GST, PF, ESI & Statutory

GST Compliance & E-Invoicing Engine

AccoNova's GST module is built for modern Indian taxation (Goods and Services Tax implemented from July 2017). Our system automates the entire GST lifecycle for businesses registered under GST, from invoice generation to statutory filing.

GST Tax Calculation: Our engine calculates CGST (Central GST), SGST (State GST), IGST (Integrated GST), and CESS based on your product/service classification and customer location. For a service provided within the same state, CGST and SGST each apply at 9% (total 18%), while interstate transactions trigger IGST at 18%.

HSN & SAC Classification: Every item or service is mapped to Harmonized System of Nomenclature (HSN) codes for goods or Service Accounting Code (SAC) for services. This ensures correct tax slab application. For example, software services fall under SAC code 998361 with standard 18% GST.

E-Invoicing Integration (IRP): From April 2023, e-invoicing became mandatory for businesses with annual turnover exceeding ₹20 crore (updated to ₹50 crore from April 2024). AccoNova pre-integrates with the Government's Invoice Registration Portal (IRP), generating IRNs (Invoice Reference Numbers) and QR codes automatically.

GSTR-1 Filing (Outward Supplies): Monthly GSTR-1 returns capturing all B2B and B2C invoices with tax details. AccoNova auto-generates a consolidated summary with line-wise HSN/SAC data, quantities, and tax amounts. Example: If you issued ₹10,00,000 worth of taxable services at 18% GST, GSTR-1 shows CGST ₹90,000 and SGST ₹90,000.

GSTR-3B Filing (Summary Return): The simplified composite return combining outward supplies, inward supplies, tax liability, and ITC (Input Tax Credit). AccoNova consolidates this automatically with auto-population of key fields, reducing manual entry errors.

ITC Management: Input Tax Credit is the ability to offset GST paid on purchases against GST collected on sales. AccoNova tracks every inward supply document, validates ITC eligibility, and prevents blocked credit items. For example, GST on fuel is blocked at 20% ITC eligibility.

Payroll Statutory Deduction Framework

Indian payroll involves multiple deductions mandated by statute. AccoNova automates the entire process to ensure zero compliance violations.

Gross Salary Structure: Every employee salary is broken into components: Basic, Dearness Allowance (DA), House Rent Allowance (HRA), Conveyance, Medical, LTA, and Performance Bonus. AccoNova stores each component separately, enabling statutory calculations based on precise salary structures.

Statutory Deductions Overview: Indian law mandates employer and employee contributions to social security funds. AccoNova calculates both simultaneously:

• Employee PF (EPF): 12% of wages capped at ₹15,000/month (max ₹1,80,000/year)
• Employer EPF: 3.67% + 0.61% pension = 4.28% of wages (same cap)
• ESI (where applicable): 0.75% employee + 3.25% employer on monthly wages up to ₹21,000
• Income Tax: Progressive slab-based deduction as per annual income
• Professional Tax (PT): State-specific, ranging ₹0-2,500 annually

PF & ESI Calculation Mechanics

Provident Fund (PF) Calculation Example: An employee with Basic ₹30,000, DA ₹10,000, and HRA ₹8,000 = Wages ₹48,000. PF calculation uses only Basic + DA = ₹40,000 (HRA excluded). Employee PF = 12% × ₹40,000 = ₹4,800. Employer PF = 4.28% × ₹40,000 = ₹1,712.

ESI Eligibility & Calculation: ESI applies to employees earning ≤₹21,000/month. For an employee with monthly wages ₹20,000, both contributions = 0.75% (emp) + 3.25% (emp) = 4% × ₹20,000 = ₹800. Once salary exceeds ₹21,000, ESI coverage ends completely. AccoNova automatically flags when an employee crosses the ESI threshold and stops ESI deductions.

LPF vs EPF: In some states (Tamil Nadu, Karnataka, Kerala), Labor Provident Fund (LPF) replaces EPF with similar mechanics but different rates (typically 11% employee, 3.67% employer). AccoNova switches dynamically based on employee registration state.

Gratuity Provision: Under Payment of Gratuity Act 1972, companies must provide gratuity at separation based on 15 days' wages for every completed year of service (capped at 40 years). AccoNova calculates: Gratuity = (Wages × 15 × Completed Years) ÷ 26. For an employee with ₹50,000 monthly wages completing 5 years = (₹50,000 × 15 × 5) ÷ 26 = ₹1,44,230.

TDS & Income Tax Management

Income Tax Slab Structure (FY 2025-26): Indian income tax operates on progressive slabs:

• Upto ₹3,00,000: 0% (newly increased to ₹5,50,000 under new regime)
• ₹3,00,000 - ₹6,00,000: 5%
• ₹6,00,000 - ₹9,00,000: 10%
• ₹9,00,000 - ₹12,00,000: 15%
• ₹12,00,000 - ₹15,00,000: 20%
• Above ₹15,00,000: 30%

Plus applicable surcharge (2-37% on tax) and Health and Education Cess (4% on total tax).

TDS Calculation: TDS (Tax Deducted at Source) is withheld monthly to align annual tax liability. For an annual salary of ₹10,00,000, tax = ₹70,000 + surcharge + cess. Monthly TDS = ₹70,000 ÷ 12 = ₹5,833/month (approximately). AccoNova updates TDS tables annually and applies per IT Department guidelines.

Standard Deduction: New tax regime (optional from FY 2020-21) provides a standard deduction of ₹50,000, simplifying calculations. AccoNova supports both old and new regimes, auto-computing and allowing employee election.

Labour Law Compliance Standards

Working Hours & Overtime: Industrial Employment (Standing Orders) Act defines 8 hours/day or 48 hours/week as normal working hours. Overtime beyond this attracts 1.5x-2x wages depending on state law. AccoNova tracks attendance, compares against statutory limits, and flags overtime eligibility for payment.

Weekly Rest Day: Every employee is entitled to 1 rest day per week (typically Sunday) without wage loss. If worked on rest day, compensation = 1x daily wage. AccoNova auto-deducts rest days from monthly attendance.

Leave Policy Compliance: Factories Act mandates 1 leave per 20 days worked (casual leave). Earned Leave Act prescribes 15-30 days annual leave for various categories. AccoNova enforces minimum leave accruals and prevents unauthorized leave denial.

Maternity & Paternity: Maternity Benefit Act provides 26 weeks paid leave for female employees (8 weeks pre-delivery, 18 post-delivery). Recently extended paternity leave to 2 weeks. AccoNova auto-applies these upon notification.

Full & Final Settlement: Upon resignation/termination, employers must settle all dues within 30 days: pending wages, leave encashment, gratuity, and other benefits. AccoNova generates comprehensive settlement calculations preventing employee disputes.

48-Hour Regulatory Update Commitment

Indian tax laws change frequently. Recent examples:

• 2023: New income tax regime rates modified; E-invoicing threshold reduced
• 2024: PF salary ceiling increased to ₹15,000; ESI threshold revised to ₹21,000
• Ongoing: State-wise PT slabs update annually; GST rate revisions on specific categories

AccoNova's compliance team monitors official notifications from Income Tax Department, GST Network, Ministry of Labour, and State Secretariats 24/7. Within 48 hours of official publication, we push server-side updates to all tenant instances. No client action needed—updates apply automatically on next payroll run or invoice generation.

Audit Trails, Reporting & Documentation

Permanent Audit Logs: Every salary adjustment, attendance correction, or tax change logs with timestamp, admin UID, and reason. These are immutable (cannot be deleted or modified retroactively) as per Income Tax Act Section 44AB and Companies Act audit requirements.

Statutory Reports: AccoNova auto-generates:

• Form 16 (TDS certificates) for employee income tax filing
• Form 12BA (ESI deduction certification)
• PF Reconciliation (Schedule 3A) matching employee contribution records
• Attendance & Leave registers compliant with Factory Acts
• Full & Final settlement sheets

Multi-Year Compliance: All historical records retained for 7 years (statute of limitations for income tax), fully indexed for audit retrieval.