Complete functional requirements for an HRMS serving Indian companies — EPF, ESI, TDS, Professional Tax, Gratuity Act, Indian Labour Codes, POSH Act, and DPDP Act 2023.
| Req ID | Requirement Name | Description & Business Rules | Legal Basis | Priority |
|---|---|---|---|---|
| PAY-001 | EPF Employee Contribution | Deduct 12% of (Basic + DA) as EPF employee contribution each month. If Basic + DA exceeds ₹15,000, mandatory contribution is capped at 12% × ₹15,000 = ₹1,800/month; employee may voluntarily contribute on the full amount. Formula engine must support: min(basic + da, 15000) × 0.12. Deducted before TDS computation. |
EPF Act 1952 | Critical |
| PAY-002 | EPF Employer Contribution | Employer contributes 12% of (Basic + DA) on the capped ₹15,000 base, split as: 3.67% to EPF account, 8.33% to Employees' Pension Scheme (EPS). Additionally, employer pays EDLI (insurance) contribution of 0.5% of Basic + DA. These are employer costs — not deducted from employee's gross but must appear in CTC breakdown and payroll journal. | EPF Act 1952 | Critical |
| PAY-003 | ESI Employee Contribution | Deduct 0.75% of gross wages for employees whose gross wages are ≤ ₹21,000/month. ESI eligibility is determined at the start of each half-year period (April–September; October–March). If an employee crosses ₹21,000 mid-period, they remain covered until the period end. Formula: if(gross ≤ 21000, gross × 0.0075, 0). Establishments with 10+ employees must register under ESI. |
ESI Act 1948 | Critical |
| PAY-004 | ESI Employer Contribution | Employer contributes 3.25% of gross wages for all ESI-eligible employees (gross ≤ ₹21,000/month). Employer contribution is an additional cost not deducted from employee salary. Both employee and employer ESI amounts must be remitted to ESIC portal by the 15th of the following month. | ESI Act 1948 | Critical |
| PAY-005 | Professional Tax (PT) | State-level tax deducted monthly from employee wages. Rates differ by state — must be configurable per state. Constitutional cap ₹2,500/year (₹200/month in most states, ₹300 in Maharashtra for February). States without PT (e.g., Delhi, Gujarat — abolished) must allow ₹0 configuration. System must support a state-wise PT slab table. PT is deductible from income tax u/s 16(iii). | State PT ActsArt. 276 Constitution | High |
| PAY-006 | TDS on Salary — Section 192 | Employer is legally required to deduct TDS monthly from each employee's salary. Calculation method: (1) project employee's full-year income (salary × remaining months + bonus already paid), (2) subtract applicable deductions and exemptions based on employee's chosen tax regime and Form 12BB declarations, (3) apply income tax slabs, (4) divide annual tax liability by 12 to get monthly TDS. TDS must be deposited to government by the 7th of the following month. Missing the deposit deadline attracts interest at 1.5% per month. | Income Tax Act s.192 | Critical |
| PAY-007 | New vs Old Tax Regime | From FY 2023-24, the New Tax Regime is the default for all employees. Employees must explicitly opt for the Old Regime. The system must: (1) store each employee's regime choice, (2) apply the correct slabs and available deductions accordingly, (3) allow regime change only at start of financial year (April). New Regime: NIL up to ₹3L, 5% ₹3L–₹7L, 10% ₹7L–₹10L, 15% ₹10L–₹12L, 20% ₹12L–₹15L, 30% above ₹15L. Section 87A rebate: no tax if income ≤ ₹7L under New Regime. Old Regime: NIL up to ₹2.5L, 5% ₹2.5L–₹5L, 20% ₹5L–₹10L, 30% above ₹10L. | Finance Act 2023Income Tax Act s.115BAC | High |
| PAY-008 | Form 12BB Investment Declaration | At the start of each financial year (April), HR must collect Form 12BB from every TDS-paying employee. The form declares planned investments (PPF, LIC, ELSS, NSC, home loan interest, HRA details, etc.) under the Old Regime, enabling computation of correct TDS from April itself. The system must store Form 12BB declarations as documents. In January–February, collect actual proof documents and adjust TDS accordingly for the remaining months. | Income Tax Rule 26C | High |
| PAY-009 | Indian Salary Structure Components | The system must support all standard Indian salary components as configurable pay components: Basic Salary (40–50% of CTC, fully taxable), Dearness Allowance (DA, % of Basic), House Rent Allowance (HRA, 50% metro / 40% non-metro of Basic, partially exempt u/s 10(13A)), Leave Travel Allowance (LTA, exempt u/s 10(5) for actual travel twice per 4-year block), Medical Allowance (₹1,250/month, exempt up to ₹15,000/year in Old Regime), Conveyance Allowance (₹1,600/month), Special Allowance (balancing component, fully taxable), Performance Bonus / Variable Pay (fully taxable, TDS on payment). All components must be individually configurable with formula or fixed calculation methods. | Income Tax Act | High |
| PAY-010 | HRA Exemption Calculation | Under Old Regime, HRA exemption is the minimum of: (a) actual HRA received, (b) 50% of Basic (metro) or 40% of Basic (non-metro), (c) actual rent paid minus 10% of Basic. System must capture whether employee is in a metro city (Delhi, Mumbai, Kolkata, Chennai) and actual rent paid to compute the taxable portion of HRA. This affects TDS calculation for Old Regime employees. | Income Tax Act s.10(13A) | High |
| PAY-011 | Loss of Pay (LOP) Calculation | Unpaid absences must reduce the monthly salary proportionally. LOP formula: (Monthly Gross ÷ Working Days in Month) × Number of Unpaid Days. The "working days in month" divisor must be configurable per company (typically 26 or actual working days). LOP must be visible as a separate deduction line on the payslip. LOP days are fed from the TNA / leave module after attendance finalization. | Shops & Establishments Acts | High |
| PAY-012 | NEFT / RTGS Bank Transfer File | After payroll is finalized, the system must generate a bank-compatible bulk NEFT/RTGS payment file containing: employee name, bank account number, IFSC code, net pay amount, payment reference. This replaces WPS (which is UAE-only). Most Indian banks accept a CSV format for bulk NEFT upload via corporate banking portal. Format must be configurable per bank. | RBI NEFT/RTGS Guidelines | High |
| PAY-013 | Indian Payslip Format | Employee payslip must show: (a) Earnings table — each component name, monthly amount; (b) Deductions table — EPF employee, ESI employee, Professional Tax, TDS, LOP; (c) Employer contributions (EPF employer, ESI employer) for information; (d) CTC summary; (e) Net take-home pay in INR with ₹ symbol; (f) YTD (year-to-date) totals for each line. Payslip header must include: company name, employee name, Employee ID, PAN (masked), department, designation, pay period, UAN, ESIC number (if applicable). | Payment of Wages Act | High |
| PAY-014 | Statutory Bonus | Payment of Bonus Act applies to establishments with 20+ employees. Eligible employees: wages up to ₹21,000/month. Rate: minimum 8.33%, maximum 20% of annual wages. Calculation wage is capped at ₹7,000/month (even if actual wages are higher), so minimum bonus = ₹7,000 × 8.33% × 12 = ₹6,999/year. Must be paid within 8 months of financial year end (i.e., by November 30). System must support a separate bonus payroll run and generate the statutory register. | Payment of Bonus Act 1965 | High |
| PAY-015 | Standard Deduction | ₹50,000 standard deduction is available under both New and Old Regimes (from FY 2023-24 onwards). The system must automatically apply this deduction when computing projected annual taxable income for TDS under Section 192. No documentation or declaration required from the employee. | Income Tax Act s.16(ia) | Medium |
| PAY-016 | Section 80C & Other Deductions | Under Old Regime only, the system must support deduction declarations for: 80C investments (PPF, ELSS, LIC premiums, NSC, housing loan principal — max ₹1.5L total), 80CCD(1B) NPS contribution (additional ₹50,000), 80D medical insurance premiums, home loan interest u/s 24(b) (max ₹2L for self-occupied). Values are sourced from Form 12BB declarations. These reduce the taxable income base for TDS projection. | Income Tax Act s.80C, 80D | Medium |
| PAY-017 | NPS Employer Contribution | If company has National Pension Scheme (NPS) for employees, employer may contribute up to 10% of (Basic + DA) as NPS employer contribution. This is tax-exempt for the employee u/s 80CCD(2) (no upper cap). System must support NPS as a separate employer cost component with a configurable percentage of Basic + DA. | Income Tax Act s.80CCD(2) | Medium |
| PAY-018 | April–March Fiscal Year | The system must support April–March as the financial year (fiscal_year_start = 4). All TDS projections, annual leave resets (CL, SL), Form 16, Form 24Q, statutory bonus, and gratuity slab computations must use April 1 as year start and March 31 as year end. Payslip YTD columns must reset on April 1. | Income Tax Act 1961Factories Act 1948 | Critical |
| PAY-019 | Advance Salary & Salary Revision | Mid-year salary revisions (increments) must trigger a recalculation of projected annual income for TDS from the revision month onwards. If revision is backdated (arrears), the arrear amount must be added to the current month's projected income and TDS adjusted. System must allow entering a salary revision effective date and auto-adjusting TDS for all remaining months in the fiscal year. | Income Tax Act s.192 | Medium |
| PAY-020 | Flexi Benefit Plan (FBP) | Some Indian companies offer employees the flexibility to choose their allowance mix (within a defined CTC) to optimise tax. System should allow configuring a set of optional allowances (internet allowance, books & periodicals, fuel allowance, etc.) with individual annual limits. Employee's choices are stored and the system computes tax benefit for Old Regime employees. | Income Tax Act | Low |
| Req ID | Requirement Name | Description & Business Rules | Legal Basis | Priority |
|---|---|---|---|---|
| EMP-001 | PAN Number | Permanent Account Number is mandatory for TDS deduction u/s 192. If an employee does not provide PAN, the employer must deduct TDS at the maximum rate of 20% (instead of the slab rate). PAN must be validated for format: 5 alpha + 4 numeric + 1 alpha (e.g., ABCDE1234F). PAN must be captured on the employee record, visible only to HR Admin and Payroll Admin. System must alert HR if any active employee's PAN is missing before payroll run. | Income Tax Act s.139As.206AA | Critical |
| EMP-002 | Aadhaar Number | 12-digit unique identity number issued by UIDAI. Mandatory for EPF UAN KYC verification and ESIC registration. Must be stored with only last 4 digits visible (masked as XXXX-XXXX-1234) at all times in the UI and exported reports. Full Aadhaar must never be displayed, logged, or exported per UIDAI guidelines. Validate format: 12 digits, first digit not 0 or 1. | Aadhaar Act 2016UIDAI Guidelines | Critical |
| EMP-003 | UAN — Universal Account Number | 12-digit Universal Account Number assigned by EPFO. UAN is portable across employers — employees carry it throughout their career. Must be captured for all EPF-enrolled employees. Required for filing ECR (Electronic Challan cum Return) on EPFO portal. If an existing employee already has a UAN from a previous employer, system must store and use that existing UAN (not generate a new one). | EPF Act 1952 | Critical |
| EMP-004 | ESIC IP Number | Insurance Number (IP Number) issued by ESIC for each covered employee (gross wages ≤ ₹21,000/month). Generated when employer registers the employee on the ESIC portal. Must be stored on the employee record. Required for employees to access ESIC medical benefits. System must track ESIC eligibility status and flag employees who become ineligible (wages cross ₹21,000) at contribution period end. | ESI Act 1948 | High |
| EMP-005 | Bank Account & IFSC Code | Employee's bank account number and 11-character IFSC (Indian Financial System Code) are mandatory for NEFT salary transfer. Validate IFSC format: 4 alpha (bank code) + 0 + 6 alphanumeric. Account number format varies by bank (9–18 digits). System must validate both fields before payroll run. Re-validation should trigger when bank details are updated. IFSC must be checked against known bank codes if possible. | RBI NEFT Guidelines | Critical |
| EMP-006 | Form F — Gratuity Nomination | All employees must submit Form F under the Payment of Gratuity Act to nominate the person who will receive gratuity in case of the employee's death. System must track whether Form F has been collected for each employee. Must be updatable at any time (e.g., after marriage, birth of child). Treated as a mandatory document — HR must be alerted for new joiners who have not submitted Form F within 30 days of joining. | Payment of Gratuity Act 1972 | High |
| EMP-007 | Tax Regime Selection | System must store each employee's income tax regime choice (New Regime or Old Regime) on the employee record. Default is New Regime from FY 2023-24. Employee can declare their regime preference at start of financial year (April) via ESS portal. HR can override if needed. The chosen regime drives TDS calculation for the entire financial year. Mid-year changes are not permitted (employees declare regime in their ITR separately). | Income Tax Act s.115BAC | High |
| EMP-008 | Form 12BB — Investment Declaration | Annual investment declaration collected from each employee in April. Must be stored as a document against the employee record. System must use the declared values (80C investments, HRA, LTA travel details, home loan interest) when computing TDS for Old Regime employees. Declarations must be updatable by HR, with an audit trail showing date of change. Actual proof documents (insurance premium receipts, rent receipts) must be uploadable and linked to the declaration. | Income Tax Rule 26C | High |
| EMP-009 | Voluntary EPF Contribution | Employees whose Basic + DA exceeds ₹15,000 may choose to contribute EPF on their actual Basic + DA (instead of the ₹15,000 mandatory cap). This is Voluntary Provident Fund (VPF). System must allow marking an employee as "VPF opted" and computing EPF on actual Basic + DA. VPF contributions are also eligible for 80C deduction under Old Regime. Employer is not required to match VPF contribution above ₹15,000. | EPF Act 1952 | Medium |
| EMP-010 | ESI Eligibility Threshold Tracking | ESI eligibility is wage-based (gross ≤ ₹21,000/month). The system must automatically track eligibility changes: when a salary revision pushes an employee's gross above ₹21,000 mid-contribution-period, they remain covered until the period end (e.g., September or March) and must exit from the next period. System must alert HR before the ESI contribution period transition for affected employees, so ESIC portal exit notices can be filed. | ESI Act 1948 | High |
| EMP-011 | TAN Configuration | TAN (Tax Deduction Account Number) is a 10-character alphanumeric code (4 alpha + 5 numeric + 1 alpha, e.g., PUNE12345F) allotted by Income Tax Department to entities that deduct TDS. TAN is mandatory for TDS deposits and Form 24Q returns — without TAN, TDS deposits are rejected. System must store the company's TAN on the company record and include it on all TDS-related reports, Form 24Q data, and payslips. | Income Tax Act s.203A | Critical |
| EMP-012 | Indian Company Identifiers | Indian company records require different identifiers compared to UAE: CIN (Corporate Identification Number, 21-character alphanumeric for companies registered under Companies Act) and GSTIN (GST Identification Number, 15-character) instead of UAE Trade Licence. System must support these fields on the company record. WPS MoL ID and WPS Agent ID should be hidden / not required for Indian tenants. | Companies Act 2013GST Act 2017 | Medium |
| Req ID | Requirement Name | Description & Business Rules | Legal Basis | Priority |
|---|---|---|---|---|
| LVE-001 | Privilege / Earned Leave (PL/EL) | Minimum 15 days earned leave per year (Factories Act). Accrual: monthly at 1.25 days/month. Maximum carry-forward: 30 days (excess lapses). Maximum accumulation before encashment triggers: configurable per company. Leave must exclude weekends and public holidays. Minimum notice: 7 days. Negative balance not allowed. On resignation/separation, remaining PL balance must be encashed at basic salary rate. Must be tracked completely independently from CL and SL. | Factories Act s.79Shops Acts | Critical |
| LVE-002 | Leave Approval Workflow — Immediate Manager / HRMS Admin | All leave requests must go through a mandatory two-tier approval workflow: (1) Employee submits via ESS portal — leave type, dates, reason, and any supporting document upload; (2) Immediate Manager receives notification and must approve/reject within 48 hours — SLA tracked; (3) If manager takes no action within 48 hours, request auto-escalates to HRMS Admin / HR Admin; (4) Approval triggers: balance deduction, calendar update, and LOP flag in payroll if applicable; (5) Rejection requires a mandatory reason that is communicated to the employee; (6) Employee receives in-app and email notification at every stage transition. Workflow must be auditable with timestamps for each action. | Shops & Establishments Acts | Critical |
| LVE-003 | Sick Leave (SL) | 7–12 days per year (varies by state Shops Act). Annual credit on April 1 (full allocation at fiscal year start). No carry-forward — lapses on March 31. Medical certificate required for sick leave exceeding 3 consecutive days. Zero negative balance. Maximum consecutive days: 7 before a medical certificate is mandatory. Must be tracked in a completely separate balance from PL and CL. Cannot be combined with any other leave type. | Shops & Establishments Acts | High |
| LVE-004 | Casual Leave (CL) | 7–12 days per year (varies by state Shops Act). Annual credit on April 1. Strictly no carry-forward — lapses at fiscal year end (March 31). Purpose is personal or emergency absence. No advance notice required. Maximum consecutive days: typically 3 (application for longer CL periods is subject to approval). Zero negative balance. Must be tracked independently from PL and SL. Cannot be taken in conjunction with national/public holidays to extend CL period (per many state rules). | Shops & Establishments Acts | High |
| LVE-005 | Maternity Leave | Fully paid maternity leave: 26 weeks for the first two children (up to 8 weeks can be availed before expected delivery date); 12 weeks for the third child and beyond. Available to female employees who have worked for at least 80 days in the preceding 12 months. Medical certificate required. Employer cannot terminate a female employee during maternity leave. System must enforce leave duration limits, track previous maternity leave applications to determine 26-week vs 12-week entitlement, and auto-flag the upcoming return-to-work date. | Maternity Benefit Act 1961 (Amend. 2017) | Critical |
| LVE-006 | Paternity Leave | No central statutory paternity leave law in India (unlike UAE). Most companies offer 5–15 days as company policy. System must support configuring paternity leave as a company-defined leave type with a fixed entitlement. Government employees get 15 days under Central Government rules. Central Services (Leave) Rules should be referenced if supporting government entities. Leave type should allow configuration per employment category. | Company PolicyCS(L)R for Govt | High |
| LVE-007 | National Holidays (Mandatory) | Three national holidays are mandatory across all states under the Negotiable Instruments Act: (1) Republic Day — 26 January, (2) Independence Day — 15 August, (3) Gandhi Jayanti — 2 October. All other public holidays are either state-specific or company-declared. System must maintain a holiday calendar with at least these 3 mandatory entries. Leave taken on a national holiday should not consume any leave balance — it is a paid non-working day. | Negotiable Instruments Act 1881 | Critical |
| LVE-008 | Restricted Holidays (RH) | Many Indian companies provide a list of ~14 festival/religious holidays from which each employee may choose 5–7 per year (Restricted Holidays). Employee must apply in advance for each chosen restricted holiday. System must: (a) allow HR to configure the annual RH list, (b) allow employee to select their choices (within the allotted count), (c) deduct from a separate RH balance, (d) enforce the annual maximum. RH balance lapses at year-end and does not carry forward. | Government of India Policy | Medium |
| LVE-009 | Compensatory Off (Comp-Off) | Employees who work on a public holiday or weekly day off earn 1 compensatory day off per day worked. System must allow: (a) HR to record a "comp-off earned" event against an employee, (b) employee to apply for comp-off leave against accrued credit, (c) comp-off balance expiry (typically 30–90 days after earning — configurable). Comp-off should be treated as a separate leave bank. Application must go through the standard LVE-002 approval workflow. | Shops & Establishments Acts | Medium |
| LVE-010 | Leave Without Pay (LWP) | When an employee is absent without leave balance (negative balance attempt) or takes unpaid leave by choice, the system must: (a) record it as Loss of Pay (LOP) days, (b) deduct proportional salary from the month's gross, (c) show LOP days and LOP deduction separately on the payslip, (d) exclude LOP days from EPF/ESI calculation base (LOP-adjusted gross is used). HR approval is required for LWP — cannot be self-approved via ESS. | Payment of Wages Act | High |
| LVE-011 | Medical Certificate Requirement | Sick leave exceeding 3 consecutive calendar days must be accompanied by a medical certificate. System must: (a) flag sick leave applications for > 3 days as requiring document upload, (b) allow HR to mark the certificate as received, (c) hold or reject the leave if no certificate is submitted within a configurable grace period after return. Medical certificates must be stored in the employee's document record. | Factories Act 1948Shops Acts | Medium |
| LVE-012 | Leave Encashment | PL/EL balance can be encashed (converted to monetary payment) on separation, or annually if company policy allows. Encashment rate = Basic Salary ÷ 26 (working days) × Number of Days Encashed. Encashment is taxable up to a limit of 30 days × last basic salary × number of years of service (exemption u/s 10(10AA)). System must compute encashment on separation automatically and flag if balance exceeds encashable maximum. | Income Tax Act s.10(10AA) | High |
| LVE-013 | Three Independent Leave Banks | PL/EL, Sick Leave, and Casual Leave must be completely independent leave banks. They must never be combined, substituted, or merged. Each has a separate balance, separate accrual cycle, and separate carry-forward rules. The system must enforce that: (a) employees cannot use SL balance for a CL application, (b) HR cannot merge balances, (c) reports show each bank separately. This is a fundamental difference from many Western HRMS systems that use a single PTO bank. | Factories Act 1948Shops Acts | Critical |
| LVE-014 | Annual Leave Balance Reset | On April 1 each year: (a) CL balance resets to the annual entitlement (unused CL from previous year is forfeited), (b) SL balance resets to the annual entitlement (unused SL from previous year is forfeited), (c) PL balance retains the carried-forward amount (up to 30 days max carry) and adds new accrual. System must run this reset automatically on April 1 and log the reset event in the audit trail per employee. HR must be able to view balances both before and after reset. | Factories Act 1948 | High |
salary_divisor = 26 is configured in the gratuity slab for all Indian tenant records.
| Req ID | Requirement Name | Description & Business Rules | Legal Basis | Priority |
|---|---|---|---|---|
| GRT-001 | Minimum Service Threshold | Gratuity is payable only after 5 years of continuous service with the same employer. Exception: if the employee dies or becomes permanently disabled, gratuity is payable regardless of service duration. System must block gratuity calculation for employees with less than 5 years' service (unless reason = death or disability). Service must be continuous — a break in service (unless due to authorised leave) resets the counter. | Payment of Gratuity Act 1972 s.4 | Critical |
| GRT-002 | Gratuity Formula — Divisor 26 | Formula: Gratuity = (Basic + DA) ÷ 26 × 15 × Years of Service. Each element: Daily rate = (Basic + DA) ÷ 26 (working days, not calendar days). Annual entitlement = Daily Rate × 15 days. Total gratuity = Annual Entitlement × Completed Years of Service. Maximum payable: ₹20,00,000 (₹20 lakh) — tax-exempt up to this limit. Any amount beyond ₹20 lakh is fully taxable. Only Basic Salary and Dearness Allowance (DA) are included in the calculation base — not HRA, LTA, bonus, or any other allowances. | Payment of Gratuity Act 1972 s.4(2) | Critical |
| GRT-003 | Salary Divisor Enforcement | The gratuity slab configuration for Indian tenants must have salary_divisor = 26. The system must read this value from the database (finance.gratuity_slabs) — never hardcode. This is distinct from UAE slabs which use divisor 30. When creating an Indian company, the system must create the correct Indian gratuity slabs: slab 1 (0–4.99 years, 0 days/year, divisor 26) and slab 2 (5+ years, 15 days/year, divisor 26). Both slabs must explicitly carry divisor 26. |
Payment of Gratuity Act 1972 | Critical |
| GRT-004 | Maximum Gratuity Cap | Statutory maximum gratuity is ₹20,00,000 (₹20 lakh). Gratuity amount above ₹20 lakh is fully taxable as income. Amount up to ₹20 lakh is tax-exempt u/s 10(10). System must cap the gratuity payment at ₹20 lakh in all calculations and payslip outputs. If calculated gratuity exceeds ₹20 lakh, the system must show both the calculated amount and the capped amount, with the excess flagged as taxable. | Payment of Gratuity Act 1972 s.4(3)Income Tax Act s.10(10) | High |
| GRT-005 | Death & Disability Exception | In the event of an employee's death or permanent total disablement due to accident or disease while in service, gratuity is payable regardless of the 5-year minimum service requirement. The amount is calculated using the standard formula (Basic + DA) ÷ 26 × 15 × Years of Service. System must allow HR to mark a separation reason as "death" or "disability" and override the 5-year threshold, computing gratuity for even a 6-month tenure. Gratuity is paid to the nominee (Form F) in case of death. | Payment of Gratuity Act 1972 s.4(1) | High |
| GRT-006 | Partial Year Rounding Rule | For years of service, a fraction of a year greater than 6 months counts as a full year. A fraction of 6 months or less is ignored. Example: 8 years and 7 months = 9 years for gratuity. 8 years and 5 months = 8 years. System must apply this rounding when calculating completed years of service at the time of separation. The calculation must use the actual last working day as the end date, not payroll period end. | Payment of Gratuity Act 1972 s.4(2) | Medium |
| Req ID | Requirement Name | Description & Business Rules | Legal Basis | Priority |
|---|---|---|---|---|
| CMP-001 | TDS Deposit Deadline — 7th | TDS collected in a month must be deposited to the government by the 7th of the following month (exception: March TDS can be deposited by April 30). Late deposit attracts interest at 1.5% per month u/s 234B/C. System must generate a TDS deposit report showing total TDS to be deposited for the month, per challan, including challan details (section code 192 for salary). System must alert HR at least 3 days before the 7th if payroll has been finalized but TDS deposit data has not been exported. | Income Tax Act s.200s.201 | Critical |
| CMP-002 | EPF ECR Filing Support | EPF Electronic Challan cum Return (ECR) must be filed on the EPFO portal by the 15th of each month. System must export an ECR-compatible file containing for each employee: UAN, employee name, gross wages, EPF wages (Basic + DA, capped at ₹15,000), employee EPF contribution, employer EPF contribution, employer EPS contribution, EDLI wages, EDLI contribution. Format must match EPFO's prescribed ECR 2.0 format. System alert if any enrolled employee has a missing UAN before the 15th. | EPF Act 1952 | Critical |
| CMP-003 | ESIC Monthly Return | ESIC contributions must be filed and paid on the ESIC portal by the 15th of the following month. System must export ESIC contribution data per eligible employee: IP Number, employee name, gross wages, employee ESI contribution (0.75%), employer ESI contribution (3.25%), number of days worked. The ESIC half-yearly return (April–September period: file by November 11; October–March: file by May 11) must also be supported. System must generate a summary of total ESIC remittance for each period. | ESI Act 1948 | Critical |
| CMP-004 | Form 24Q — Quarterly TDS Return | Quarterly TDS return on salary must be filed with income tax authorities. Due dates: Quarter 1 (Apr–Jun): July 31; Q2 (Jul–Sep): October 31; Q3 (Oct–Dec): January 31; Q4 (Jan–Mar): May 31. Form 24Q contains: employer's TAN, each employee's PAN, salary paid, TDS deducted, challan details. System must generate the data required for Form 24Q preparation. In Q4, Form 24Q includes the full year's data and forms the basis for Form 16. | Income Tax Act s.192Income Tax Rule 31A | Critical |
| CMP-005 | Form 16 — Annual TDS Certificate | Form 16 is the annual TDS certificate that employers must issue to all employees whose TDS has been deducted, by June 15 each year. Part A: TDS deducted and deposited (generated from Form 24Q). Part B: salary details, deductions claimed, taxable income, tax computation. System must generate Form 16 (PDF or data export for Form 16 generation via TRACES) for every employee for the completed financial year. Must include employer TAN, employee PAN, and all salary component details. | Income Tax Act s.203Income Tax Rule 31 | Critical |
| CMP-006 | POSH Act Compliance | All organisations with 10 or more employees must constitute an Internal Complaints Committee (ICC) under the Prevention of Sexual Harassment at Workplace Act 2013. System must: (a) track ICC members' appointment dates and terms (ICC member tenure is 3 years, renewable once), (b) generate reminders for ICC member renewal, (c) store the annual POSH compliance report (filed January 31 each year with the local government authority), (d) allow creation of complaint cases linked to the ICC process. Non-compliance attracts ₹50,000 fine and possible business licence suspension. | POSH Act 2013 | High |
| CMP-007 | Minimum Wages Enforcement | Minimum wages are set by Central and State Governments based on skill category (Unskilled, Semi-skilled, Skilled, Highly Skilled) and zone (A, B, C). System must allow HR to configure minimum wage thresholds per state and skill category. Before finalizing payroll, system must validate that no employee's Basic Salary falls below the applicable minimum wage for their state and skill classification. Violations must be flagged with a warning that prevents payroll approval until resolved. | Minimum Wages Act 1948Code on Wages 2019 | High |
| CMP-008 | Professional Tax Challan | Professional Tax collected from employees must be remitted to the respective state government by state-specific due dates (typically monthly). System must generate a state-wise PT summary report showing total PT deducted per month and per employee. Each state must be handled separately. Company must hold separate PT registration certificates per state of operation. System must allow storing state PT registration numbers on the company record. | State PT Acts | High |
| CMP-009 | Labour Code Readiness (4 Codes) | India consolidated 29 central labour laws into 4 Labour Codes (passed 2019–2020, pending state-level notification as of 2024). The 4 Codes are: (1) Code on Wages 2019 — minimum wages, payment timing, equal remuneration; (2) Industrial Relations Code 2020 — trade unions, standing orders for 300+ establishments; (3) Code on Social Security 2020 — EPF, ESI, Gratuity, Maternity; (4) Occupational Safety Code 2020 — working hours, leave, safety. System must be designed to transition to new Code requirements when notified, without core architecture changes. | Labour Codes 2019-2020 | Medium |
| CMP-010 | Shops & Establishments Registration | Most IT and services companies are governed by state Shops and Establishments Acts (rather than Factories Act). Company must hold a Shops & Establishments registration certificate for each state/city of operation. System must allow storing these registration numbers and their renewal dates on the company record, with document expiry alerts at 90/60/30 days before renewal. Annual returns must be filed with local authorities under each state's Shops Act. | State Shops & Establishments Acts | Medium |
| CMP-011 | ICC Annual Report — POSH | Every organisation with an ICC must file an annual report with the local District Officer by January 31 each year. The report covers: number of complaints received, disposed of, and pending. System must generate a summary of complaint records for POSH reporting purposes. Annual report filing date (January 31) must be in the compliance calendar with an alert sent to HR at least 15 days in advance. | POSH Act 2013 s.21 | Medium |
| CMP-012 | Maternity Benefit Act Return | Companies covered under the Maternity Benefit Act must submit an annual return to the Inspector showing: number of female employees, maternity leave cases during the year, payments made. System must generate this report for the financial year. The report must list all female employees who availed maternity leave, dates, duration, and total maternity benefit paid. Must be generated before the annual compliance filing deadline. | Maternity Benefit Act 1961 s.28 | Medium |
| Req ID | Requirement Name | Description & Business Rules | Legal Basis | Priority |
|---|---|---|---|---|
| DPDP-001 | Aadhaar Data Masking | Aadhaar number must never be displayed in full anywhere in the system — UI, PDF reports, CSV exports, or API responses. Only the last 4 digits may be shown: displayed as XXXX-XXXX-1234. Full Aadhaar must not be logged to server logs or audit tables. Storage should be encrypted at rest. API responses must always return the masked version. This applies to all roles including HR Admin and Payroll Admin. | Aadhaar Act 2016UIDAI Circular | Critical |
| DPDP-002 | Salary Data Role-Gating | Salary data (CTC, gross, net, component amounts) must only be visible to employees with HR Admin, Payroll Admin, or SysAdmin roles. Line managers must not see subordinates' salary data unless the system is explicitly configured to allow this (off by default). Employees can see only their own salary via ESS. PAN, bank account, and statutory contribution amounts must also be role-gated. All salary field access is logged to the audit trail. | DPDP Act 2023 | Critical |
| DPDP-003 | DPDP Act 2023 Compliance Framework | India's Digital Personal Data Protection Act 2023 requires: (1) lawful basis for collecting and processing personal data (employment contract satisfies this for employment data), (2) data minimisation — collect only what is necessary, (3) purpose limitation — use data only for stated HR purposes, (4) storage limitation — define and enforce retention periods, (5) accuracy — employees have right to request correction, (6) notification of data breaches within prescribed timeframes to the Data Protection Board. HR system must document data processing activities. | DPDP Act 2023 | High |
| DPDP-004 | Employee Consent for Data Processing | Where data processing goes beyond the employment contract (e.g., biometric attendance, optional surveys), explicit consent must be obtained and recorded. The system must: (a) allow defining data processing consent types, (b) record employee consent with timestamp and consent version, (c) allow withdrawal of consent (with appropriate workflow). Employment-related data processing (salary, tax, leave) does not require separate consent as it is necessary for the employment contract. | DPDP Act 2023 s.6 | High |
| DPDP-005 | Data Residency Consideration | The current HRSanad production instance is deployed on Azure UAE North for UAE PDPL compliance. For Indian companies, DPDP Act 2023 requirements around cross-border data transfer must be assessed. If data must reside in India, deployment should be on Azure Central India (Pune) or South India (Chennai). HR must consult legal counsel on whether their specific data set requires India data residency. System must allow documentation of the data residency decision for each Indian tenant. | DPDP Act 2023 s.16 | High |
| DPDP-006 | Biometric Data Protection | Biometric data (fingerprints, face images from attendance) is sensitive personal data under DPDP Act. Face images captured for clock-in/out must: (a) be stored encrypted at rest and in transit, (b) be accessible only to HR Admin, (c) not be used for any purpose other than attendance verification, (d) be deleted when the employee's data retention period expires, (e) have explicit consent recorded before enrollment. Face images must not be included in any data export or API response except via authenticated admin endpoint. | DPDP Act 2023 | High |
| DPDP-007 | Right to Correction | Under DPDP Act, employees (as data principals) have the right to request correction or erasure of their personal data. System must allow employees to flag data corrections via ESS portal. Corrections are reviewed by HR Admin before applying. System must track the correction request, HR review, and outcome. For separated employees, personal data must be retained for the applicable legal retention period (minimum 7 years for payroll/tax records) and then anonymisable upon request after the retention period. | DPDP Act 2023 s.12 | Medium |
| DPDP-008 | PAN Data Protection | PAN (Permanent Account Number) is a financial identifier regulated by Income Tax authorities. PAN must be masked in non-administrative views (showing only first 3 and last character: ABCXXXXX4F format). Full PAN must only be visible to HR Admin and Payroll Admin. PAN must never be logged to application or error logs. When included in payslip PDFs, PAN must be partially masked. PAN must not be included in bulk employee exports unless explicitly required for a specific report (e.g., Form 24Q data). | Income Tax ActDPDP Act 2023 | Medium |
| Req ID | Requirement Name | Description & Business Rules | Legal Basis | Priority |
|---|---|---|---|---|
| LOC-001 | INR Currency (₹) | All monetary values for Indian tenants must be displayed and exported in Indian Rupees (INR) with the ₹ symbol. Currency code must be set to 'INR'. No decimal places required for round amounts (₹50,000 not ₹50,000.00) though two decimal places must be supported for precision. The payroll engine must use INR as the base currency for all calculations. No multi-currency conversion is required for India-only deployments. | Payment of Wages Act | Critical |
| LOC-002 | Indian Number Format | Indian number formatting uses lakhs and crores instead of millions/billions: ₹1,00,000 (one lakh), ₹10,00,000 (ten lakhs), ₹1,00,00,000 (one crore). The system must support Indian number grouping (2-2-3 digits from right) in payslips, reports, and dashboard displays for Indian tenants. Form 16, Form 24Q, and salary registers must use Indian notation. Alternatively, both Indian and international formatting should be configurable per tenant. | — | High |
| LOC-003 | IST Timezone — UTC+5:30 | All timestamps for Indian tenants must use Indian Standard Time (IST), which is UTC+5:30. India does not observe daylight saving time — the offset is fixed. Attendance clock-in/out times, leave application timestamps, payroll run timestamps, and audit log entries must all display in IST. Database stores in UTC; application layer must convert to IST for display to Indian tenant users. TDS deposit deadlines (7th of month), EPF/ESIC return deadlines (15th of month) are all in IST. | — | High |
| LOC-004 | DD/MM/YYYY Date Format | India uses DD/MM/YYYY date format. All date displays for Indian tenants must use this format: e.g., 26/01/2026 for Republic Day, 15/06/2026 for Form 16 deadline. Date pickers in the UI must default to DD/MM/YYYY. CSV/Excel exports must use DD/MM/YYYY in date columns. API responses may use ISO 8601 (YYYY-MM-DD) internally, but the UI layer must format for the Indian locale. Financial year labels must use the Indian convention: "FY 2025-26" (April 2025 to March 2026). | — | High |
| LOC-005 | EPF ECR Export | Monthly EPF Electronic Challan cum Return (ECR) export must be generated in the EPFO ECR 2.0 format (text file). Required fields per employee row: UAN, member name, gross wages, EPF wages, EPF contribution (employee), employer EPF contribution (3.67%), employer EPS contribution (8.33%), EDLI wages, EDLI contribution (0.5%), NCP days (Non-Contribution Period days), refund of advances. File must be generatable after payroll finalization and before the 15th of the following month. System must validate that all employees have valid UANs before generating the ECR. | EPF Act 1952 | Critical |
| LOC-006 | ESIC Contribution Export | Monthly ESIC contribution data must be exportable in a format compatible with ESIC portal upload. Required fields: employer code, employee IP number, employee name, gross wages, employee ESI contribution (0.75%), employer ESI contribution (3.25%), number of days present. Export must cover only ESI-eligible employees for the period. System must generate both monthly and half-yearly ESIC return data (Apr–Sep and Oct–Mar periods) with appropriate totals. | ESI Act 1948 | High |
| LOC-007 | Form 24Q Data Export | Quarterly TDS return data must be exportable for Form 24Q preparation. The export must include: employer TAN, each employee's PAN, salary paid in the quarter, TDS deducted, challan details (BSR code, challan date, challan number, amount). Q4 export must include full year totals. Data must be in the TRACES/NSDL-prescribed format for Form 24Q filing. System must accumulate quarterly totals from monthly payroll runs and generate the quarterly summary. | Income Tax Rules Rule 31A | High |
| LOC-008 | Salary Register & Headcount Report | Monthly Salary Register must include for each employee: employee code, name, designation, department, basic salary, all earnings components, all deduction components, gross, total deductions, net salary, PAN (masked), UAN. Report must support filtering by department, grade, location. Headcount report (employee strength) must show: total headcount, department-wise breakup, new joiners for the month, separations for the month, and net headcount change. Both reports must be exportable as Excel (.xlsx) and PDF. Use April–March financial year for annual summaries. | Payment of Wages ActFactories Act | High |
| LOC-009 | Hindi Language Support | Optional: system should support Hindi (Devanagari script) as a third language in addition to English and Arabic. Employee names can be stored in both English and Hindi. Payslip and Form 16 can optionally be generated in Hindi. Hindi UI localisation is a lower priority than the statutory compliance requirements listed above but is desirable for broader user adoption across India, especially for blue-collar workers and manufacturing sector deployments. | Official Languages Act 1963 | Low |
| Section | Total | Critical | High | Medium | Low |
|---|---|---|---|---|---|
| 💰 Section 1 — Payroll & Tax (PAY) | 20 | 7 | 8 | 4 | 1 |
| 👤 Section 2 — Employee Data & Documents (EMP) | 12 | 5 | 5 | 2 | 0 |
| 🌴 Section 3 — Leave Management (LVE) | 14 | 5 | 7 | 2 | 0 |
| 🏅 Section 4 — Gratuity (GRT) | 6 | 3 | 2 | 1 | 0 |
| ⚖️ Section 5 — Compliance & Labour Law (CMP) | 12 | 5 | 3 | 4 | 0 |
| 🔒 Section 6 — Data Privacy DPDP (DPDP) | 8 | 2 | 4 | 2 | 0 |
| 🌐 Section 7 — Localisation & Reporting (LOC) | 9 | 2 | 5 | 0 | 2 |
| 📊 Total | 81 | 29 | 34 | 15 | 3 |