Payroll Compliance in India: A Complete 2025 Guide
TDS, EPF, ESI, professional tax, and more — a no-nonsense breakdown of what you must get right every salary cycle.
The Indian Payroll Compliance Stack
If you're running payroll in India, there are five statutory deductions you must handle correctly every month:
1. TDS (Tax Deducted at Source)
Employers must deduct income tax at source from employee salaries based on their projected annual income. This must be deposited with the government by the 7th of the following month.
2. EPF (Employees' Provident Fund)
- Applicable for companies with 20+ employees
- Employee contribution: 12% of basic salary
- Employer contribution: 12% (split between EPF and EPS)
- Challan due: 15th of following month
3. ESI (Employees' State Insurance)
- Applicable for employees earning less than ₹21,000/month
- Employee contribution: 0.75% of gross salary
- Employer contribution: 3.25%
4. Professional Tax
- Levied by state governments — rate and applicability varies by state
- Maharashtra: ₹200/month for income above ₹10,000
- Karnataka, AP, and others have different slabs
5. Labour Welfare Fund
- Small amounts, but non-compliance attracts disproportionate penalties
Why Automation Is Non-Negotiable
PaySync handles all five automatically. Every month, it calculates each employee's deductions, generates challans, and flags any compliance issues before you process payroll — not after.
Manual payroll leaves you one miscalculation away from a statutory notice.
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