Key Takeaways
- Key statutory components: PF, ESI, Professional Tax, LWF and TDS on salary.
- Rules vary by state and are updated periodically.
- Payroll software calculates deductions, generates challans and tracks due dates.
- Confirm current rates and thresholds with your CA or payroll advisor.
Payroll in India is not just salary calculation. Employers must deduct, deposit and report several statutory contributions accurately and on time.
Main components
| Component | What it is | Applies to |
|---|---|---|
| Provident Fund (PF) | Retirement savings via EPFO | Eligible establishments and employees |
| ESI | Health insurance via ESIC | Employees under the wage ceiling in covered areas |
| Professional Tax (PT) | State tax on employment | States that levy it |
| Labour Welfare Fund (LWF) | State welfare contribution | States with LWF laws |
| TDS on salary | Income tax deducted at source | Employees with taxable income |
How software helps
- Automatic calculation using current rules
- State-wise PT and LWF configuration
- Challan and return file generation
- Due date reminders
- Form 16 and payslips
- Audit-ready reports
Common mistakes
- Wrong wage base for PF/ESI
- Missing state-specific PT slabs
- Late deposits attracting interest and penalties
- Not updating for regulatory changes
See new labour codes and payroll.
Note: General information only; confirm current rules with a professional.
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Frequently Asked Questions
What are statutory deductions in Indian payroll?
Common deductions include PF, ESI, Professional Tax, Labour Welfare Fund and TDS on salary, depending on applicability.
Is professional tax applicable in all states?
No, only in states that levy it, with state-specific slabs.
Can payroll software generate PF challans?
Yes, most payroll software generates ECR files and challans for EPFO.
What happens if PF is paid late?
Late payments can attract interest and damages; timely deposit is important.
