Payroll Compliance

Payroll compliance involves adhering to various statutory requirements while processing employee salaries. This includes deductions, contributions, and reporting obligations.

Key Statutory Deductions

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Provident Fund (PF)

  • •Employee contribution: 12% of (Basic + DA)
  • •Employer contribution: 12% of (Basic + DA)
  • •Mandatory for establishments with 20+ employees
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Employee State Insurance (ESI)

  • •Employee contribution: 1.75% of wages
  • •Employer contribution: 4.75% of wages
  • •Applicable for employees earning up to ₹21,000 per month
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Tax Deducted at Source (TDS)

  • •Deducted as per Income Tax Act, 1961
  • •Based on employee's tax slab and declarations
  • •Form 16 issued annually to employees
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Professional Tax

  • •State-specific tax on employment
  • •Varies by state (typically ₹200-₹2,500 per month)
  • •Not applicable in all states
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Labour Welfare Fund

  • •State-specific contribution
  • •Amount varies by state
  • •Applicable in certain states only
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Monthly Compliance Checklist

  • ✓Calculate and deduct PF contributions
  • ✓Calculate and deduct ESI contributions (if applicable)
  • ✓Deduct TDS as per tax calculations
  • ✓Deduct Professional Tax (state-specific)
  • ✓Remit all statutory contributions to respective authorities
  • ✓File monthly returns (PF, ESI, TDS)
  • ✓Maintain accurate payroll records
  • ✓Issue payslips to employees
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Annual Compliance

  • ✓Issue Form 16 to employees (TDS certificate)
  • ✓File annual returns with EPFO
  • ✓File annual returns with ESIC (if applicable)
  • ✓Maintain statutory registers and records
  • ✓Comply with annual audit requirements
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Important Notes

  • •Compliance requirements may vary by state
  • •Keep updated with latest amendments and circulars
  • •Maintain proper documentation for all deductions
  • •Non-compliance can result in penalties and legal issues
  • •Consider using payroll software or consulting experts for accurate compliance

Disclaimer

This content is for informational purposes only and does not constitute legal advice. Laws and regulations may change. Please verify details from official government sources or consult a qualified professional.