What Is a Payroll Deduction?

Payroll deductions are wages withheld from an employee’s salary for the payment of taxes or benfits. There are both mandatory and voluntary payroll deductions. The order in which deductions are taken out of salaries also matters because some are made pre-tax and some are made post-tax. 

Which Payroll Deductions Are Mandatory?

Employers are required by law to withhold the following payroll deductions before issuing an employee’s salaries are Professional Tax, Provident Fund, ESI, Gratuity & TDS

Which Payroll Deductions are Voluntary?

The law doesn’t require employers to take voluntary payroll deductions, but many choose to, as they are often helpful for employees or the employer. Voluntary payroll deductions may include:

• Health, life, and disability insurance payments
• Voluntary Provident Fund