Quick answer: A small business in India can run payroll with free tools (Excel templates, free calculators and payslip generators, free trials and free plans for a few employees) or low-cost cloud payroll priced per employee per month. Whatever you choose must handle PF (from 20 employees), ESI (from 10), professional tax for your state and TDS, produce payslips and a bank file, and keep your data safe. Avoid cracked "free download" software. Move up from a spreadsheet when headcount, states or compliance outgrow it.
For a startup or small business, payroll software can feel like an unnecessary cost, and "free payroll software download" is a common search. But payroll mistakes in a small business are just as costly as in a large one: a missed PF deposit or wrong TDS brings interest and penalties, and an unhappy employee. This guide explains the free and low-cost payroll options available to Indian small businesses, what each can and cannot do, what a small business must comply with at each stage of growth, and how to choose. For how payroll systems work in general, see our payroll management system guide.
What a small business payroll tool must do
Before comparing options, be clear about the minimum. Any payroll tool, free or paid, should:
- ☐ Calculate gross pay for days worked, with overtime and arrears
- ☐ Deduct PF, ESI, professional tax and TDS correctly, when they apply
- ☐ Produce payslips (wage slips are required under the Code on Wages)
- ☐ Produce a bank transfer file or salary list
- ☐ Give the totals for PF, ESI, professional tax and TDS payments and returns
- ☐ Keep a payroll register and year-to-date figures for tax
- ☐ Keep salary and bank data secure
Compliance by headcount
What your payroll has to handle depends on size. Under the Labour Codes, the main thresholds are:
| Headcount | What usually applies |
|---|---|
| 1 or more | Minimum wages, wage slips, payment by the 7th, TDS where salary is taxable, professional tax where the state levies it |
| 10 or more | ESI (for employees earning up to ₹21,000 a month), gratuity coverage |
| 20 or more | PF (on wages up to the ₹25,000 ceiling, or full wages), statutory bonus |
| State thresholds | Labour welfare fund in states that levy it, shops and establishments rules |
Many small businesses also register for PF voluntarily before reaching 20 employees, to attract staff. See our guides to payroll compliance and the PF and ESI applicability rules.
Setting up payroll for the first time
Whatever tool you pick, a small business needs the same foundations before the first salary run:
- Registrations: TAN for TDS; professional tax registration in states that levy it; PF on the EPFO portal and ESI on the ESIC portal when you reach the thresholds (or earlier, voluntarily).
- Salary structures: basic, HRA and other components set so that wages meet the Labour Code definition and the 50% rule.
- Employee records: appointment letters, PAN, Aadhaar, bank details, UAN and ESIC numbers, and each employee's tax regime choice.
- Pay calendar: attendance cut-off, salary date (by the 7th of the next month), and statutory due dates for TDS, PF, ESI and professional tax.
- Records: a payroll register, payslips and copies of every challan and return.
Our new employee payroll setup guide covers the joining steps in detail.
Free payroll options
1. Excel or Google Sheets payroll
A spreadsheet is the most common free option. With formulas for gross pay, PF, ESI, professional tax and TDS, and a payslip sheet linked to the register, it works well for a few employees in one state. The risks are broken formulas, manual copy errors and rule changes that you must update yourself. Our payroll in Excel guide shows how to build one properly, with checks.
2. Free calculators and payslip generators
Free online tools cover individual steps: our in-hand salary calculator, PF calculator, ESI calculator, TDS calculator and salary slip generator. They are useful for checking figures and producing payslips for one or two employees, but they are not a full payroll system: they do not keep history, registers or returns. For a single employee, a payslip generator plus a simple monthly salary register in Excel is usually enough, provided you keep every payslip and your TDS working.
3. Free plans and free trials
Some cloud payroll vendors offer a free plan for a small number of employees, or a free trial of the full product. These can give a small business real payroll software at no cost, but read the limits: headcount caps, missing statutory files, no professional tax for some states, limited support, or a free period that ends. Check the current terms on the vendor's own website, because free plans change often. For named products, see our top payroll software in India list.
4. Payroll in accounting software you already use
If you keep your books in accounting software such as TallyPrime, its payroll features may already be included in your licence. Running payroll there links salary directly to your accounts. See our guide to payroll in Tally Prime.
Beware of "free payroll software download" offers
Searches for free offline payroll software often lead to unofficial downloads and cracked versions of paid software. Avoid them. They can carry malware that steals bank and identity data, they are rarely updated for changes such as the PF wage ceiling of ₹25,000 from 17 September 2026 or the new income tax forms, and using cracked software is illegal. Payroll holds PAN, Aadhaar-linked numbers and bank details for every employee; under the Digital Personal Data Protection Act, 2023, employers will be responsible, as data fiduciaries, for reasonable security safeguards once the main obligations under the DPDP Rules take effect on 13 May 2027, so build those habits now. Download only from a vendor's official website or the official app stores.
Low-cost paid payroll software
When free options stop being enough, entry-level cloud payroll is the usual next step. It is typically priced per employee per month, often with a minimum monthly fee, and includes:
- Automatic PF, ESI, professional tax, labour welfare fund and TDS calculations, updated when rules change.
- Payslips and tax declarations through an employee portal or app.
- PF ECR, ESI contribution files and TDS return data.
- Bank transfer files and accounting exports.
- Attendance and leave, either built in or through integration.
For a small team, the subscription is often less than the cost of one compliance error or of the owner's time spent on payroll each month.
Comparison of options
| Option | Cost | Best for | Main limitation |
|---|---|---|---|
| Excel / Google Sheets | Free | 1–20 employees, one state | Manual updates and formula errors |
| Free calculators and payslip generator | Free | 1–3 employees, checking figures | No registers, history or returns |
| Free plan of cloud payroll | Free within limits | Very small teams | Headcount and feature caps |
| Accounting software payroll | Included or add-on | Businesses already using it for books | Less HR self-service |
| Low-cost cloud payroll | Per employee per month | Growing teams, PF/ESI, multi-state | Ongoing subscription |
| Outsourced payroll | Per employee fee | Owners with no time or expertise | Less control; liability stays with you |
Our payroll outsourcing guide covers the last option.
Payroll apps for small businesses
Many small-business payroll products have Android and iPhone apps. Employees use them to see payslips, mark attendance and apply for leave; owners use them to approve requests and view payroll summaries. A free app on its own rarely runs full Indian payroll; it is usually the mobile side of a web-based system. Check that the app comes from the vendor's official account in the app store.
How to choose: a checklist for small businesses
- Count your needs: number of employees now and in a year, states, and whether PF and ESI apply.
- Test on your own data: run last month's payroll for two or three employees and compare with your current figures.
- Check statutory outputs: payslips, PF ECR, ESI file, professional tax for your state, TDS under both tax regimes.
- Check rule updates: confirm the tool already reflects the ₹25,000 PF ceiling and the Labour Code wage rules.
- Check data and exit: where data is stored, who can access it, and whether you can export everything if you switch.
- Compare total cost: subscription plus your time, not just the price per employee.
When to move from a spreadsheet to software
- ☐ You have crossed 10 or 20 employees and ESI or PF now applies
- ☐ You have employees in more than one state
- ☐ Payroll takes the owner or accountant more than a day each month
- ☐ You have had a payroll error or late deposit
- ☐ Employees ask for payslips, tax declarations or leave online
- ☐ Only one person understands the spreadsheet
If two or more of these apply, it is time to move. Start at the beginning of a quarter, ideally the financial year, so that TDS and returns are simple to carry over. Our monthly payroll checklist helps whichever option you use.
Payroll for startups
Startups face a few extra payroll questions: paying founders and early staff, ESOPs, interns on stipend, and fast hiring across cities. Keep salary structures simple and compliant with the Labour Code wage definition from the start, register for PF and ESI as soon as you cross the thresholds (or earlier, voluntarily), and choose a tool that can grow with you. See our guides to salary structure under the Labour Codes and stipend vs salary for interns.
A ready payroll system in Excel. The Complete Indian Payroll Excel Workbook gives small businesses salary calculation, PF, ESI, professional tax, TDS, payslips and reports in one file, without a monthly subscription.
Frequently asked questions
Is there any free payroll software?
Yes, in a limited way. Free options include spreadsheet payroll templates, free online salary calculators and payslip generators, free trials of paid software, and free plans that some vendors offer for a small number of employees. Free plans usually limit headcount or features, so check that they handle PF, ESI, professional tax and TDS for your state before relying on them.
Which is the best free payroll software?
There is no single best free option. For a business with a few employees, a well-built Excel payroll sheet or a vendor's free plan can work. Choose the one that calculates PF, ESI, professional tax and TDS correctly for your state, produces payslips and a bank file, and lets you export your data if you move later.
What is the cheapest payroll software for small businesses?
The cheapest option is usually a spreadsheet you already have, followed by a vendor's free or entry-level plan. Paid cloud payroll for small teams is typically priced per employee per month, often with a minimum fee. Compare the total cost, including your own time and the cost of compliance errors, not just the subscription.
Is free payroll software safe?
Software from a known vendor's official website or app store is generally safe. Avoid cracked or unofficial offline payroll downloads: they can contain malware, are rarely updated for new PF, ESI and tax rules, and put sensitive salary and bank data at risk.
Do small businesses need payroll software?
Not always. A business with a handful of employees in one state can run payroll accurately in a spreadsheet if someone understands the rules. Software becomes worthwhile when headcount grows, PF and ESI start to apply, you operate in more than one state, or payroll takes too much of the owner's time.
When do PF and ESI apply to a small business?
PF generally applies once an establishment has 20 or more employees, and ESI once it has 10 or more, under the Code on Social Security. Professional tax depends on the state, and TDS applies when an employee's estimated tax for the year, after any rebate, is more than nil.
Is payroll software free?
Most complete payroll software is paid, usually priced per employee per month. Free payroll is possible in a limited way: spreadsheet templates, free calculators and payslip generators, free trials, and free plans for a few employees. These suit a business with one to a few employees in one state. Once PF and ESI apply, or you have staff in several states, a paid tool or a well-built Excel workbook is usually more reliable.
Position as of 15 November 2026, under the Labour Codes, the PF wage ceiling of ₹25,000 from 17 September 2026 and the Income-tax Act, 2025. Free plans and prices change often; check vendors' current terms. General information, not product or legal advice.