Challan

Meaning & Definition

The term “Challan” refers to the official receipt for remitting your government-mandated tax or duty, which is to be paid through an authorised financial institution or through an online payment portal that has been set up by the government. In relation to HR and payroll, employers generate challans on behalf of employees as evidence of payment and compliance with their legally required contributions, for example, the Employee Provident Fund (EPF), the Professional Tax (PT), and any other government-mandated contributions.

Important aspects of Challan

• Provides official proof of statutory payments made by employers and employees. 
• Gives the basis for tracking accurate payroll and compliance during compliance audits and regulatory inspections. 
• Timely deposit of all employer and employee contributions. 
• Eliminates the risk of penalties incurred by employers and employees due to late or missed payment of contributions.

Governance & Policy Alignment

• The payment and filing processes of Challans are subject to laws.
• Challans must be prepared by suitably calculating the amount and generating them on time.
• The payment of a challan should take place within the time limits that have been set.
• The records must be kept for audit and reconciliation purposes.