Entire amount earned by employee for the payroll cycle may not be payable to employee because there could be various statutory deductions, other organization specific deductions and one-time deductions.
Deductions affect the actual compensation, i.e. Net Pay of employee.
Payroll Processor will receive information on statutory social security deductions to be made or not from HR. Typically, this covers Employee Provident Fund (EPF), Employees State Insurance (ESI) and Group Medical Insurance scheme (if any).
Profession Tax (PT) is a mandatory deduction based on compensation and is a checklist item for Payroll Processor to refer official circulars and updates and arrive at PT rates, deduct and deposit it to Local Government Agency.
Another important deduction is Income Tax. Payroll Process has to ensure that Income Tax as per Government regulation has been deducted (TDS - Tax Deducted at Source) and deposited to IT department. This has a specific window of financial year (April - March) and in case employee is not giving sufficient proof for tax saving investments, additional IT deduction can also be applicable.
When employee avails personal loan or a salary advance type of financial assistance from the company, there could be recurring deductions in the form of EMI (Equated Monthly Installment). Based on instructions from HR/Accounts, this can come up as another deduction.
In addition to this, one-time deductions can also be there. For Payroll Processor, collecting inputs on one time-deductions from HR is a checklist item every month. Examples of one-time deductions are Fines, Recoveries, etc.