Payroll is the one compliance that repeats every month, which is exactly why it slips. Miss a provident fund deposit and you owe interest and damages; miss a TDS return and a ₹200-a-day fee starts running. None of it is complicated. It just has to happen, on time, every month.
This checklist gives you the four statutory deductions with their rates and dates, then breaks the payroll month into four weeks so nothing depends on someone remembering. If you would rather hand it over, Regikart's payroll services run the whole cycle.
Quick answers
| Deduction | Rate | Deposit by | Return |
|---|---|---|---|
| TDS on salary | Slab rates on projected annual income | 7th of the next month | Quarterly: Form 138 from 1 April 2026 (old 24Q) |
| EPF | 12% employee + 12% employer, wage ceiling ₹15,000 | 15th of the next month | Monthly ECR |
| ESI | 0.75% employee + 3.25% employer, up to ₹21,000 a month | Within 15 days of month end | Monthly filing, half-yearly return of contributions |
| Professional tax | State slabs, capped at ₹2,500 a year | As the state prescribes | As the state prescribes |
The four statutory deductions
TDS on salary under section 192
For FY 2025-26, TDS on salary is under section 192 of the Income-tax Act, 1961. For salary paid from 1 April 2026, the Income-tax Act, 2025 and the Income-tax Rules, 2026 apply, with new form numbers (see below). The method is unchanged: there is no flat rate. You estimate each employee's tax for the full year, on projected annual income and the regime they have chosen, and deduct it evenly across the remaining months.
EPF: 12% and 12%, and the wage ceiling
EPF applies to establishments with 20 or more employees. The employee contributes 12% of basic pay plus dearness allowance. The employer also contributes 12%, of which 8.33% goes to the pension scheme (EPS) and 3.67% to the provident fund, plus EDLI and administration charges. The EPF wage ceiling is ₹15,000 a month. The Union Cabinet approved raising it to ₹25,000 on 16 September 2026, but the EPFO implementation circular is awaited, so keep computing on ₹15,000 until it is issued. Employees who leave can claim through PF withdrawal.
ESI: 0.75% and 3.25%, up to ₹21,000 a month
ESI covers establishments with 10 or more persons (20 in some states and sectors) and employees earning up to ₹21,000 a month, or ₹25,000 for a person with disability. The employee pays 0.75% of wages and the employer 3.25%. Employees with average daily wages up to ₹176 pay no employee share, but the employer still pays its 3.25%. Our ESIC return filing team handles the monthly cycle.
Professional tax: a state levy
Professional tax is levied by the states, and not every state levies it. The slabs and due dates differ by state, but Article 276(2) of the Constitution caps it at ₹2,500 a person a year. The employer deducts it from salary and pays it to the state. For returns, see professional tax return; for enrolment, our professional tax registration guide.
Week 1: inputs
Everything downstream inherits the errors you let through here. Before any calculation begins, close the inputs for the month:
- Collect and lock attendance for the period.
- Record leave taken (casual, sick and earned) and identify any loss-of-pay days.
- Note salary advances, recoveries and any one-off deductions.
- Capture salary revisions, increments and promotions effective this month.
- Record new joiners and exits with their effective dates, and flag any full-and-final settlements due.
Week 2: computation
With inputs locked, compute gross pay, then work down to net through the statutory deductions:
- Gross salary: basic pay plus allowances, adjusted for any loss of pay.
- EPF: 12% from the employee and 12% from the employer on basic plus DA, with the wage ceiling at ₹15,000 a month until the EPFO circular on ₹25,000 is issued.
- ESI: 0.75% from the employee and 3.25% from the employer, for employees earning up to ₹21,000 a month (₹25,000 for a person with disability). No employee share if average daily wages are ₹176 or less.
- TDS on salary: on the employee's projected annual income and declared tax regime, not on the month's salary in isolation.
- Professional tax: at the slab of the state where the employee works, within the ₹2,500 annual cap.
Then generate payslips, have the computation reviewed by someone other than whoever prepared it, and get sign-off before money moves.
Week 3: payment and record
- Pay salaries into employee accounts and keep the bank confirmation.
- Send payslips and give employees a window to raise discrepancies.
- Post the payroll entries to your books, including the employer's share of EPF and ESI, which is a cost to the business and not a deduction from the employee. Our accounting service does this monthly.
- File the bank proof and the payroll register: these are the documents an auditor or inspector will ask for.
Week 4: statutory deposits
Paying your employees is not the end of the month. The statutory deposits are what keep you compliant, and they run on their own deadlines:
| Obligation | What it covers | Timing |
|---|---|---|
| TDS deposit (salary) | Tax deducted from salary | By the 7th of the next month. The March deposit has a later date prescribed under the rules |
| EPF deposit and ECR | Employee and employer contributions, filed through the monthly Electronic Challan cum Return | By the 15th of the next month |
| ESI deposit | Employee and employer contributions | Within 15 days of the end of the month |
| Professional tax | State-levied professional tax | As prescribed by the state |
The monthly compliance calendar
| Deduction | Rate | Deposit by | Return |
|---|---|---|---|
| TDS on salary | Slab rates (section 192 for FY 2025-26) | 7th of the next month | Quarterly: Form 138 (old 24Q); annual certificate Form 130 (old Form 16) |
| EPF | 12% + 12%, ceiling ₹15,000 | 15th of the next month | Monthly ECR |
| ESI | 0.75% + 3.25%, ceiling ₹21,000 | Within 15 days of month end | Monthly filing; half-yearly return of contributions |
| Professional tax | State slabs, max ₹2,500 a year | Per state rule | Per state rule |
Add these dates to your compliance calendar once, and review them each month rather than working from memory.
Quarterly and annual returns
The quarterly TDS return
For quarters from 1 April 2026, the quarterly salary TDS statement is Form 138, which replaces Form 24Q, under section 397 of the Income-tax Act, 2025 and Rule 219 of the Income-tax Rules, 2026. Quarters up to 31 March 2026 stay on Form 24Q, including any correction you file for them now. The due dates are 31 July, 31 October and 31 January for the first three quarters and 31 May for the January to March quarter. Late filing costs ₹200 a day, capped at the tax deductible. Our TDS return filing service files on the new forms.
The salary TDS certificate
Form 130 replaces Form 16 for salary from Tax Year 2026-27, and Form 131 replaces Form 16A for other payments. Form 130 is downloaded from TRACES and must be issued by 15 June after the year ends. It is generated from the Form 138 data, which is why a sloppy quarterly return becomes an annual problem. Employees use it to file their income tax return.
| Purpose | Up to 31 March 2026 (Income-tax Act, 1961) | From 1 April 2026 (Income-tax Act, 2025) |
|---|---|---|
| Quarterly salary TDS statement | Form 24Q | Form 138 |
| Salary TDS certificate | Form 16 | Form 130 |
| Non-salary TDS certificate | Form 16A | Form 131 |
EPF monthly ECR and the ESI half-yearly return
The EPF return is the monthly ECR (Electronic Challan cum Return), filed with each deposit. ESI contributions are filed monthly on the ESIC portal, and each six-month contribution period has a half-yearly return of contributions, which the portal builds largely from your monthly filings.
A useful discipline: every quarter, reconcile the TDS deposited, the TDS reported in the quarterly statement and the TDS in your books. If the three do not agree, fix it while the quarter is fresh. A tax audit will test the same trail.
Late deposits: interest and damages
- ESI: 12% simple interest a year from the due date, plus damages that rise with the length of the delay.
- EPF: interest under section 7Q and damages under section 14B of the EPF Act for every wage cycle deposited late.
- TDS: interest on late deposit, and the ₹200-a-day fee on a late quarterly statement.
The errors that recur
- Computing TDS on the month rather than the year. Section 192 requires deduction against projected annual income and the employee's chosen regime.
- Missing ESI for employees within the ₹21,000 ceiling, particularly new joiners at lower salaries.
- Forgetting the employer's own contribution. EPF and ESI both carry an employer share, which is a cost to the business.
- Applying ₹25,000 as the EPF ceiling before the EPFO circular. It is approved, not yet in force.
- Treating professional tax as uniform. It is a state levy, and an employee in another state may be on a different slab or none.
- Depositing late by a day or two. Interest and damages on delayed EPF and ESI deposits are avoidable and self-inflicted.
- Using the wrong TDS form for the period. Form 138 for quarters from 1 April 2026; Form 24Q for earlier quarters and their corrections.
- Not reconciling the quarterly statement against the challans, so the mismatch surfaces only when an employee's Form 130 or Form 26AS looks wrong.
What the labour codes changed
The four labour codes, including the Code on Wages and the Code on Social Security, came into force on 21 November 2025 and replaced 29 older labour laws. For payroll, they matter in three places: the definition of wages used for contributions, appointment letters for employees, and social security coverage. ESIC now works under the Code on Social Security. Our post on the new wage code 50% rule covers the wage definition, and our team handles offer letter drafting that fits the codes. Check any specific provision against your establishment before changing salary structures.
Let Regikart run your payroll
Payroll compliance does not fail because it is hard. It fails because it is monthly. Regikart's payroll services process salaries, compute and deposit TDS, EPF, ESI and professional tax, file Form 138 and the ECR, and issue Form 130. We serve 250+ clients from Kolkata (head office), Delhi and Bengaluru. Call or WhatsApp +91 70444 94804, or contact us.
Frequently asked questions
What are the monthly payroll deadlines I must not miss?
TDS on salary is deposited by the 7th of the next month (the March deposit has a later date), EPF by the 15th with the monthly ECR, and ESI within 15 days of the end of the month. Professional tax follows the state's timetable.
How is TDS on salary calculated?
On the employee's projected annual income and the tax regime they have chosen, spread across the year, not on each month's salary in isolation. For FY 2025-26 this is section 192 of the Income-tax Act, 1961; from 1 April 2026 the Income-tax Act, 2025 applies.
What replaced Form 24Q and Form 16?
For quarters from 1 April 2026, Form 138 replaces Form 24Q, and Form 130 replaces Form 16. Quarters up to 31 March 2026 stay on Form 24Q and Form 16, including corrections filed now.
What is the EPF wage ceiling in 2026?
₹15,000 a month. The Union Cabinet approved raising it to ₹25,000 on 16 September 2026, but the EPFO implementation circular is awaited, so contributions stay on ₹15,000 until it is issued.
What are the ESI contribution rates?
0.75% of wages from the employee and 3.25% from the employer, for employees earning up to ₹21,000 a month (₹25,000 for a person with disability). Employees with average daily wages up to ₹176 pay no employee share.
What happens if we deposit EPF or ESI late?
Late ESI carries 12% simple interest a year plus damages. Late EPF attracts interest under section 7Q and damages under section 14B of the EPF Act. Both accrue from the due date whatever the reason for delay.
Does professional tax apply everywhere in India?
No. It is a state levy, so whether it applies and at what slab depends on the state where the employee works. Where it applies, the Constitution caps it at ₹2,500 a person a year.
Is the ESI return still half-yearly?
Contributions are filed and paid monthly on the ESIC portal. Each six-month contribution period also has a half-yearly return of contributions, which the portal builds largely from the monthly filings.
Do the labour codes change payroll?
Yes. The four labour codes came into force on 21 November 2025 and affect the wage definition used for contributions, appointment letters and social security coverage. Review salary structures against them.
Payroll mein har mahine kaunse deposits karne hote hain?
Salary ka TDS agle mahine ki 7 tareekh tak, EPF aur ECR 15 tareekh tak, ESI mahine khatam hone ke 15 din ke andar, aur professional tax state ke rule ke hisaab se. 1 April 2026 se quarterly TDS return Form 138 mein jaata hai.
About the author
CA Deepak Jaiswal
Founding Partner, FCA at Regikart. Want to discuss this in the context of your business?
