Loans, advances and recoveries from salary
Salary advances and staff loans with your eligibility rules, interest free, flat or reducing balance, recovered through payroll with EMI holidays, pauses, top-ups and foreclosure. Canteen, hostel and shop purchases come off the same payslip, and whatever is left is settled at exit.
PLANSFrom Growth
Why it matters
Staff loans, advances and small dues are usually tracked in a register next to payroll. Instalments get missed, a pause agreed on the phone is never recorded, and when someone leaves, nobody knows what they still owe. In SmartMy HRMS each loan has a schedule that payroll reads every month. Every change to it goes through approval, and the balance falls into the full and final by itself. With SmartMy Feast, Hostel or POS, canteen meals, hostel rent and store purchases bought against the salary land on the same payslip. Each is one line, oldest first, within the net pay. Your payroll team stops collecting deduction lists from three counters.
The problem it solves
- Advances are given on a slip of paper and the deduction is remembered only some months.
- An employee asks to skip an EMI or pay off early, and the register and payroll no longer agree.
- The canteen, the hostel and the staff store each send payroll a list of dues to deduct, in their own format.
- Someone resigns and the loan balance, the hostel rent and the store dues are found after the final pay has gone.
How it works
- Set up your loan and advance types once. Set who can take them, the maximum amount and instalments, interest, how it is paid out and whether a pause is allowed. Five come ready: Salary Advance, Festival Advance, Personal Loan, Emergency Loan and Asset Damage / Dues Recovery.
- An employee asks under My Loans and Advances or in the app; HR can enter one for anyone. The rules of the type are checked when it is sent: service, confirmation, notice period, amount, open loans, guarantor, document.
- The request goes through its approval chain. Once approved, the schedule of instalments is made, and the money goes with the next salary or is recorded as paid by bank or cash.
- Each payroll run takes the instalment of its month, within the Entity's recovery limit. What does not fit is carried to the next month, and the payslip says so.
- Changes to a running loan are asked for on the loan and applied only when approved. These are an EMI holiday, a new EMI, a top-up, a part prepayment, foreclosure, a waiver or a pause. The schedule is worked out again.
- When the person leaves, the outstanding balance and any canteen, hostel or store dues not yet deducted are recovered in the full and final settlement.
Everything it does
Loan and advance types
- Kind: salary advance, loan, or recovery (asset damage, dues)
- Employees Can Request: on to start with; off for recoveries, which HR enters
- Eligibility: confirmed staff only, minimum service in months, not while on notice (on to start with). Also maximum open loans of the type (1 to start with), months since the last one closed, guarantor needed and document needed
- Maximum amount: no limit, a fixed amount, times the monthly gross, or times a salary component such as Basic
- Paid out with the next salary, by bank transfer (the default) or in cash
- Ready types, all editable: Salary Advance (1 month's gross, 3 instalments) and Festival Advance (10,000, once in 12 months). Personal Loan (confirmed, 12 months' service, 3 months' gross, 24 instalments, 6 % reducing). Emergency Loan and Asset Damage / Dues Recovery
Interest and schedule
- Interest free, flat, or reducing balance, at a yearly rate per type
- Repay by a number of instalments or a monthly amount, from the First Instalment Month
- Schedule per month: principal, interest, instalment, principal left, recovered and state (due, partly recovered, recovered, skipped for an EMI holiday, cancelled)
- Perquisite for income tax: a concessional loan charged below the type's benchmark rate adds a taxable perquisite to the employee's TDS projection. This starts once their loans exceed the exempt limit (20,000 to start with)
Recovery in payroll
- Each payslip deducts the instalments of its month, one line per loan
- Loan Recovery at Most (% of net pay): 50 % to start with. The rest is carried to the next month, noted on the line. 0 means no limit
- Recoveries recorded as salary deduction, paid directly, full and final, or waived
- Workers paid by wage runs: the instalment is held back on the first wage slip of the period that can bear it
Changes to a running loan
- Pause the recovery, resume it, skip an EMI (EMI holiday), change the EMI or change the number of instalments. Also top-up, part prepayment (keep the EMI or keep the number of instalments), foreclosure and waive the balance
- Every change is approved before it has any effect
- HR asks for any change; an employee may ask only to pause or resume their own loan
- Pause per type: allowed or not (allowed to start with), longest pause in months and pauses allowed per loan. Also whether the interest of paused months is added or the instalments simply move
- A pause with a resume month ends by itself in that month
Canteen, hostel and shop purchases
- With SmartMy Feast: meals and wallet top-ups paid by payroll deduction, within the Entity's Payroll Deduction Limit (month), as a Food Service line
- With SmartMy Hostel: a staff resident's rent, electricity and fines on a Pay by Salary stay, as a Hostel line
- With SmartMy POS: store sales paid with a Deduct from Salary payment method, within the register's Salary Deduction Limit (month), as a Store Purchases line
- Oldest charges first, as far as the net pay goes; the rest waits for the next payslip
- At exit, what was not deducted is a due in the full and final; an open hostel stay must be checked out first
Letters, lists and reports
- Sanction Letter and Loan Statement, printed from the loan; the statement also in the app
- Instalments Due, Recoveries, and the Outstanding Report by loan, type and department
- A Loans and Advances dashboard
- Asset loss or damage can be recovered from salary as a recovery loan
- Go-live import of loans still being recovered: the balance, the EMI and the month recovery continues from
Who uses it
EmployeeAsks for a loan or advance, follows the schedule and statement, and may ask to pause or resume the recovery.
Reporting managerApproves the requests of their team at the manager level.
HR officerEnters loans and recoveries, approves at the HR level, and asks for or approves changes to running loans.
Payroll or accountsGives the last approval, records payment by bank or cash, and watches the recoveries in each payroll.
Where you use it
- Web: HRMS > Loans and Advances (My Loans and Advances, All Loans and Advances, Instalments Due, Recoveries, Outstanding Report, Configuration > Loan and Advance Types)
- Web: Approvals inbox for loans and loan changes
- The SmartMy HRMS app: apply, see the schedule and statement, approve and record payment (built and in testing, not in the app stores yet). Pause and resume are asked for on the web
- With SmartMy Feast, Hostel or POS: Payroll Deductions and Salary Deductions lists in those products
What you control
Settings
- Loan Recovery at Most: 50 % of net pay per Entity (0 for no limit)
- Per type: perquisite benchmark rate and exempt limit (20,000)
- Per type: Allow Pause (on), longest pause, pauses per loan, interest during a pause (none to start with)
- In SmartMy Feast and POS: the monthly salary deduction limit per employee
Approvals
- Loan / advance: reporting manager, then HR, then accounts or payroll to start with. With the chain, the levels you set (the ready one: reporting manager, then a finance or payroll approver), per loan type if you like
- Loan change: HR of the Entity to start with, levels you add
- The person a loan is about never decides it
Notifications
- Loan to Approve: to the approver at each level, by email and in the app's inbox
- Loan Decided: to the employee when it is sanctioned or rejected, by email and in the app's inbox
- Loan Paid: to the employee when it is paid by bank or cash, by email and in the app's inbox
- Loan Recovery Paused and Loan Recovery Resumed: to the employee, by email and in the app's inbox
- These cannot be switched off; a person can switch off email for themselves, in-app notices always arrive
Works with
SmartMy FeastStaff meals and wallet top-ups deducted from salary within a monthly limit; dues and wallet balance at exit.
SmartMy HostelStaff residents pay rent and charges through payroll; an open stay must be checked out before the final settlement.
SmartMy POSStaff store purchases against the salary within a monthly limit, refunds given back on the next payslip.
Questions
Can an employee skip an EMI during a hard month?
Yes. HR asks for an EMI holiday on the loan, or the employee asks to pause the recovery if the loan type allows it. Once approved, payroll recovers nothing for that month and the schedule moves.What if the instalment is more than the salary can bear?
The Entity's limit, 50 % of net pay to start with, caps what one payslip recovers. The rest is carried to the next month and the payslip line says how much.Is an interest-free loan taxed?
For a loan type with a benchmark rate, the difference to the rate charged is added as a perquisite in the employee's monthly TDS. This happens once their loans are above the exempt limit, 20,000 to start with.What happens to a loan when someone resigns?
The outstanding balance is recovered in the full and final settlement and the loan is closed when the settlement is paid. Canteen, hostel and store dues not yet deducted are added there too.Do we need SmartMy Feast or POS for loans?
No. Loans and advances work on their own in Growth. Recovering canteen, hostel and store purchases needs SmartMy Feast, Hostel or POS in the same account, and is in Scale.Related features
PAYROLLPayroll runs, approval and lockRun payroll per Entity and pay period straight from the attendance record, with joiners, leavers and mid-month revisions worked out. Approvers review it on one screen, salaries can be held and released, and a paid payroll is locked and reopened only with a reason.PAYROLLPayslips, bank files and accounting entriesOnce a payroll run is approved, each employee gets a password-protected PDF payslip by email. The bank gets a transfer file in its own format with a covering letter. The salary posts to each Entity's accounts.EXITFull and final settlementOne settlement brings together what you owe the leaver and what they owe you. It covers held salary, leave encashment, notice pay or recovery, gratuity, loans, clearance dues and the final TDS. HR approves, then accounts, then payroll marks it paid.STATUTORY AND TAX, INDIAIncome tax (TDS), declarations and Form 16Each payroll projects the year's salary under the employee's regime and deducts the tax still due, spread over the months left. Employees declare and compare the two regimes, and payroll accepts or rejects their proofs. Form 16 Part B, 12BA, 12BB and the 24Q data come from the same figures.LETTERS, CARDS, DOCUMENTS, ASSETSAssets issued to employeesLaptops, phones, SIM cards, keys and uniforms go out on a request that is approved, handed over and acknowledged by the employee. When they come back damaged or not at all, the charge is recovered from salary, at once or in monthly instalments.ACROSS SMARTMY HRMSApproval chains and one approvals inboxEvery HR request, from a day's leave to the full and final, goes through its approval chain and waits in one Approvals inbox. Levels, approvers, reminders, escalation and stand-ins are settings you control, per Entity and kind of request.
See your own month run in it.
Tell us how many people you have, how you take attendance and how your salary is structured. We will show you SmartMy HRMS set up that way.