What Is Wage Garnishment? Meaning, Process & Compliance in India
Book a Free DemoWage Garnishment
A legal process where a portion of an employee’s earnings is withheld to repay debts such as child support or loans. Employers must comply with court-ordered garnishments to avoid penalties.
Wage garnishment is the legal process of deducting a portion of an employee’s earnings to settle debts such as loan repayments, child support, or court-ordered penalties. The employer is instructed by a court or authorised authority to withhold the specified amount from the employee’s salary and transfer it to the creditor or relevant agency.
In India, wage garnishment is governed by court orders, The Code of Civil Procedure, 1908, and other applicable laws. Employers must follow the order precisely to avoid legal penalties and maintain payroll compliance.
💬 “By integrating Pagarai’s payroll compliance module, we processed garnishment orders accurately without disrupting regular salary runs.” — Aarti, Payroll & Compliance Head
Common Reasons for Wage Garnishment in India
| Reason | Description |
| Loan Repayment | For unpaid bank loans or EMIs |
| Child Support | As ordered by a family court |
| Tax Recovery | For unpaid income tax or GST dues |
| Court Fines | For legal penalties imposed by a court |
| Arbitration Awards | As directed by an arbitration ruling |
Bonus: In India, garnishment orders typically specify the amount or percentage to be deducted and the duration of deductions.
Why It Matters
- Ensures compliance with legal and court directives
- Protects the company from legal action or fines
- Maintains transparent payroll practices
- Builds trust with regulatory authorities
- Helps resolve employee debt obligations lawfully
Common Tools for Managing Wage Garnishment in India
- Payroll compliance software: GreytHR, Keka, Zoho Payroll
- HRMS platforms with legal deduction modules
- Pagarai HR Suite – for garnishment tracking, automated deductions, and reporting
How Pagarai Helps
- Automates garnishment deductions based on court orders
- Tracks repayment progress until completion
- Integrates with payroll to ensure timely disbursement
- Maintains secure documentation for audits
- Alerts HR/payroll teams of new or expiring garnishment orders
FAQ
Q1: Is there a limit on wage garnishment in India?
Yes — generally, deductions cannot exceed 50% of the employee’s salary (except in special cases like child support where it may be up to 60%).
Q2: Can an employee refuse wage garnishment?
No — employers are legally bound to comply with court or authority orders.
Q3: Does garnishment affect bonuses?
Yes — if the order specifies inclusion of variable pay or bonuses.
Q4: How should employers handle multiple garnishment orders?
Follow the priority defined by law, often child support and tax dues take precedence.
