Payroll & statutory · Updated October 2026
The deductions, fines and advances register is where an employer records every amount taken out of wages for fines, for damage or loss, and for recovery of advances, so each recovery can be traced to a lawful reason. Under the Code on Wages (Central) Rules, 2026 these all go into Form IV, the same combined register that holds wages and overtime, as required by sections 19(8) and 21(3) of the Code on Wages.
Section 18 starts from a bar: no deduction from wages except those the Code authorises. The authorised list includes fines, absence from duty, damage to or loss of goods or money entrusted to the employee, employer housing and approved amenities, and recovery of advances and loans. The ceiling is the headline number: total deductions in a wage period cannot exceed 50% of that period’s wages, and any excess is recovered in the prescribed manner. This is the same 50% idea behind the wage definition rule, but a separate provision.
| Item | Main conditions |
|---|---|
| Fine | Only for acts listed in an approved notice; capped at 3% of that wage period’s wages; none on anyone under 15; no recovery in instalments or after 90 days; show-cause first (Rule 16: 7 days to reply, outcome intimated within 15 days) |
| Damage or loss | Cannot exceed the actual loss caused by the employee’s neglect or default; show-cause opportunity first |
| Advance | Instalments within a wage period cannot exceed 50% of wages (Rule 19); a travel advance given before employment began cannot be recovered |
Fine proceeds may be used only for purposes beneficial to employees, so record where they went.
Statutory deductions such as PF and professional tax run under their own laws, so this register is really about employer-initiated recoveries. Log the date, reason, amount, show-cause reference, instalment number and balance for each one. The most common problems are a recovery with no written show-cause on file, an instalment plan set in payroll that breaches the 50% cap in a month with low pay, and a salary-advance balance that never reconciles at exit. Mechanics of the recovery schedule are covered in salary advance and recovery.
Under the Central Rules it is one: Form IV covers fines, damage or loss deductions and advances along with wages and overtime. State rules may still prescribe separate formats, so check yours.
Not within a wage period. Section 18 lets the excess be recovered only in the manner prescribed, so check the rule before pushing a balance into later pay cycles.
Consent alone does not widen the list. The older wages law and the Code both work from an authorised list, so confirm the head under which the recovery falls.
Model how an advance is repaid with the Salary Advance EMI Calculator before you set the instalment.