Payroll is the one compliance that repeats every single month, which is precisely why it is so often the one that slips. Miss a provident fund deposit and you owe interest and damages; miss a TDS return and a per-day fee starts running. None of it is complicated. It just has to happen, on time, every month.
The fix is not more effort - it is a rhythm. This checklist breaks the payroll month into four weeks, so that nothing depends on someone remembering.
If you want the substantive rules behind each deduction rather than the operating calendar, our complete payroll compliance guide covers TDS, EPF, ESI and professional tax in depth.
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, where applicable, computed on the prescribed wage components at the statutory rate.
- ESI, where the employee's wages fall within the applicable wage ceiling. Both the employee's and the employer's contributions apply.
- TDS on salary under Section 192, computed on the employee's projected annual income for the year and their declared tax regime - not on the month's salary in isolation.
- Professional tax, where the state in which the employee works levies it. Rates and slabs are state-specific.
Then generate payslips, have the computation reviewed by someone other than whoever prepared it, and obtain sign-off before money moves.
Week 3: payment and record
- Disburse salaries to employee accounts and retain the bank confirmation.
- Distribute payslips and give employees a window to raise discrepancies.
- Post the payroll entries to your books, including the employer's share of contributions, which is a cost to the business and not merely a deduction from the employee.
- File the bank proof and the payroll register - these are the documents an auditor or an inspector will ask for.
Week 4: statutory deposits
Paying your employees is not the end of the month. The statutory deposits are what actually keep you compliant, and they run on their own deadlines:
| Obligation | What it covers | Timing |
|---|---|---|
| EPF deposit | Employee and employer provident fund contributions | By the 15th of the following month |
| ESI deposit | Employee and employer ESI contributions | By the 15th of the following month |
| TDS deposit (salary) | Tax deducted under Section 192 | By the 7th of the following month (with a different date for March) |
| Professional tax | State-levied professional tax | As prescribed by the relevant state |
Quarterly and annual obligations
Beyond the monthly cycle, a smaller set of filings runs on a quarterly and annual rhythm:
- Form 24Q, the quarterly TDS return for salary payments, filed after each quarter. Late filing attracts a per-day fee, and the return must reconcile with the TDS you actually deposited.
- Form 16, issued annually to every employee from whose salary tax was deducted. It is generated from the Form 24Q data, which is why a sloppy quarterly return becomes an annual problem.
- Annual EPF and ESI reconciliations, where applicable to your establishment.
A useful discipline: reconcile the TDS deposited, the TDS reported in Form 24Q, and the TDS shown in your books every quarter. If those three do not agree, fix it while the quarter is fresh rather than discovering the gap when Form 16 is due.
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 who fall within the wage 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, not a deduction from the employee.
- Treating professional tax as uniform. It is a state levy, and an employee working in a different state may be on a different slab entirely.
- Depositing late by a day or two. Interest and damages on delayed provident fund deposits are avoidable and entirely self-inflicted.
- Failing to reconcile Form 24Q against the challans, so the mismatch only surfaces when an employee's Form 16 or Form 26AS looks wrong.
Frequently Asked Questions
What are the monthly payroll deadlines I must not miss?
TDS deducted on salary is deposited by the 7th of the following month, and EPF and ESI contributions by the 15th. Professional tax follows the timetable set by the relevant state. Confirm the current dates, as they are set by the authorities and can change.
How is TDS on salary calculated?
Under Section 192, on the employee's projected annual income and the tax regime they have elected, spread across the year - not on each month's salary viewed in isolation. Getting this wrong produces a Q4 shortfall.
What is Form 24Q and when is it filed?
It is the quarterly TDS return for salary payments, filed after the end of each quarter. Form 16 is generated from it, so errors in Form 24Q propagate into your employees' Form 16 and Form 26AS.
What happens if we deposit EPF late?
Interest and damages apply on delayed deposits. It is one of the most avoidable costs in payroll, and it accrues from the due date regardless of 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 in which the employee works. An organisation with employees in several states will have several different obligations.
Let Regikart run your payroll
Payroll compliance does not fail because it is hard. It fails because it is monthly, and a single missed deposit costs more than the work of making it.
Regikart's accounting and payroll service processes salaries, computes and deposits TDS, EPF, ESI and professional tax, files Form 24Q, and issues Form 16 - so the calendar is our problem rather than yours. With offices in Kolkata, Delhi, Gurugram, and Pune and clients across India, we run payroll for teams of five and teams of five hundred. Talk to us about taking it off your plate.
About the author
Gaurav
Senior Advisor at Regikart. Want to discuss this in the context of your business?
