Loading page
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Pay owed for an earlier period and settled in a later one, most often because an increment was agreed after its effective date. The affected months are recomputed, the difference is paid as an identified line in the current month, and the original payslips stand as issued.
Not the same as a correction. An arrear says the earlier payslip was right under the salary then in force; a correction says it was wrong.
Arrears appear in payroll whenever a change is approved after the month it applies from. The typical case is an appraisal increment approved in June but effective from April: the June run pays the new salary plus the difference for April and May as a separate arrears line on the payslip.
Example figures: if basic rises from ₹20,000 to ₹22,000 from April, the June arrears for basic are ₹4,000 for two months. Any allowances linked to basic move too, and PF must be recalculated for those months on the revised PF wage, subject to the ceiling the employer applies.
The common mistake is paying the arrears as one lump sum with no month-wise breakup. That makes the PF return and the employee's tax working harder to reconcile, and the employee may later claim relief under section 89 of the Income-tax Act, which needs the year-wise split. Keep the working with the payroll file.
Arrears are pay owed for an earlier period and settled in a later one, most often because an increment was agreed after its effective date.
The most common cause is an increment agreed after the date it is meant to apply from, so the months in between were paid at the old salary.
The affected months are recomputed under the revised salary and the difference is worked out for each of them.
The difference is paid as an identified line in the current month's payslip rather than being folded into ordinary pay.
No. The original payslips stand as issued, because they were right under the salary in force at the time.
An arrear says the earlier payslip was right under the salary then in force; a correction says the earlier payslip was wrong.
Effective dating records the date a salary revision applies from, which is what tells payroll which past months need to be recomputed.
So the difference is identified in the current month while the original payslips stand as issued.
14-day free trial · Full access to all 12 modules · Zero implementation fee · Cancel anytime