PF, ESI and PT Compliance Checklist for Indian Employers (2026)

Statutory compliance is the part of payroll where small mistakes become expensive: late-payment interest, damages and notices that take weeks to resolve. This checklist covers the deductions most Indian employers deal with every month, what each one applies to, and the deadlines to put in your calendar.

1. Employees' Provident Fund (EPF)

EPF applies to establishments with 20 or more employees (smaller ones can join voluntarily). Coverage is mandatory for employees whose basic wages plus dearness allowance are up to ₹15,000 a month; employees above that can be enrolled by agreement.

• Employee contribution: 12% of basic + DA.
• Employer contribution: 12%, of which 8.33% goes to the Employees' Pension Scheme (on wages capped at ₹15,000, so at most ₹1,250 a month) and the balance to EPF.
• Employer also pays EDLI and administrative charges.
• File the Electronic Challan cum Return (ECR) and pay by the 15th of the following month.

2. Employees' State Insurance (ESI)

ESI covers employees earning gross wages up to ₹21,000 a month (₹25,000 for persons with disabilities) in establishments with 10 or more employees in notified areas.

• Employee contribution: 0.75% of gross wages.
• Employer contribution: 3.25% of gross wages.
• Pay by the 15th of the following month.
• Eligibility is fixed for a contribution period (April–September, October–March), so an employee who crosses the limit mid-period stays covered until it ends.

3. Professional Tax (PT)

Professional Tax is levied by states, so the slabs, due dates and even whether it applies depend on where each employee works. The Constitution caps it at ₹2,500 per person per year. Some states, such as Delhi, do not levy it at all.

• Register in every state where you have employees who are liable.
• Deduct according to that state's salary slabs — many states also have a higher deduction in one month to reach the annual amount.
• Pay and file returns on the state's schedule (monthly, quarterly or annually depending on the state and the size of your liability).

4. TDS on salary

Employers must estimate each employee's annual tax and deduct it evenly through the year, adjusting as salary, declarations or the chosen tax regime change. The new tax regime is the default unless the employee opts out.

• Deposit TDS by the 7th of the following month (the March deduction has a later due date).
• File the quarterly TDS return for salaries.
• Issue Form 16 to employees after the year closes.
• Collect investment declarations early in the year and proofs before the final quarter.

5. Labour Welfare Fund (LWF)

A number of states run a Labour Welfare Fund with small employee and employer contributions, usually deducted half-yearly or annually. Check whether the states you operate in have one, and add the deduction months to your payroll calendar.

6. The labour codes

India's four labour codes consolidate older laws on wages, social security, industrial relations and workplace safety. One change with direct payroll impact is the uniform definition of "wages": if allowances make up more than half of total pay, the excess is treated as wages, which can raise PF and gratuity costs for structures with a low basic salary. Review your salary structures with an advisor as the central and state rules are finalised.

Your monthly compliance calendar

1. By the 7th — deposit TDS deducted from last month's salaries.
2. By the 15th — pay PF (file ECR) and ESI contributions.
3. As per state — pay Professional Tax and, where applicable, Labour Welfare Fund.
4. Quarterly — file TDS returns.
5. Annually — issue Form 16 and complete any annual returns.

How software keeps you compliant

Most compliance errors start with wrong inputs: attendance that doesn't match payroll, an employee who crossed the ESI limit, or a state PT slab that was never updated. DigiHR payroll calculates PF, ESI, PT and TDS from attendance and leave data already in the system, and produces month-wise statutory reports so filings take minutes instead of days.