Running payroll in India is more than paying salaries, it means deducting and depositing PF, ESI, TDS, and professional tax correctly, filing the returns on time, and meeting the new Labour Codes. Mistakes attract interest, penalties, and notices. Samkhya manages your end-to-end payroll, from salary processing to every statutory filing.
Payroll compliance is the set of legal obligations that go with paying employees in India, covering the correct deduction, deposit, and reporting of several statutory amounts. The main heads are the Employees’ Provident Fund (PF), Employees’ State Insurance (ESI), TDS on salary under Section 192 of the Income Tax Act, Professional Tax (PT), and the Labour Welfare Fund (LWF), alongside bonus and gratuity. Each has its own rate, threshold, and due date, PF and ESI are deposited by the 15th of the following month, and salary TDS by the 7th. From 21 November 2025, the four Labour Codes came into force, consolidating 29 laws and, under the Code on Wages, requiring basic pay to be at least 50% of CTC, which changes how PF and gratuity are calculated. The Income Tax Act, 2025, in force from 1 April 2026, has also renumbered and renamed several payroll provisions.
Getting payroll right brings real benefits:
Payroll involves several statutory heads:
Payroll carries regular filings:
Payroll compliance applies to:
Payroll runs on a monthly cycle. Each month, gross salary is computed, the statutory deductions, PF, ESI, TDS, and professional tax, are calculated on the correct base, and net pay is released with a payslip. The employer then deposits PF and ESI by the 15th and salary TDS by the 7th of the following month, through the EPFO, ESIC, and income-tax portals, and files the periodic returns, the ECR for PF, the ESI return, and Form 24Q for TDS each quarter, with Form 16 issued to employees annually. Records of wages, deductions, and registers must be kept, and under the OSH Code many of these registers are now digital. Getting the wage definition right under the Code on Wages is central, as it drives the PF and gratuity figures.
For Setup:
For Each Cycle:
The monthly payroll process runs as follows:
Outsourcing payroll to Samkhya Corporate Services is simple. Just follow these easy steps:
From there, our team runs the monthly cycle and all the filings.
Recent reforms reshape payroll:
The key numbers are steady: PF is 12% each from employer and employee on basic and DA; ESI is 3.25% from the employer and 0.75% from the employee on gross wages up to the Rs. 21,000 threshold; and salary TDS is deducted monthly under Section 192 (renumbered Section 392 under the Income Tax Act, 2025 from April 2026). PF and ESI are deposited by the 15th of the following month and TDS by the 7th, with Form 24Q each quarter and Form 16, now in its revised form, issued by 15 June. Delays are expensive: PF attracts interest and damages, ESI carries interest, and late TDS draws interest and a fee, with the Labour Codes raising penalties significantly for non-compliance. Keeping the deposits and returns on schedule is therefore essential.
| Head | Rate / Basis | Due |
| Provident Fund | 12% employer + 12% employee. | 15th monthly. |
| ESI | 3.25% + 0.75% of gross. | 15th monthly. |
| TDS on Salary | Slab, on estimated income. | 7th monthly. |
| Form 24Q | Quarterly TDS return. | Each quarter. |
| Professional Tax | State-specific. | As notified. |
What is payroll compliance?
It is the set of obligations that go with paying employees, deducting and depositing PF, ESI, TDS, and professional tax correctly, filing the returns, and meeting the Labour Codes.
What are the main payroll deductions?
The main heads are the Provident Fund, ESI, TDS on salary, professional tax, and the Labour Welfare Fund, with bonus and gratuity payable to eligible employees.
When are PF, ESI, and TDS deposited?
PF and ESI are deposited by the 15th of the following month, and salary TDS by the 7th, with Form 24Q filed each quarter.
What changed under the Labour Codes?
From 21 November 2025, the four Labour Codes require basic pay to be at least 50% of CTC, which raises the base for PF and gratuity, among other changes.
What is Form 16?
Form 16 is the annual TDS certificate an employer issues to each employee, now in a revised format under the Income Tax Act, 2025.
What is the penalty for late deposits?
Late PF and ESI attract interest and damages, and late TDS draws interest and a fee, with the Labour Codes increasing penalties for non-compliance.
