India Payroll Compliance Explained: PF, ESI, PT, and TDS

The Four Pillars

Every Indian employer running payroll deals with four statutory streams: Provident Fund (PF), Employee State Insurance (ESI), Professional Tax (PT), and Tax Deducted at Source (TDS). Each has its own thresholds, rates, portals, and penalties.

Provident Fund

Mandatory for establishments with 20+ employees. Both employer and employee contribute 12% of PF wages, with the employer share split between EPF and EPS. The ECR file must be uploaded and paid by the 15th of the following month. Automation generates the ECR directly from processed payroll, with UAN validation built in.

Employee State Insurance

Applies to employees earning up to the ESI wage ceiling. Contributions (0.75% employee, 3.25% employer) are due by the 15th. The tricky part is the contribution period rule: once covered, an employee stays covered until the period ends even if their salary crosses the ceiling. A good payroll engine tracks this automatically.

Professional Tax

Levied by states, not the centre, so slabs and due dates differ across Maharashtra, Karnataka, West Bengal, and other states. Multi-state employers need state-wise registration and state-wise returns. The system should pick the right slab from the employee's work location.

TDS on Salaries

Monthly deduction under Section 192 based on projected annual income, investment declarations, and the regime the employee opted for. Quarterly 24Q returns, annual Form 16 generation, and reconciliation with challans paid. Errors here directly hit your employees' tax credits, so accuracy matters more than anywhere else.

The Compliance Calendar

PF and ESI by the 15th, TDS deposit by the 7th, PT dates by state, quarterly 24Q filings, and annual Form 16 by June 15. Miss a date and interest plus penalties accrue automatically.

Why Automation Wins

Compliance is not intellectually hard, it is operationally relentless. Automating challan-ready reports, ECR files, and Form 16 generation turns a week of monthly effort into a review-and-approve task.