Guide
Payroll compliance in India: a 2026 guide to PF, ESI, TDS, professional tax and LWF
What an Indian employer needs to deduct, deposit and file every month, with current rates, wage ceilings and due dates.
Last reviewed 26 October 2026. Rules change, so confirm against the official portals listed at the end before you act.
The monthly payroll compliance calendar at a glance
| Obligation | Rate or limit | Due |
|---|---|---|
| Provident fund (EPF, EPS, EDLI) | 12% of PF wages from employee and employer. Mandatory wage ceiling of ₹25,000 a month from 17 September 2026 (₹15,000 before). | Return (ECR) and payment by the 15th of the following month. |
| Employees' State Insurance (ESI) | Employer 3.25% and employee 0.75% of wages. Applies up to ₹21,000 a month (₹25,000 for persons with disability). | Contributions by the 15th of the following month. |
| TDS on salary | Estimated and deducted each month under the employee's tax regime. | Deposit by the 7th of the following month (30 April for March). Quarterly return by 31 July, 31 October, 31 January and 31 May. Salary certificate by 15 June. |
| Professional tax | State-specific slabs and rates. | Varies by state. |
| Labour welfare fund | State-specific amounts and frequency. | Varies by state. |
What changed in 2026
PF wage ceiling raised. The statutory EPF wage ceiling moved from ₹15,000 to ₹25,000 a month on 17 September 2026, after Cabinet approval on 16 September and a Gazette notification (S.O. 5109(E)) issued on 17 September. Employees with PF wages between ₹15,000 and ₹25,000 who were outside mandatory coverage can now come within it, and members contributing on a ₹15,000 cap may see contributions rise. Because the change took effect mid-month, September 2026 was computed in two parts: 1 to 16 September on the old ceiling and 17 to 30 September on the new one.
September ECR deadline extended once. EPFO moved the September 2026 ECR and payment date from 15 October to 31 October 2026. The extension covers that wage month only, and October 2026 contributions remain due on 15 November.
New income tax law. From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act. TDS on salary now falls under Section 392, the quarterly salary return is Form 138 instead of Form 24Q, and the salary certificate is Form 130 instead of Form 16. Reported due dates are unchanged.
Common payroll compliance mistakes
- Using an out-of-date PF wage ceiling in the pay run after the September 2026 change.
- Treating the quarterly TDS return date as the payment date, when the tax itself is due by the 7th of the next month.
- Applying one state's professional tax or labour welfare fund rules to employees in another state.
- Re-entering attendance and leave into a separate payroll sheet, so absences and deductions do not match.
What to look for in payroll software
- Statutory deductions (PF, ESI, professional tax, LWF and TDS) calculated automatically, and updated when the rules change.
- Attendance and leave feeding payroll directly, so pay is based on approved records.
- A monthly view of what is due and what has been filed.
- Statutory reports that export to Excel or PDF.
- Clear information on whether statutory filing is included or whether you file yourself.
How Sanvit HR fits in
Sanvit HR applies PF, ESI, professional tax, LWF and TDS in the pay run, tracks a monthly statutory calendar and provides statutory reports in Excel and PDF. Statutory filing is not included in the Basic plan. See payroll software and HR compliance for details.
Questions
Frequently asked questions
What is the PF wage ceiling now?
From 17 September 2026 the statutory EPF wage ceiling is ₹25,000 a month, up from ₹15,000. Contributions on wages above the ceiling are voluntary. Check the EPFO notification for your own situation.
What are the current ESI rates and limit?
The employer pays 3.25% and the employee 0.75% of wages, a total of 4%. ESI applies to employees earning up to ₹21,000 a month, or ₹25,000 for persons with disability.
When is TDS on salary due?
Tax deducted from salary must be deposited by the 7th of the following month, and by 30 April for March. The quarterly salary return is due on 31 July, 31 October, 31 January and 31 May.
Which form replaces Form 16 and Form 24Q?
Under the Income-tax Act, 2025, which applies from 1 April 2026, the salary TDS return is Form 138 (earlier Form 24Q) and the salary certificate is Form 130 (earlier Form 16). The certificate is still due by 15 June after the year.
Are professional tax and labour welfare fund the same everywhere?
No. Both are set by each state, so slabs, amounts, due dates and even whether they apply differ. Check the rules for every state where you have employees.
Check the official sources
This guide is general information, not legal or tax advice. Rates, ceilings and dates are set by notification and can change. The Cabinet decision on the PF wage ceiling is in the Press Information Bureau release. Confirm current rules on the EPFO website, the ESIC website and the Income Tax Department portal, and with your state labour department for professional tax and labour welfare fund.
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