Statutory Compliance

Ensure your organization complies with all Indian labor laws and statutory requirements related to payroll.

1. Provident Fund (PF) Compliance

Overview

The Employees' Provident Fund (EPF) is a retirement benefits scheme applicable to organizations with 20 or more employees.

Key Requirements

• Applicability: Organizations with 20+ employees

• Employee Contribution: 12% of Basic + DA (capped at ₹15,000)

• Employer Contribution: 12% (3.67% to EPF + 8.33% to EPS)

• Due Date: 15th of following month

• Returns: Monthly ECR filing through EPFO portal

How the System Helps

• Automatic PF calculation based on configured rates

• Wage ceiling enforcement (₹15,000)

• ECR file generation in EPFO format

• UAN-based employee mapping

• Monthly PF register

Important

Ensure all employees have valid UAN (Universal Account Number). Update UAN in employee master before processing payroll.

2. Employee State Insurance (ESI) Compliance

Overview

ESI provides medical and cash benefits to employees and their families in case of sickness, maternity, or employment injury.

Key Requirements

• Applicability: Organizations with 10+ employees (20+ in some states)

• Wage Ceiling: Employees earning up to ₹21,000 per month

• Employee Contribution: 0.75% of gross wages

• Employer Contribution: 3.25% of gross wages

• Due Date: 15th of following month

• Returns: Half-yearly returns through ESIC portal

How the System Helps

• Automatic ESI calculation for eligible employees

• Wage ceiling enforcement

• ESI return file generation

• Employee-wise ESI register

3. Professional Tax (PT) Compliance

Overview

Professional Tax is a state-level tax on professions, trades, and employment. Rates vary by state.

Key Requirements

• Applicability: State-specific (not applicable in all states)

• Deduction: Based on salary slabs defined by state

• Maximum: ₹2,500 per year (varies by state)

• Due Date: Varies by state (usually monthly or quarterly)

States with PT

Maharashtra, Karnataka, West Bengal, Gujarat, Andhra Pradesh, Telangana, Tamil Nadu, Madhya Pradesh, Assam, Chhattisgarh, Meghalaya, Odisha, Tripura

How the System Helps

• State-wise PT slab configuration

• Automatic PT calculation based on gross salary

• PT register and challan generation

• Annual PT certificate (Form 5)

4. Tax Deducted at Source (TDS) Compliance

Overview

Employers must deduct income tax from employee salaries based on their income and tax regime choice.

Key Requirements

• Applicability: All employees with taxable income

• Calculation: Based on income tax slabs and regime (old/new)

• Due Date: 7th of following month

• Quarterly Return: Form 24Q

• Annual Certificate: Form 16

TDS Calculation Process

1. Collect employee investment declarations (80C, 80D, HRA, etc.)

2. Calculate annual taxable income

3. Apply tax slabs based on chosen regime

4. Compute monthly TDS

5. Deduct from salary

6. Deposit to government by 7th

7. File quarterly 24Q return

8. Issue Form 16 annually

How the System Helps

• Investment declaration module

• Automatic TDS calculation (old and new regime)

• Monthly TDS register

• Form 24Q generation

• Form 16 generation

• TDS challan preparation

Tax Regime Choice

From FY 2020-21, employees can choose between old tax regime (with deductions) or new tax regime (lower rates, no deductions). Collect employee choice at the beginning of financial year.

Compliance Calendar

Penalties for Non-Compliance

• Late PF Payment: 12% interest + damages up to 100%

• Late ESI Payment: 12% interest + penalty

• Late TDS Payment: 1.5% interest per month + penalty

• Non-filing of Returns: Penalties and prosecution

Always ensure timely compliance to avoid penalties!