PF, ESI, PT and TDS: A Payroll Compliance Guide for Indian Employers
Indian employers deposit four payroll-linked statutory amounts: provident fund (12% each from employee and employer on PF wages), ESI (0.75% employee, 3.25% employer for eligible staff), professional tax (state-specific, max ₹2,500 a year) and TDS on salary. PF and ESI are generally due by the 15th and TDS by the 7th of the next month.
Provident Fund (PF)
The Employees' Provident Fund is a retirement savings scheme run by EPFO. Employee and employer each contribute 12% of PF wages (basic plus dearness allowance). Part of the employer share goes to the pension scheme, and the rest to the provident fund account.
Coverage is mandatory for establishments with 20 or more employees, and contributions are generally calculated on a wage ceiling of ₹15,000 per month unless the employer and employee opt for higher wages. Check EPFO for the current ceiling. Contributions are filed through the monthly ECR and are generally due by the 15th of the following month.
Employees' State Insurance (ESI)
ESI provides medical and cash benefits to employees earning up to ₹21,000 per month. Employees contribute 0.75% of wages and employers 3.25%. It generally applies to establishments with 10 or more employees, though thresholds can differ by state. Contributions are generally due by the 15th of the following month.
Professional Tax (PT)
Professional tax is levied by state governments, not the centre. Slabs and due dates differ by state, some states do not charge it, and the annual cap is ₹2,500 per person. Employers deduct it from salary and deposit it as the state requires, so multi-state employers need state-wise configuration.
TDS on salary
Employers must deduct income tax at source on salary, based on the employee's estimated annual tax liability and their declared tax regime and investments. The tax deducted in a month is generally deposited by the 7th of the following month, with quarterly TDS returns and an annual salary tax certificate issued to each employee.
A simple monthly compliance rhythm
- Lock attendance and leave, then run payroll.
- Review PF, ESI, PT and TDS figures before approving.
- Deposit PF and ESI by the 15th, TDS by the 7th, PT as your state requires.
- File returns on schedule and store challans and proofs against each employee.
- Reconcile with the ledger and keep records audit-ready.
Where software helps
These figures all derive from payroll. When payroll and compliance sit in the same system, the numbers are calculated once. TimesalX Payroll includes statutory compliance for PF, ESI, PT and TDS inside the salary run.
Rates and thresholds are commonly applied figures at the time of writing and can change. Confirm on epfindia.gov.in, esic.gov.in and incometax.gov.in.
Official sources
Frequently asked questions
What is the PF contribution rate?
Employee and employer each contribute 12% of PF wages (basic plus dearness allowance).
What is the ESI contribution rate?
Employees contribute 0.75% and employers 3.25% of wages, for employees earning up to ₹21,000 per month.
When are PF, ESI and TDS due?
PF and ESI are generally due by the 15th of the following month, and TDS on salary by the 7th.
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