India Statutory Payroll Compliance Guide (2026)

Overview of Indian statutory payroll

Indian payroll compliance combines central legislation (EPF, ESIC, income tax, gratuity, bonus, maternity benefit, CLRA) with state-specific statutes (Professional Tax, Labour Welfare Fund and each state's Shops & Establishments Act). An employer's compliance surface therefore depends on where its establishments operate, how many employees each site has, and whether contract labour is engaged.

The rest of this guide walks through each statute — who it applies to, what the employer must contribute or deduct, the return cadence, and the penalties for non-compliance.

EPF — Employees' Provident Fund

The Employees' Provident Funds & Miscellaneous Provisions Act, 1952 requires establishments with 20 or more employees to register with the EPFO. Both employee and employer contribute 12% of basic + DA (capped at the statutory wage ceiling of ₹15,000 for mandatory coverage). The employer's 12% is split — 8.33% flows to the Employees' Pension Scheme (EPS) and 3.67% to EPF.

• Filing: monthly ECR, due by the 15th of the following month.
• Interest on delay: Section 7Q at 12% p.a.; damages under Section 14B up to 25% p.a.
• UAN & KYC seeding must be completed for every new joiner.

EPS — Employees' Pension Scheme

EPS is funded from the employer's 8.33% share (max ₹1,250/month at the wage ceiling). Employees who joined EPF before September 2014 and continued in service could opt for a higher pension on actual wages under recent Supreme Court directions.

EDLI — Employees' Deposit Linked Insurance

EDLI provides life insurance cover to EPF members. The employer contributes 0.50% of monthly wages up to ₹15,000 (max ₹75) plus a 0.005% admin charge. Cover payable to nominees is up to ₹7 lakh.

ESIC — Employees' State Insurance

The ESI Act covers establishments with 10 or more employees (20 in some states) where employees earn gross wages up to ₹21,000 (₹25,000 for persons with disabilities). Employer contribution is 3.25% and employee contribution 0.75%. Contributions are due by the 15th of the following month; contribution periods run April–September and October–March.

Professional Tax (PT)

PT is a state levy. Karnataka, Maharashtra, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Kerala, Gujarat and Madhya Pradesh among others impose PT with maximum annual liability of ₹2,500. Employers must register both as an entity (Enrolment Certificate) and as a deductor (Registration Certificate) and file returns monthly, quarterly or annually depending on the state.

Labour Welfare Fund (LWF)

LWF is a state statute funding welfare schemes for workers. Contribution amounts, employee coverage and payment frequency (monthly, half-yearly, annually) vary. Common examples: Karnataka LWF (annual, December), Maharashtra LWF (half-yearly, June/December), Tamil Nadu LWF (annual, January).

Payment of Gratuity Act, 1972

Applies to establishments with 10+ employees. Gratuity is payable after 5 continuous years of service (waived on death/disablement). Formula: (Last drawn basic + DA) × 15 / 26 × completed years, capped at ₹20,00,000. Employers must maintain a gratuity liability provision and ideally fund it through an approved trust or LIC-managed group gratuity scheme.

Payment of Bonus Act, 1965

Applies to factories and establishments with 20+ employees. Employees drawing wages up to ₹21,000 are covered. Statutory minimum bonus is 8.33% and maximum 20% of eligible salary, calculated on a bonus salary ceiling of ₹7,000 or minimum wages, whichever is higher. Form D is filed annually within 30 days of disbursement.

Payment of Wages Act, 1936

Governs when and how wages must be paid. Wage periods cannot exceed one month; payment must be made by the 7th (establishments < 1,000 employees) or 10th (larger establishments). Only prescribed deductions are permitted.

Minimum Wages Act, 1948

State governments notify minimum wages by scheduled employment, skill level and zone. Rates typically revise twice a year (April/October) with VDA adjustments. Employers must display the notification, maintain wage registers (Form V) and pay overtime at 2× ordinary rate.

Equal Remuneration Act, 1976

Prohibits pay discrimination on the basis of sex for same or similar work. Maintain Form D register and ensure gender-neutral job evaluation.

Shops & Establishments Acts

Every state has its own Shops & Establishments Act governing working hours, weekly off, leave, overtime, youth employment and closure rules for commercial establishments. Registration is required within 30 days of commencement; annual returns and periodic renewals apply.

Contract Labour (Regulation & Abolition) Act, 1970

Applies to principal employers engaging 20+ contract workers. Principal employer must obtain a Registration Certificate; each contractor requires a Licence. Registers of workers, wages and deductions must be maintained and half-yearly (Form XXIV) and annual (Form XXV) returns filed.

Maternity Benefit Act, 1961

26 weeks paid leave for the first two children, 12 weeks from the third; 12 weeks for adopting and commissioning mothers. Nursing breaks and creche facility (50+ employees) are mandatory. Medical bonus of ₹3,500 applies where prenatal/postnatal care is not provided free by the employer.

TDS on salary — Income Tax Act, 1961

Under Section 192, employers deduct income tax monthly using the applicable regime (old vs new). Key deadlines:

• Monthly TDS deposit: 7th of the following month (30 April for March).
• Quarterly Form 24Q: 31 Jul, 31 Oct, 31 Jan, 31 May.
• Form 16 (Part A auto-generated on TRACES + Part B) to employees by 15 June.
• Form 12BB collected from employees to substantiate exemptions.

Payroll compliance calendar (recurring)

• 7th of month: TDS deposit for the previous month.
• 15th of month: EPF ECR + payment; ESIC contribution; state PT (Karnataka, Maharashtra) and LWF where monthly.
• 10th–21st (state-specific): Professional Tax returns and payments.
• 31 Jul / 31 Oct / 31 Jan / 31 May: Quarterly TDS (Form 24Q) return.
• 15 Jun: Issue Form 16 to employees.
• Half-yearly / annual: LWF, CLRA, S&E, POSH annual report (31 January).

Monthly statutory checklist

1. Reconcile new joiners, exits and transfers before payroll cutoff.
2. Compute EPF, EPS, EDLI, ESIC, PT, LWF, TDS and any state-specific deductions.
3. Generate ECR and deposit EPF challan by the 15th.
4. File ESIC contribution and deposit challan by the 15th.
5. Pay Professional Tax in each applicable state per the state deadline.
6. Deposit TDS by the 7th and update employee investment declarations.
7. Distribute payslips and archive the payroll register.

Annual compliance checklist

1. File quarterly Form 24Q and issue Form 16 by 15 June.
2. File EPF annual return (Form 3A / 6A) and ESIC annual return where applicable.
3. File Shops & Establishments annual returns per state.
4. File Bonus Act Form D within 30 days of payment.
5. Submit POSH annual report to the District Officer by 31 January.
6. Renew factory / S&E / CLRA licences before expiry.
7. Reassess gratuity liability actuarially and top up trust funding.

Frequently asked questions

When is EPF payment due each month in India?

EPF contributions and the Electronic Challan-cum-Return (ECR) must be deposited on or before the 15th of the following month. Interest under Section 7Q and damages under Section 14B apply to delayed remittances.

What is the current EPF wage ceiling?

The statutory EPF wage ceiling is ₹15,000 per month. Employers must contribute for every employee earning basic + DA up to that amount; employers may choose to contribute on actual wages above the ceiling.

Who has to register under ESIC?

Establishments covered by the ESI Act with 10 or more employees (20 in some states) must register. Employees earning gross wages up to ₹21,000 per month (₹25,000 for persons with disabilities) are covered and contributions are due by the 15th of the following month.

Is Professional Tax the same across India?

No. Professional Tax is a state levy. Rates, slabs and return frequency differ by state. Karnataka, Maharashtra, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Gujarat, Kerala and Madhya Pradesh among others levy PT; states like Delhi and Haryana do not.

When does gratuity become payable?

Under the Payment of Gratuity Act, gratuity is payable on separation after 5 continuous years of service (relaxed on death or disablement). The formula is (last drawn basic + DA) × 15 / 26 × completed years of service, capped at ₹20 lakh.

What is the deadline for filing TDS returns on salary?

Employers file quarterly Form 24Q by 31 July, 31 October, 31 January and 31 May. Form 16 (Part A + B) must be issued to employees by 15 June following the financial year.

How many weeks of paid maternity leave are Indian employees entitled to?

The Maternity Benefit (Amendment) Act, 2017 provides 26 weeks of paid maternity leave for the first two children and 12 weeks from the third child onwards. Establishments with 50+ employees must also provide creche facilities.