Payroll Compliance Checklist for Indian Businesses — PF, ESIC, TDS, PT

Payroll is the most regulated function in any Indian business — five different statutes, four different authorities, and personal liability for the directors on non-deposit. The compliance is rule-based and largely automatable, but it has to be done every month, on time, without exception.

1. Employees' Provident Fund (EPF)

Applicable to establishments with 20+ employees. Contribution is 12% of basic + DA from the employee, matched by 12% from the employer (of which 8.33% goes to EPS, capped at Rs15,000 wage). UAN must be linked, KYC seeded, and the ECR (Electronic Challan-cum-Return) filed and contribution deposited by the 15th of the following month. Late deposit attracts 12% p.a. interest under Section 7Q and damages up to 100% under Section 14B.

2. Employees' State Insurance (ESIC)

Applicable to establishments with 10+ employees (most states) where employees earn up to Rs21,000 per month. Contribution is 3.25% employer + 0.75% employee on gross wages. Monthly return and deposit by the 15th of the following month (recently revised from the 21st in some states — check your jurisdiction).

3. Professional Tax (PT)

State-specific. Examples:

• Maharashtra: Rs200/month for salary Rs10,000+ (Rs300 in February to total Rs2,500/year).
• Karnataka: Rs200/month for salary Rs25,000+.
• West Bengal, Telangana, Tamil Nadu: slab-based, mostly monthly returns.

Employer must obtain Enrolment Certificate (PTEC) and Registration Certificate (PTRC), deduct PT and deposit monthly or quarterly per state rules.

4. TDS on salary — Section 192

• Compute TDS monthly on average projected annual salary income at the employee's applicable slab (new or old regime as opted).
• Deposit by the 7th of the following month (30 April for March).
• File quarterly Form 24Q by 31 July, 31 October, 31 January and 31 May (for Q4, which also includes annexure for Form 16).
• Issue Form 16 to all employees by 15 June.
• Penalties: Rs200/day under Section 234E for late return, interest under Section 201, prosecution under Section 276B for willful default.

5. Annual and other deliverables

• Annual return under Shops & Establishment Act / Labour Welfare Fund (state-specific).
• Gratuity provision and POSH (Sexual Harassment) Act compliance — Internal Complaints Committee for 10+ employees.
• POSH annual report to the District Officer by 31 January.
• New Labour Codes — track effective date and rebuild wage definitions when notified.

Our payroll processing service runs the entire monthly cycle, including challan generation, payslips, Form 16 and statutory returns.

Frequently Asked Questions