full leave policy guide.
Leave encashment. Converting unused earned leave to a cash payment, usually at the basic (or basic + DA) rate — most common at exit, sometimes annual.
Sandwich leave. A policy where a weekend or holiday between two leave/absence days is itself treated as leave. Legal, but must be explicit policy, not an assumption.
Geofencing. Drawing a virtual boundary around a work location so attendance apps can verify a punch happened inside it. Explained in choosing the right geofence radius.
Exit and settlement terms
Full and Final Settlement (F&F). The single reconciliation that closes an employment relationship — unpaid salary, leave encashment, gratuity and bonus, minus recoveries and advances. Full breakdown: full and final settlement in India.
Notice pay. Payment in lieu of the notice period an employee did not serve (or, in reverse, pay owed to an employee whose notice the company waives).
Looking for the mechanics rather than the definition? Each term above links to the full guide. For the software side of any of this, features and pricing cover what AttendancePay actually does.