Payroll Compliance in India: A Complete Employer's Guide (PF, ESIC, PT, TDS)
Hiring in India means taking on a set of statutory payroll obligations that differ significantly from other countries. This guide walks through salary structuring and every deduction an employer must manage.
Salary structure (CTC)
Indian salaries are expressed as Cost to Company (CTC) — the total employer cost including basic pay, allowances (HRA, special allowance), employer PF, and bonus. How you split the CTC affects tax and PF liability.
Provident Fund (PF)
Establishments above the employee threshold must register with EPFO. Both employer and employee contribute a percentage of basic wages monthly, deposited by a fixed due date with an electronic challan (ECR).
Employees' State Insurance (ESIC)
ESIC provides medical and social security to employees below a wage ceiling. Registered establishments deduct and deposit contributions monthly.
Professional Tax (PT)
A state-level tax deducted from salaries in states that levy it (e.g., Maharashtra, Karnataka, West Bengal). Rates are slab-based and capped annually; some states don't levy PT at all.
TDS on salary (Section 192)
Employers estimate each employee's annual tax (old vs new regime), deduct 1/12th monthly, deposit by the 7th, file quarterly Form 24Q, and issue Form 16 by 15 June.
Monthly & annual calendar
- Monthly: PF, ESIC, PT and TDS deposits
- Quarterly: TDS returns (24Q)
- Annual: Form 16 issuance; bonus and gratuity as applicable
Penalties for non-compliance
Late PF/ESIC attracts interest and damages; late TDS attracts interest and 234E fees. Deducting employee contributions but not depositing them is treated seriously.
Statura runs your India payroll — CTC design, monthly deposits, filings and Form 16 — fully remote.