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Update on Contractor Payments being renamed to Part-Time Employee Feature

XPayroll avatar
Written by XPayroll
Updated this week

Earlier, the Contractor Payment feature on your dashboard allowed a wide range of payments to freelancers, interns, and vendors. This feature has now been renamed to Part-Time Employee, and here’s why:

Why the Change?

To comply with evolving regulatory norms and banking guidelines, RazorpayX Payroll is updating how contractor payments are handled via the Payroll Wallet*

  • Going forward, only payments under TDS section 194J or those that don’t attract TDS (like intern stipends or part-time employees with personal PANs) will be allowed through the Payroll wallet.
    Vendor payments to business PANs or those falling under non-194J TDS sections will no longer be supported via the Payroll wallet.

Hence, the feature is now renamed to better reflect its intended use: Part-Time Employee Payments.

*RazorpayX Payroll, as of today, lets you process payroll in two ways—either via your Payroll Wallet or via your RazorpayX Payroll-linked Current Account. This change is applicable only to payments happening via Payroll Wallet.

What This Means for You (for payments via Payroll wallet)

You can continue to:

  • Pay freelancers, consultants, interns, or any part-time individual using a personal PAN, under TDS 194J or no-TDS scenarios.

  • Process salary and compliance payouts through the Payroll wallet.

You can no longer:

  • Pay vendors or entities with a business PAN.
    Make payments that fall under non-194J TDS categories using the Payroll wallet.

Want to continue with the erstwhile Contractor Payments module?

You can still make all types of payouts, including vendor payments, by linking a RazorpayX-powered Current Account to your Payroll setup (RazorpayX Payroll-linked Current Account).

Here’s how:

  1. Email us at xpayroll@razorpay.com, and our team will guide you through the entire setup.

  2. We’ll help you open a RazorpayX-powered Current Account with our banking partners (Axis, RBL, YBL, IDFC).

  3. The entire process is fully digital—no branch visits required.

  4. Once the account is activated, it will be linked to your RazorpayX Payroll account.

Know more >

What About 26Q Filing?

If you choose to continue using the Payroll wallet:

  • RazorpayX Payroll will not have full visibility into your vendor payments (as they are happening outside of the Payroll wallet), which could lead to inaccurate filing

  • We recommend disabling auto 26Q filing and working with your Chartered Accountant for accurate filings
    ​

If you link a RazorpayX-powered Current Account:

  • We’ll handle 26Q filings for you with complete data accuracy. 🎉

Important Dates

Effective starting July 31, 2025, vendor payments via the Contractor Payment module will be discontinued on the Payroll wallet.

Summary of Options

✅ Option 1: Link RazorpayX-powered Current Account to Payroll, know more >

  • Continue all payments: vendor + part-time employees + salary + compliance

  • No manual wallet loading

  • Enhanced transaction visibility

  • Free access to our Business Banking core plan

❌ Option 2: Do Nothing

  • We’ll support Contractor payments (with personal PAN) + salary + compliance

  • Vendor payments disabled after July 31, 2025

  • Everything else remains the same

FAQs

  1. Why are vendor payments being discontinued via the Payroll wallet?
    To comply with updated banking regulations and ensure a compliant and reliable payment experience.
    ​

  2. What if I don’t open a RazorpayX-powered Current Account?
    You’ll still be able to make payments to individual contractors and employees, but vendor payments will be disabled after July 31, 2025. Other salary disbursals are not affected.
    ​

  3. How do I open a RazorpayX-powered Current Account?
    Reach out to us at xpayroll@razorpay.com. Our team will handle everything for you.
    ​

  4. What changes once I link the Current Account?
    All payouts—contractors, vendors, salaries, compliances—will go through your Current Account. You’ll get additional benefits like:

    1. No need to top up your Payroll wallet

    2. Enhanced transaction visibility

    3. Free access to our Business Banking core plan
      ​

  5. Will my Payroll experience change after linking my Current Account with RazorpayX Payroll?
    The core product remains the same. With a linked Current Account, the experience becomes more seamless and powerful.
    ​

  6. Do I need to do anything if I don’t pay vendors?
    No. You can continue as-is with the Payroll wallet for part-time employees, salary, and compliance payments.

Need help?

📩 Email us at xpayroll@razorpay.com

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