Payroll Compliance Services: PF, ESI, PT, LWF and TDS on Salary
Payroll compliance means paying every statutory deduction on staff salaries correctly and on time: provident fund, ESI, professional tax, labour welfare fund and TDS. PF and ESI for a month fall due by the 15th of the next month, and salary TDS by the 7th. We run the whole calendar for you, from the first employee onwards.
What it is
Every salary you pay comes with legal duties attached. Some of the pay goes to the employee’s provident fund and ESI account, part may go to the state as professional tax or labour welfare fund, and income tax has to be deducted before the money reaches the employee. Payroll compliance is the job of working out each amount, paying it on the right portal and filing the return that shows you paid.
The law behind it changed recently. The four labour codes, including the Code on Social Security, 2020 and the Code on Wages, 2019, came into force on 21 November 2025. During the transition, the rules and schemes under the old Acts continue to apply. TDS on salary sits under section 192 of the Income-tax Act, 1961 for FY 2025-26, and under section 392 of the Income-tax Act, 2025 from tax year 2026-27. Deposits go through the EPFO unified portal, the ESIC portal and the Income Tax e-filing system.
Here is the catch: the wage definition now has teeth. Say a company pays basic plus DA at 40% of total pay and the other 60% as allowances. Under the Code on Wages, anything excluded beyond one-half of total pay is added back, so 10% of pay moves into “wages” for PF and similar dues. Many salary structures built years ago need a second look.
Who it applies to
Employers with 20 or more staff
Provident fund becomes mandatory once you have 20 or more employees. Smaller employers can register voluntarily, and many do, because candidates ask about PF. A Faridabad auto-parts unit that grows from 18 to 20 workers for a new order crosses the line the day the twentieth person joins.
Employers with 10 or more staff
ESI covers establishments with 10 or more employees, for staff earning up to ₹21,000 a month (₹25,000 for employees with disabilities). It is now voluntary below 10, but mandatory even for one worker in a hazardous process.
Anyone paying taxable salary
Every employer, of any size, must deduct TDS when an employee’s estimated salary income crosses the taxable limit. Companies, LLPs, firms and proprietors are all covered.
Why it matters
Stop interest before it starts
Late PF dues carry simple interest of 12% a year from the due date until payment. Late TDS deposits attract 1.5% a month. A habit of paying a week late gets expensive.
Protect your staff’s cover
ESI gives employees medical cover and cash benefits; PF builds their retirement savings and pension. A missed deposit shows up in their passbook and in their trust in you.
Pass lender and client checks
Banks, large customers and government tenders ask for PF and ESI challans and TDS returns. Clean records shorten that check.
Payroll deductions at a glance
| Item | Who pays and how much | Due date |
|---|---|---|
| Provident fund (EPF/EPS/EDLI) | Employee 12% of wages; employer 12% (3.67% EPF + 8.33% EPS), plus 0.5% EDLI and 0.5% admin charges. Wage ceiling ₹25,000 a month from 17 September 2026 (₹15,000 earlier). | 15th of the next month (ECR) |
| ESI | Employee 0.75%, employer 3.25% of gross wages, for staff earning up to ₹21,000 a month | 15th of the next month |
| Professional tax | Set by each state; capped at ₹2,500 a year per person. Not levied in Haryana or Delhi. | As per state law |
| Haryana labour welfare fund | Employee 0.2% of salary up to ₹35; employer twice that, up to ₹70 (from 1 January 2026) | By 31 December, or monthly online |
| TDS on salary | As per the slab rates of the regime the employee chooses | 7th of the next month (30 April for March) |
Documents required
From the business
- PAN, TAN and certificate of incorporation or registration
- Existing PF and ESI codes, if any
- Shops Act or factory registration
- Bank account details and DSC of the authorised signatory
For each employee
- Aadhaar, PAN and bank account
- UAN and ESI IP number, if they had a previous job
- Appointment letter and date of joining
- Tax regime choice and investment declaration
Every month
- Attendance and leave records
- Salary register with each pay component
- Joiners, leavers and any revisions
How it works
Review your set-up
We check registrations, the salary structure and past deposits. If you have no PF code yet, we start with registering your establishment with EPFO. We flag gaps such as missed UANs or allowances that push wages out of line with the labour codes.
Calculate dues employee by employee
You send attendance and changes. We compute PF, ESI, LWF and TDS employee by employee and share a summary for your approval.
Deposit and file on time
We prepare the ECR on the EPFO portal, the ESIC monthly contribution, the TDS challan and the quarterly salary TDS statement, the same work we do under our TDS return filing service. You make the payments, or approve them on your banking login.
Close the year and issue Form 16
We issue Form 16 (Form 130 from tax year 2026-27), reconcile deposits with returns and with your monthly books of account, and handle LWF and any state professional tax filings.
Timelines
Monthly
TDS on salary by the 7th of the next month (30 April for March). PF ECR and ESI contribution by the 15th of the next month.
Quarterly
Salary TDS statement (Form 24Q, now Form 138) by 31 July, 31 October, 31 January and 31 May.
Yearly
Haryana LWF by 31 December. Form 16 / Form 130 to employees by 15 June. ESI contribution periods run April–September and October–March.
What happens if you miss a deposit
PF arrears
Simple interest of 12% a year from the due date of each payment to the date you settle it, applied from 21 November 2025 under the Code on Social Security.
TDS defaults
Interest of 1% a month if tax was not deducted and 1.5% a month if deducted but not deposited. Late statements cost ₹200 a day under section 234E, capped at the TDS amount.
LWF in Haryana
Interest at 12% a year on late contributions. Prosecution can bring a fine of ₹2,000–₹5,000 for a first offence, and more for repeat ones.
Frequently asked questions
What is the new PF wage ceiling?
The PF wage ceiling is ₹25,000 a month from 17 September 2026, raised from ₹15,000 by notification S.O. 5109(E). At the ceiling, the employee contribution is ₹3,000 a month and the employer pays about ₹3,250 once EDLI and admin charges are added. Existing members stay members. New joiners earning above the ceiling can stay out unless both sides opt in. We recheck every employee’s status so your October payroll is right.
When must I register for PF and ESI?
PF becomes mandatory when you employ 20 or more people, and ESI when you employ 10 or more. ESI covers staff earning up to ₹21,000 a month. Smaller employers can join PF voluntarily, and ESI is voluntary below 10 employees unless the work involves a hazardous process. Registration is online, and once your documents are in order you can start deductions from the next salary.
Does Haryana charge professional tax?
No. Haryana and Delhi do not levy professional tax, so a Faridabad or Gurugram office has nothing to deduct. States such as Maharashtra, Karnataka, West Bengal and Gujarat do levy it, capped at ₹2,500 a person a year. The tax follows the state where the employee works, not where the company is registered. In practice, a Gurugram software firm with a small sales team in Pune deducts nothing for its Haryana staff but must register and deduct in Maharashtra. If you have staff in a levying state, we register and file there for you.
How much is the Haryana labour welfare fund contribution?
From 1 January 2026 the employee pays 0.2% of salary, capped at ₹35, and the employer pays twice that, up to ₹70. The deposit is due by 31 December each year, though Haryana also allows monthly online payment. It applies to factories and establishments with more than 20 employees and to shops with 10 or more. We add it to the payroll so it never slips past year end.
What changed for payroll under the labour codes?
The four labour codes came into force on 21 November 2025. The biggest payroll change is the wage definition: if allowances excluded from wages exceed one-half of total pay, the excess counts as wages for PF and similar dues. Appointment letters are now mandatory, and fixed-term staff become eligible for gratuity after one year. Old rules continue during the transition, and we track each new notification for you.
When is TDS on salary due?
TDS deducted from salary must be deposited by the 7th of the following month, except March, which is due by 30 April. The quarterly statement, Form 24Q (Form 138 from tax year 2026-27), is due by 31 July, 31 October, 31 January and 31 May. Employees then receive Form 16, now called Form 130, by 15 June. We prepare all three from one salary register.
Which tax regime should we use for employee TDS?
Use the regime each employee chooses; if they say nothing, the new regime applies by default. Under the new regime the standard deduction is ₹75,000, and the section 87A rebate makes income up to ₹12 lakh effectively tax-free. Professional tax and most other deductions are allowed only under the old regime. We collect each employee’s declaration at the start of the year and recompute TDS whenever their choice or salary changes.
What if we have missed PF or TDS deposits in the past?
Pay the arrears as soon as possible, because interest keeps running until you do. PF arrears carry 12% simple interest a year, and late TDS carries 1.5% a month. Late TDS statements also attract ₹200 a day, capped at the tax amount. We work out the exact arrears, file the pending returns and help you reply to any notice. The sooner you start, the smaller the bill.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
There is no government fee to register for PF or ESI. The statutory contributions, interest and late fees described above are paid directly to EPFO, ESIC, the state or the Income Tax Department.
Ready to begin?
Send us last month’s salary register and we will tell you exactly where your PF, ESI, LWF and TDS stand.