PF, ESI, PT, and LWF: A State-by-State Compliance Guide for Indian Payroll
2026 Edition — Rates, Thresholds, Deadlines, and Filing Requirements
India’s statutory payroll compliance runs on two tracks simultaneously. The first is central legislation — PF and ESI — which applies uniformly across all states. The second is state-level legislation — Professional Tax and Labour Welfare Fund — where every state writes its own rules, sets its own rates, and runs its own filing calendar.
A company with offices in Bengaluru, Mumbai, and Chennai is not managing one compliance profile. It is managing three different PT structures, three different LWF obligations, and three different Shops and Establishments registrations — alongside the uniform national PF and ESI rules. This guide covers all of it, confirmed for FY 2025-26.
Part 1: Provident Fund (PF)
Governed by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Rules are uniform nationally and enforced by the Employees’ Provident Fund Organisation (EPFO).
Applicability Thresholds
Mandatory for every establishment with 20 or more employees. Once an establishment crosses 20 employees, it remains covered even if headcount later falls below.
Applies to all employees with basic salary up to ₹15,000/month. Employees above ₹15,000 basic at the time of joining may be excluded from mandatory PF — but employees who were enrolled at a lower salary remain enrolled for life, regardless of subsequent increases.
Employees above ₹15,000/month basic who have never been enrolled may be voluntarily enrolled with mutual consent.
Contract staff, fixed-term employees, and part-time employees are covered if the engagement meets the substance test of employment.
Contribution Structure (FY 2025-26)
Component
Employee Rate
Employer Rate
EPF (Employee Provident Fund)
12% of Basic + DA
3.67% of Basic + DA
EPS (Employee Pension Scheme)
Nil
8.33% of Basic + DA, capped at ₹1,250/month
EDLI (Employee Deposit Linked Insurance)
Nil
0.50% of Basic + DA, capped at ₹75/month
EPF Admin Charges
Nil
0.50% of Basic + DA, min ₹500/month per establishment
Total employer outgo
12% of Basic + DA
~13% of Basic + DA
PF is calculated on Basic + DA, not gross salary. Many employers keep basic salary low to reduce PF liability — this is permissible, but the basic must reflect a genuine component. EPFO audits scrutinise the ratio of basic to gross. A basic below 40% of gross on a professional salary often triggers review.
Filing Deadlines
Obligation
Deadline
Monthly ECR (Electronic Challan cum Return) — filing and deposit
15th of the following month
UAN generation for new joiners
Before first payroll run (ideally within 7 days of joining)
Annual PF return (Form 3A / Form 6A)
30 April for the preceding FY
Penalty for late PF deposit: 12% p.a. interest on arrears, plus damages of 5% (delay <2 months), 10% (2–4 months), 15% (4–6 months), or 25% (>6 months). Damages are in addition to interest — not a substitute. An EPFO audit can assess damages retroactively across multiple financial years.
Part 2: Employees’ State Insurance (ESI)
Governed by the Employees’ State Insurance Act, 1948. Rules are nationally uniform, enforced by the Employees’ State Insurance Corporation (ESIC). ESI provides medical, disability, maternity, and dependent benefits.
Applicability Thresholds
Mandatory for establishments with 10 or more employees in most states. Some states extend coverage from 20+ employees — verify the local notification for your specific location.
Applies to employees with gross salary of ₹21,000/month or below. Above this threshold, employees are excluded.
For employees with disabilities, the threshold is ₹25,000/month gross.
Coverage applies only in ESIC-notified areas. Not all geography is notified — verify your office address is in a notified area before registering. Registration in a non-notified area is not required.
Contribution Rates (FY 2025-26)
Contributor
Rate
Base
Employee
0.75%
Gross salary
Employer
3.25%
Gross salary
Total
4.00%
Of gross salary
Employees earning ≤ ₹176/day gross
Employee exempt
Employer still contributes 3.25%
Filing Deadlines
Obligation
Deadline
Monthly ESIC contribution deposit
15th of the following month
Half-yearly ESIC return (Form 5)
11 May (Apr–Sep period); 11 November (Oct–Mar period)
ESIC number generation for new joiners
Before first payroll run; within 3 months of joining at latest
Part 3: Professional Tax (PT) — State by State
PT is levied under Entry 60 of the State List of the Constitution. Fourteen states and union territories currently levy PT. Each sets its own slabs, payment frequency, and filing requirements. The national cap is ₹2,500 per employee per year, but most states levy less.
States with no PT: Delhi, Uttar Pradesh, Haryana, Rajasthan, Punjab, Himachal Pradesh, Uttarakhand, Bihar, Jharkhand, Chhattisgarh, J&K, and most of North-East India. Do not apply PT deductions to employees in these states.
Monthly challan by 20th of the following month. Penalty: 1.25% per month interest + up to 3× unpaid PT. Karnataka is the most actively enforced PT jurisdiction.
Maharashtra
Monthly Gross → PT Amount
Deadline & Notes
Slabs
₹0–7,500: Nil ₹7,501–10,000: ₹175/month Above ₹10,000: ₹200/month (₹300 in February) Annual total: ₹2,500 — highest in India
Monthly payment by last day of the month. February PT is ₹300 to reach the ₹2,500 annual cap. Separate PT registration from other labour registrations.
Tamil Nadu
Monthly Gross → PT Amount
Deadline & Notes
Slabs
Calculated half-yearly on total gross: Up to ₹21,000: Nil ₹21,001–30,000: ₹135 ₹30,001–45,000: ₹315 ₹45,001–60,000: ₹690 ₹60,001–75,000: ₹1,025 Above ₹75,000: ₹1,250
Half-yearly payment: September 30 and March 31. Annual total = ₹2,500 at the top slab. Returns filed alongside payment.
Monthly payment by 10th of the following month. Identical slabs to Telangana post-bifurcation. Separate registration required — AP and TS are distinct jurisdictions.
Monthly by 28th of the following month. Assam Professions, Trades, Callings and Employments Taxation Act, 1947.
Part 4: Labour Welfare Fund (LWF) — State by State
LWF is collected by state Labour Welfare Boards to fund worker welfare schemes. Contributions are deducted from employee salary and matched — usually at a higher rate — by the employer. Amounts are small, which is exactly why LWF is the most commonly missed statutory obligation. The audit exposure is real.
LWF amounts are small — which is why they get missed and accumulate quietly. A company with 150 employees in Karnataka missing LWF for three years owes ₹18,000 in contributions plus interest and administrative penalty. The audit risk from a lapsed LWF registration is disproportionate to the amount.
Part 5: Shops and Establishments Registration
Every commercial establishment must register under the state Shops and Establishments Act from the day it commences operations. This registration is separate from EPFO, ESIC, PT, and LWF and must be obtained before the first employee joins.
State
Register From
Filing Window
Renewal
Karnataka
Day 1 / 1 employee
Within 30 days of commencement
Annual
Maharashtra
Day 1
Before commencing business
3 years (10+ employees)
Tamil Nadu
Day 1
Within 30 days
Annual
Telangana
Day 1
Within 30 days
Annual
Delhi
Day 1
Within 30 days
1 or 3 years (employer choice)
West Bengal
Day 1
Within 15 days
Annual
Gujarat
Day 1
Within 30 days
Permanent (post-2022 amendment)
Andhra Pradesh
Day 1
Within 30 days
Annual
\Operating across multiple states? Paybooks holds active registrations in all major Indian hiring locations. We configure PT, LWF, and S&E compliance separately per employee location — not as a single national template. paybooks.in/compliance | info@paybooks.in | +91 80 4710 7171
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