Glossary

The wordsbehind the work.

40 terms from payroll, provident fund, ESI, the labour codes, tax and setting up in India, in plain English. Law as of 25 September 2026.

A

Arrears: Pay that relates to an earlier period, such as a back-dated increment. Contributions and tax are worked on arrears in the month they are paid.

Branch office: An office in India of a foreign company that carries on the company's own business in permitted activities. It is set up under the FEMA rules through an authorised dealer bank and is not a separate company. More on Branch office

CIN: Corporate Identity Number: the 21-character number the Registrar of Companies gives every company in India.
Code on Social Security, 2020: One of the four labour codes in force since 21 November 2025. It brings PF, ESI, gratuity, maternity benefit and other schemes under one law. More on Code on Social Security, 2020
Code on Wages, 2019: The labour code that sets the definition of wages, minimum wages, timely payment and equal pay. Monthly wages are due by the 7th of the next month. More on Code on Wages, 2019
Contribution period (ESI): The six-month blocks, April to September and October to March. An employee covered at the start of a period stays covered to its end even if pay rises above the ceiling.

Data fiduciary: Under the DPDP Act, 2023, the person or company that decides why and how personal data is processed. The fiduciary answers for its processors.
DPDP Act, 2023: The Digital Personal Data Protection Act, 2023, with the DPDP Rules, 2025. It governs how digital personal data is collected, used, kept and erased in India.

ECR: Electronic Challan-cum-Return: the monthly file an employer uploads to EPFO listing each member's wages and contributions, followed by payment.
EDLI: Employees' Deposit Linked Insurance: life cover for PF members, paid for by the employer at 0.5% of wages up to the ceiling.
EPF: Employees' Provident Fund: the retirement savings scheme run by EPFO. Employee and employer each contribute 12% of PF wages.
EPFO: Employees' Provident Fund Organisation, the body that runs the EPF, EPS and EDLI schemes.
EPS: Employees' Pension Scheme: 8.33% of wages up to the ceiling is carried from the employer's 12% share to the pension fund, for eligible members.
ESI: Employees' State Insurance: medical and cash benefits for employees earning up to ₹21,000 a month, run by ESIC. Employer 3.25%, employee 0.75%.
Exempted PF trust: A provident fund run by the employer's own board of trustees instead of EPFO. It must give members benefits no less than the statutory scheme. More on Exempted PF trust

Fixed-term employment: Employment for a set period under a written contract. Under the Code on Social Security, fixed-term employees qualify for gratuity after one year.
Form 130: The annual certificate of tax deducted from salary under the Income-tax Rules, 2026. It replaced Form 16 for deductions from 1 April 2026.
Form 138: The quarterly statement of tax deducted from salaries under the Income-tax Act, 2025. It replaced Form 24Q.
Full-and-final settlement: The last payment to a leaving employee: salary, notice pay, leave encashment and gratuity where due. Under the Code on Wages it is due within two working days.

GMN International: An association of legally independent accounting firms in 44+ countries. GKC Management Services is a member. More on GMN International
Gratuity: A lump sum paid on leaving after qualifying service: fifteen days' wages for each year, using monthly wages divided by 26, up to ₹20 lakh. More on Gratuity
GST: Goods and Services Tax: India's tax on the supply of goods and services, filed through monthly or quarterly returns such as GSTR-1 and GSTR-3B. More on GST

Income-tax Act, 2025: The law that replaced the Income-tax Act, 1961 from 1 April 2026. Tax on salaries is withheld under section 392.
Input tax credit: GST paid on purchases that a business may set off against GST on its sales, if the supplier's return shows the invoice and the conditions are met.

Labour welfare fund: A state levy with small employer and employee contributions, paid at intervals set by each state that has one.
Liaison office: An office of a foreign company in India that only represents the parent and cannot earn income in India. More on Liaison office

Maker-checker: A control where one person prepares an output and a second, who did not prepare it, reviews it before release. More on Maker-checker
Month-end close: The routine of reconciling accounts, posting accruals and producing management figures after each month ends. More on Month-end close

Parallel run: Running a new process alongside the old one for a full cycle from the same inputs, and comparing every line before switching. More on Parallel run
Payroll register: The month's record of each employee's earnings, deductions and net pay, kept for the employer's records and inspections.
PF wages: The wages on which PF is worked: basic pay, dearness allowance and retaining allowance, with excluded pay above half of total pay added back under the Code's definition.
Professional tax: A state tax on employment that employers deduct from salaries in states that levy it. Slabs and due dates differ by state.

Reconciliation: Matching two records of the same thing, such as payroll to bank transfers, or purchase records to the supplier's GST return, and explaining every difference.

Subsidiary: An Indian company owned or controlled by a foreign parent. It is a separate legal person and the most common route for a long-term presence. More on Subsidiary

TAN: Tax Deduction and Collection Account Number: the number an employer quotes on every TDS payment and statement.
TDS: Tax deducted at source. On salaries, the employer withholds income-tax each month and deposits it by the 7th of the next month.

UAN: Universal Account Number: the one PF number that stays with an employee across employers.

Wage ceiling: The monthly wage up to which a scheme applies or is calculated: ₹25,000 for EPF from 17 September 2026; ₹21,000 for ESI coverage. More on Wage ceiling
Wages (labour codes): The single definition in the Code on Wages. If allowances left out of wages exceed half of total pay, the excess is added back.
Written scope: The document agreed before work starts: what we do, what you keep, cut-off dates, turnaround and checkpoints. More on Written scope