Updated 16 October 2026. Payroll reconciliation compares approved employee data and calculations with salary payments, statutory submissions, tax deposits and accounting records. The aim is to find a mismatch while the affected period is still easy to correct—not to assume every portal and payroll system use the same wage base.
Reconcile each employee from source to payment
- Start with approved source records. Compare the employee master, appointment terms, attendance, leave, overtime, variable pay, salary changes, joining dates and exits to the payroll inputs. Record who approved adjustments.
- Recalculate the payroll bases separately. Keep contractual gross earnings, EPF/EPS contribution wages, ESIC contribution wages, Kerala half-yearly Professional Tax and taxable salary distinct. Apply the law, threshold, member history and effective date applicable to the period.
- Check deductions and net pay. Confirm the employee-level deductions against their calculation basis and reconcile the net amount to bank transfer evidence. Explain reversals, advances and corrections.
- Reconcile employer contributions. Compare employer EPF/EPS allocation, ESIC and other applicable contributions to the payroll ledger and the employee-level statutory calculation. Avoid using a single percentage of “basic” or “gross” for every obligation.
- Match filed amounts to payment proof. Match ECR totals to EPFO acknowledgements and challans, ESIC contribution records to payment receipts, and TDS calculations to deposits and quarterly salary statements.
- Close and document differences. Classify the issue as source-data error, calculation error, filing mismatch, payment mismatch or timing difference. Assign an owner, correction date and evidence of completion.
Monthly reconciliation worksheet
| Control | Compare | Evidence to retain |
|---|---|---|
| Salary and attendance | Approved attendance and leave to paid days, earnings and deductions. | Attendance extract, approvals, payroll register and payslips. |
| EPF / EPS | Employee-level eligible wages and contribution allocation to ECR and payment. | Calculation, ECR acknowledgement, challan and payment reference. |
| ESIC | Coverage and contribution wages to monthly contribution record and payment. | Eligibility decision, contribution calculation, challan and receipt. |
| Kerala Professional Tax | Half-yearly income, revised slab, local-body assessment and payroll collection. | Local-body instructions, employee calculation, receipt and any required filing. |
| Other welfare funds | Applicable board, covered employee set, scheme-specific contribution and payment cycle. | Board registration, calculation, return or declaration if required, and payment proof. |
| Salary TDS | Tax-year salary and deductions to monthly deposit and quarterly statement. | Tax calculation, deposit evidence, filed statement and acknowledgement. |
| Bank and ledger | Net salary and statutory payments to bank debits, payroll journal and general ledger. | Bank statement, payment file, journal and signed reconciliation report. |
Change the tax control for the period
Salary-TDS events from 1 April 2026 are governed by the Income-tax Act, 2025 and Income-tax Rules, 2026. The Income Tax Department identifies Form 138 (earlier Form 24Q) as the quarterly salary-TDS statement under the new Act. Earlier periods continue to use the forms applicable to their governing law. The ordinary deposit deadline is generally the 7th of the following month; March deductions by non-government deductors are generally due by 30 April. Verify the official instructions and any exception before sign-off.
Investigate the root cause, not just the difference
- Use a consistent source for employee joining, exit, wage and bank details; route changes through an approval trail.
- Version payroll rules by effective date so a changed wage ceiling or tax year is not applied retroactively.
- Reconcile the employee detail first, then trace the difference into the filing total and payment.
- Do not “fix” a statutory mismatch by changing the next period without checking whether a correction or adjustment is permitted.
- Keep portal rejection messages and helpdesk ticket references, and track each rejected filing through acceptance.
- Restrict access to personal data and keep the reconciliation file backed up and retrievable.
Official sources
- EPFO: EPF Scheme
- ESIC: ESI Regulations
- Income Tax Department: Form 138 user guide
- Kerala LSGD: Profession Tax FAQ
- Kerala Labour Commissionerate: welfare boards
Use our CTC to In-Hand calculator for a payroll estimate, then reconcile it to actual employee-specific rules and records. For operational support, see payroll services or contact GHR Consultancy.