The Complete Guide to Payroll Compliance in India

Payroll compliance in India is notoriously complex. With regulations varying by state, frequent policy updates, and strict penalties for non-compliance, businesses need a clear understanding of their obligations.

Provident Fund (PF)

Under the Employees' Provident Fund Act, both employer and employee contribute 12% of basic salary. The employer's share is split between EPF (3.67%) and EPS (8.33%). Non-compliance attracts penalties of up to 100% of the amount due.

ESI (Employee State Insurance)

Applicable to establishments with 10+ employees where gross salary doesn't exceed ₹21,000/month. Employer contributes 3.25% and employee contributes 0.75%.

Professional Tax

Levied by state governments, professional tax varies across states. Maharashtra charges up to ₹2,500 per year, while Karnataka caps at ₹2,400. Employers must deduct and remit monthly.

TDS on Salary

Employers must deduct TDS based on estimated annual income and applicable tax slabs. Form 16 must be issued by June 15 each year. Late filing attracts penalties of ₹200 per day.

How SimplyHR Ensures Compliance

Our payroll management service handles all statutory calculations, filings, and returns. We stay updated on regulatory changes so you don't have to. Our clients have maintained 100% compliance records with zero penalties.