Payroll compliance in India, month by month
PF, ESI, professional tax, TDS and labour welfare fund dates in one place — checked against the four Labour Codes, the Income-tax Act, 2025 and the new ₹25,000 PF wage ceiling.
What changed in the last twelve months
If your payroll calendar was last updated in 2025, parts of it are now wrong. Four changes matter most.
- The four Labour Codes took effect on 21 November 2025. The Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions (OSH) Code replace 29 central labour laws. The central rules under them were notified on 8 May 2026.
- A new EPF Scheme, 2026 replaced the 1952 Scheme. It was notified on 29 June 2026, and PF is now worked out on “wages” as the Codes define them.
- The PF wage ceiling went up from ₹15,000 to ₹25,000 a month on 17 September 2026 — the first revision since 2014.
- The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. TDS on salary moved from section 192 to section 392, Form 24Q became Form 138 and Form 16 became Form 130. The due dates stayed the same.
This guide covers the central rules and a few state examples, as of October 2026. It is general information, not legal or tax advice. Confirm anything that affects your own payroll with your CA or labour-law adviser.
The dates that repeat every month
Most payroll compliance happens on the same few dates each month. Put these in the calendar first; the yearly items sit on top of them.
| Due by | What to do | Where the rule comes from |
|---|---|---|
| 7th | Pay last month’s salaries | Code on Wages: for a monthly wage period, before the seventh day of the next month ends. The government has called this out for IT and ITES employers in particular. |
| 7th | Deposit the TDS deducted from last month’s salaries | Income-tax Rules, 2026. March is the exception: due by 30 April. |
| 15th | Pay PF and upload the ECR, with joiners and leavers | EPF Scheme, 2026: within 15 days of the close of the month. |
| 15th | Pay ESI contributions | ESIC: within 15 days of the last day of the month. |
| State date | Deposit professional tax and file the return | Each state sets its own dates, and the frequency can depend on how much you deduct. |
| State date | Labour welfare fund, where your state has one | Amounts and frequency vary by state. |
Two rules are triggered by events rather than dates. When someone leaves — by resignation, termination or dismissal — their wages are due within two working days, and gratuity, where payable, within 30 days. When someone joins, they need an appointment letter; new PF members go up with that month’s ECR, and anyone covered by ESI needs registering with ESIC.
The year at a glance
This follows India’s tax year, April to March. Every month also carries the monthly dates above.
| Month | What falls due | Notes |
|---|---|---|
| April | TDS for March by 30 April. Collect each employee’s tax-regime choice and Form 124 (the old Form 12BB) claims. | The new tax regime is the default. A new ESI contribution period starts on 1 April. |
| May | Form 138 (the old Form 24Q) for January–March by 31 May. | — |
| June | Form 130 (the old Form 16) to every employee whose tax you deducted, by 15 June. | For tax year 2026–27, that is 15 June 2027. |
| July | Form 138 for April–June by 31 July. | A good time to reconcile PF, ESI and TDS for the first quarter. |
| August | Monthly dates only. | — |
| September | Monthly dates only. | 2026: the ₹25,000 PF ceiling applies from 17 September, so this month’s PF (paid by 15 October) spans two ceilings. |
| October | Form 138 for July–September by 31 October. | A new ESI contribution period starts on 1 October. 2026: EPFO’s enrolment campaign closes on 31 October. |
| November | Statutory bonus, within eight months of the end of the accounting year. | 30 November if your accounting year ends on 31 March. |
| December | Monthly dates only. | Remind employees to collect rent receipts and investment proofs. |
| January | Form 138 for October–December by 31 January. | Collect proofs for the final TDS calculation. |
| February | Unified annual return (Form XXIII) for the year ending 31 December, by the last day of February. | One return under all four Codes, set by the central rules; state rules may differ. Maharashtra and Karnataka collect ₹300 of PT this month, not ₹200, from employees in the top slab. |
| March | Final TDS true-up, so the full year’s tax is deducted. | Maharashtra now wants the March PT return, and annual PT returns, by 15 March. |
Provident fund after the 2026 changes
EPF applies to establishments with 20 or more employees. Employer and employee each pay 12% of wages; a 10% rate applies only to classes of establishments the government notifies. Contributions are calculated on wages up to the ceiling, and anything above it is voluntary. Of the employer’s share, 8.33% goes to the Employees’ Pension Scheme (EPS), so with the new ceiling the maximum employer pension contribution rises from ₹1,250 to ₹2,083 a month.
What to do now:
- Re-check who must be a memberPeople earning between ₹15,000 and ₹25,000 a month who were outside EPF now fall under mandatory coverage for EPF, EPS and EDLI insurance.
- Get September 2026 rightThe new ceiling applies from 17 September, not the 1st. Work out that month’s contributions with both ceilings in mind, and follow EPFO’s current instructions for the return.
- Rebase on the Codes’ definition of wagesIf allowances are more than half of total pay, part of them now counts as wages for PF. See the 50% rule below.
- Close old gaps while you canUntil 31 October 2026, the Employees’ Enrolment Campaign, 2026 lets employers enrol current staff who joined between 1 April 2009 and 31 March 2026 but were never enrolled. If you never deducted their share, the employee’s share is waived, but you must still pay the employer’s share for each person from their date of joining, with interest and administrative charges. Damages are limited to a lump sum of ₹100, and regular contributions continue from the month you declare them. Each person first needs a UAN authenticated by face on the UMANG app.
ESI: a different ceiling, two periods a year
ESI covers establishments with 10 or more people. Employees earning up to ₹21,000 a month (₹25,000 for persons with disability) are covered. The employee pays 0.75% of wages and the employer 3.25%. Employees whose average daily wage is ₹176 or less pay nothing, but the employer still pays its share.
ESI runs in two contribution periods: April to September, and October to March. Each one feeds a six-month cash-benefit period that starts three months after it ends. The Labour Codes also extend ESIC across India: coverage is voluntary for establishments with fewer than 10 employees, and compulsory even with one employee in a hazardous process.
Do not mix the ceilings up. PF now uses ₹25,000; ESI still uses ₹21,000. An employee earning ₹22,000 a month falls under PF but not ESI.
Professional tax: one law per state
Professional tax (PT) is a state tax. The Constitution caps it at ₹2,500 per person per year, but each state decides whether to levy it, the slabs and the dates. Deduct it according to the state where the employee works, and register in each state that levies it where you have staff.
Two neighbouring states show how much it varies:
- Maharashtra (since April 2023): men earning up to ₹7,500 a month pay nothing, ₹7,501–10,000 pay ₹175, and above ₹10,000 pay ₹200 a month and ₹300 in February. Women earning up to ₹25,000 pay nothing; above that, ₹200 a month and ₹300 in February.
- Karnataka (since April 2025): salaries of ₹25,000 a month and above pay ₹200 a month and ₹300 in February — ₹2,500 a year, up from ₹2,400.
Due dates move too. Maharashtra made 15 March the due date for the March return and for annual returns from 2026. Check each state’s portal at the start of the year rather than copying last year’s calendar.
TDS on salary under the Income-tax Act, 2025
Salary for tax year 2026–27 onwards falls under the new Act. Section 392 replaces section 192, but the method has not changed: estimate each employee’s income for the year, apply the rates in force and deduct the average every month.
- Regime first. The new tax regime is the default. Ask every employee early in the year which regime they want; if they do not tell you, deduct under the new regime.
- Claims with evidence. Employees who want deductions or exemptions considered — HRA, LTA, home-loan interest, investments — give you Form 124 with proof.
- Deposit by the 7th. March’s TDS is due by 30 April. Late deposit costs interest at 1.5% a month from the date of deduction to the date of payment.
- Quarterly return: Form 138. Due 31 July, 31 October, 31 January and 31 May.
- Annual certificate: Form 130. Issue it by 15 June after the tax year ends.
Search your payroll templates, offer letters and employee FAQs for “Form 16”, “24Q” and “12BB”. The dates did not change, but the names your employees will see did.
Labour welfare fund
Many states run a labour welfare fund, with a small contribution from employees and a larger one from employers. In Haryana, for example, the employee pays 0.2% of pay up to ₹35 a month (from January 2026), and the employer pays twice the employee’s share. Each state sets its own amounts and timing, so check with the welfare board of every state where you employ people.
What the Labour Codes changed for payroll
The 50% rule. “Wages” now means basic pay, dearness allowance and retaining allowance. If the excluded items — HRA, conveyance, overtime, commission and the like — come to more than half of total pay, the excess is added back to wages. That changes PF, gratuity and anything else calculated on wages.
A worked example
Total pay is ₹60,000 a month. Basic and DA are ₹24,000; allowances are ₹36,000. Half of total pay is ₹30,000, so ₹6,000 of the allowances is added back, and wages for statutory purposes become ₹30,000.
According to the Labour Ministry’s FAQs, performance incentives, ESOPs, variable pay and reimbursements are not part of wages. The other changes payroll teams feel most:
- Timely pay. Monthly wages by the 7th; final wages within two working days of an exit.
- Appointment letters for every worker.
- Fixed-term employees get the same benefits as permanent staff, and gratuity after one year instead of five. Gratuity under the Code applies from 21 November 2025.
- Overtime at twice the normal rate of wages.
- Free annual health check-ups for workers over 40.
- One registration, one licence and one return in place of many — including the unified annual return each February.
State governments make their own rules under the Codes, so watch their notifications too. Until a state notifies its rules, the old ones continue to the extent they fit the Codes.
Common mistakes to fix now
- Still capping PF at ₹15,000 for pay after 17 September 2026.
- Using one wage ceiling for both PF and ESI.
- Keeping a low basic and loading allowances. The 50% rule adds the excess back anyway.
- Settling final pay “in the next payroll cycle”. Wages are due within two working days of an exit.
- Deducting PT by the head office’s state instead of where the employee works.
- Treating 7 April as the date for March TDS, or 30 April as the date for every month.
- Old form names — 24Q, Form 16, 12BB — still in letters, portals and employee FAQs.
Keeping the calendar running
A calendar only works if the data behind it is right: who joined, who left, who moved state and who crossed a ceiling. In Effred One, HRMS and payroll run on the same employee master as attendance and leave, and the legal portal keeps obligations and key dates in a compliance calendar. You can ask EVA to forecast next quarter’s payroll cost — it answers from your own data and changes nothing without your confirmation.
If you would like to see it with your own payroll, book a demo.
Common questions
What is the due date for PF and ESI payments?
Both are due by the 15th of the following month. PF is paid with the electronic challan-cum-return (ECR) within 15 days of the close of the month, and ESI within 15 days of the last day of the month.
What is the due date for TDS on salary?
Deposit TDS by the 7th of the following month; tax deducted in March is due by 30 April. The quarterly salary TDS return, Form 138, is due on 31 July, 31 October, 31 January and 31 May.
Has Form 16 been replaced?
Yes. Under the Income-tax Rules, 2026, the salary TDS certificate is Form 130 and the quarterly salary TDS return is Form 138 (earlier Form 24Q). Form 130 must be issued by 15 June after the end of the tax year.
What is the PF wage ceiling in 2026?
₹25,000 a month from 17 September 2026, up from ₹15,000. Employees earning up to ₹25,000 a month now fall under mandatory EPF, EPS and EDLI coverage.
When did the new Labour Codes come into force?
On 21 November 2025. The central rules were notified on 8 May 2026. States make their own rules; until they do, the older rules continue where they fit the Codes.
Sources
- PIB — Government makes the four Labour Codes effective (21 November 2025) (opens in a new tab)pib.gov.in
- Ministry of Labour & Employment — Compliance Handbook for Employers under the Four Labour Codes (opens in a new tab)labour.gov.in
- Ministry of Labour & Employment — FAQs on Labour Codes (definition of wages, gratuity) (opens in a new tab)labour.gov.in
- The Code on Wages, 2019 (sections 17 and 39) (opens in a new tab)labour.gov.in
- Gazette of India — Code on Wages (Central) Rules, 2026, G.S.R. 343(E), 8 May 2026 (opens in a new tab)egazette.gov.in
- Gazette of India — Social Security (Central) Rules, 2026, G.S.R. 344(E), 8 May 2026 (unified annual return) (opens in a new tab)egazette.gov.in
- Gazette of India — Employees’ Provident Funds Scheme, 2026, G.S.R. 525(E), 29 June 2026 (Annexure A: Employees’ Enrolment Campaign, 2026) (opens in a new tab)egazette.gov.in
- PIB — EPFO launches Employees’ Enrolment Campaign 2026 (17 August 2026) (opens in a new tab)pib.gov.in
- PIB — Cabinet approves EPFO wage ceiling of ₹25,000 (16 September 2026) (opens in a new tab)pib.gov.in
- PIB — EPFO wage ceiling of ₹25,000 effective 17 September 2026, S.O. 5109(E) (opens in a new tab)pib.gov.in
- ESIC — Contribution rates, due date and contribution periods (opens in a new tab)esic.gov.in
- ESIC — Coverage and wage limit (opens in a new tab)esic.gov.in
- PIB — Income-tax Act, 2025 in force from 1 April 2026; Income-tax Rules, 2026 notified 20 March 2026 (opens in a new tab)pib.gov.in
- Income Tax Department — Tax payments (TDS due dates, sections 392 and 393) (opens in a new tab)incometax.gov.in
- Income Tax Department — TDS compliance FAQs (transition, interest on late deposit) (opens in a new tab)incometax.gov.in
- Income Tax Department — Form 138 (earlier Form 24Q) user manual and due dates (opens in a new tab)incometax.gov.in
- Income Tax Department — Form No. 130 (earlier Form 16) (opens in a new tab)incometaxindia.gov.in
- Income Tax Department — Form No. 124 (earlier Form 12BB) (opens in a new tab)incometaxindia.gov.in
- Income Tax Department — FAQs on new vs old tax regime (opens in a new tab)incometax.gov.in
- Constitution of India — Article 276 (taxes on professions) (opens in a new tab)legislative.gov.in
- Maharashtra GST Department — Profession Tax rate schedule (opens in a new tab)mahagst.gov.in
- Maharashtra GST Department — Trade Circular 1T of 2026 (PT due date of 15 March) (opens in a new tab)mahagst.gov.in
- Karnataka Tax on Profession (Amendment) Bill, 2025 — PRS Legislative Research (opens in a new tab)prsindia.org
- Haryana Labour Welfare Board — contribution rates (opens in a new tab)hrylabour.gov.in
First published . Spotted something out of date or unclear? Email info@effred.com and we will look at it.