Indian employers face monthly, quarterly, and annual statutory deadlines across payroll, tax, labour law, and corporate filings. A single missed Tax Deducted at Source (TDS) or Goods and Services Tax (GST) filing can freeze a company’s bank account or trigger prosecution of the officers in charge. Payroll and HR teams carry that risk every cycle, because most obligations repeat every month and switch on automatically as headcount and turnover grow.
India has more than 100,000 startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) and ranks as the world’s third-largest startup ecosystem, per Startup India. Each one inherits the same compliance load. This guide covers payroll deductions, Provident Fund (PF) and Employees’ State Insurance (ESI), TDS, professional tax, gratuity and bonus, minimum wages, the four labour codes, GST, corporate and income tax, Registrar of Companies (ROC) filings, a full deadline calendar, a startup checklist, and penalties.
What Is Statutory Compliance in India?
Statutory compliance in India is adherence to central, state, and local laws that govern employment, payroll, tax, and corporate reporting. It is a legal obligation, not a best practice, and enforcement is audit-driven. For payroll and HR teams it splits into four domains: payroll compliance, tax compliance, labour law compliance, and corporate compliance.
Payroll compliance covers deductions, contributions, and benefits. Tax compliance covers GST, income tax, and TDS. Labour law compliance covers wages, hours, and worker rights. Corporate compliance covers company filings and governance.
Why Does Statutory Compliance Matter for Payroll and HR Teams?
Non-compliance triggers fines, interest, director liability, licence loss, and frozen bank accounts, and Indian enforcement is increasingly audit-driven. A single late PF deposit attracts interest at 12% per annum plus damages, per the Employees’ Provident Fund Organisation (EPFO). Officers “in charge” of a company can be personally prosecuted for many payroll and tax defaults, so officers face personal liability.
The full penalty detail sits in the penalties section below. The point here is simpler: on-time filing is the cheapest form of risk management for a payroll team.
What Are the Payroll Statutory Deductions in India?
Every payroll cycle in India triggers PF, ESI, professional tax, TDS, and, in some states, Labour Welfare Fund (LWF) deductions. Employers also carry side obligations: gratuity accrual, statutory bonus, and leave encashment, the last paid at full-and-final settlement under state Shops and Establishments Acts. The table below sets out the recurring deductions with rates, thresholds, due dates, and sources.
| Deduction | Rate | Applicability threshold | Monthly due date | Governing act | Source |
|---|---|---|---|---|---|
| Employees’ Provident Fund (EPF) | 12% employer + 12% employee on basic + Dearness Allowance (DA) | 20+ employees | 15th of next month | EPF & MP Act, 1952 | EPFO |
| Employees’ State Insurance (ESI) | 3.25% employer + 0.75% employee | 10+ employees; wages ≤ ₹21,000/month | 15th of next month | ESI Act, 1948 | ESIC |
| Professional tax | State slabs, capped at ₹2,500/year | State-specific | Varies (often 20th–21st) | State PT Acts (Article 276) | State commercial tax dept |
| TDS on salary | Slab rate on projected annual salary | All employers | 7th of next month | Income Tax Act, Section 192 | Income Tax Department |
| Labour Welfare Fund (LWF) | Small fixed employer + employee amount | State-specific | Half-yearly or annual (varies) | State LWF Acts | State labour dept |
What Are the PF and ESI Compliance Requirements in India?
PF applies at establishments with 20 or more employees, with 12% employer and 12% employee contributions on basic wages plus DA, per EPFO. ESI applies at 10 or more employees for those earning up to ₹21,000 per month, at 3.25% employer and 0.75% employee, per the Employees’ State Insurance Corporation (ESIC). Both are deposited by the 15th of the following month.
Inside the employer’s 12% PF share, 8.33% goes to the Employees’ Pension Scheme (EPS) on the ₹15,000 wage ceiling (a maximum of ₹1,250/month), and 3.67% goes to EPF. Employers also pay Employees’ Deposit Linked Insurance (EDLI) at 0.5% and administrative charges of 0.5% (minimum ₹500/month), per EPFO. Filing is via monthly Electronic Challan cum Return (ECR), and workers carry a portable Universal Account Number (UAN).
ESI runs on two six-month contribution periods (April–September and October–March) mapped to two benefit periods, per ESIC. The coverage wage ceiling rises to ₹25,000/month for persons with disability. Employees earning up to ₹176 per day are exempt from the employee share, though the employer still contributes.
How Does TDS Deduction and Payment on Salary Work in India?
Employers deduct TDS on salary monthly under Section 192 of the Income Tax Act, based on projected annual salary and the employee’s chosen tax regime, and deposit it by the 7th of the following month (30 April for March deductions), per the Income Tax Department. The new tax regime is the default; employees must opt in for the old regime.
Employers file quarterly returns on Form 24Q and issue Form 16 to employees by 15 June. Late deduction attracts interest at 1% per month and late payment at 1.5% per month. Late filing of the return costs ₹200 per day under Section 234E, per the Income Tax Department.
How Does Professional Tax Compliance Vary by State in India?
Professional tax is a state levy capped at ₹2,500 per person per year under Article 276 of the Constitution. Several states levy it and several do not, so a multi-state employer must register and remit state by state. The table below lists the position in major states.
| State | Professional tax levied? | Indicative top slab / frequency | Source |
|---|---|---|---|
| Maharashtra | Yes | Up to ₹2,500/year; monthly | Maharashtra GST Dept |
| Karnataka | Yes | Up to ₹2,500/year; monthly | Karnataka Commercial Taxes Dept |
| West Bengal | Yes | Up to ₹2,500/year; monthly | WB Directorate of Commercial Taxes |
| Tamil Nadu | Yes | Up to ₹2,500/year; half-yearly | TN local bodies |
| Telangana | Yes | Up to ₹2,500/year; monthly | Telangana Commercial Taxes Dept |
| Gujarat | Yes | Up to ₹2,500/year; monthly | Gujarat Commercial Tax Dept |
| Delhi | No | Not levied | NCT of Delhi |
| Haryana | No | Not levied | Haryana Govt |
| Uttar Pradesh | No | Not levied | Uttar Pradesh Govt |
| Rajasthan | No | Not levied | Rajasthan Govt |
The list changes as states add or drop the levy, so verify each state’s current notification before onboarding staff there.
How Do Gratuity and Statutory Bonus Compliance Work in India?
Gratuity is payable after five years of continuous service at establishments with 10 or more employees, calculated as (last drawn salary × 15/26) × years of service, and is tax-exempt up to ₹20 lakh in aggregate, per the Income Tax Department. Statutory bonus applies at 20 or more employees for those earning up to ₹21,000/month, at 8.33% minimum to 20% maximum, payable within eight months of the financial year close.
| Item | Rule | Source |
|---|---|---|
| Gratuity eligibility | 5 years’ continuous service; 10+ employee establishments | Payment of Gratuity Act, 1972 |
| Gratuity formula | (Last drawn salary × 15/26) × years of service | Payment of Gratuity Act, 1972 |
| Gratuity tax exemption | Up to ₹20 lakh (aggregate) | Income Tax Department |
| Statutory bonus rate | 8.33% minimum to 20% maximum | Payment of Bonus Act, 1965 |
| Bonus eligibility | Wages up to ₹21,000/month; 20+ employees | Payment of Bonus Act, 1965 |
| Bonus calculation ceiling | ₹7,000/month or minimum wage, whichever is higher | Payment of Bonus Act, 1965 |
| Bonus payment deadline | Within 8 months of financial year (FY) close | Payment of Bonus Act, 1965 |
How Do Employers Stay Compliant With Minimum Wage Notifications?
There is no single national minimum wage in India. Central and state governments notify rates by scheduled employment, skill level, and geographic zone, and revise them (typically twice a year) through Variable Dearness Allowance (VDA) notifications, per the Ministry of Labour & Employment. Employers must track each state’s notifications, not one figure.
Overtime is payable at double the ordinary rate of wages under Section 14 of the Minimum Wages Act, 1948 and Section 59 of the Factories Act, 1948. Working-hour limits, weekly rest days, and shift rules apply alongside, and they vary by state and by establishment type.
What Do the Four Labour Codes Change for Employers in India?
India’s four labour codes came into force on 21 November 2025, per the Ministry of Labour & Employment, consolidating 29 central labour laws. Central rules were issued in draft in December 2025, with finalisation targeted around April 2026, so state Shops and Establishments Acts remain in effect through the transition. The single biggest payroll change is the uniform “wages” definition, which caps excluded allowances at 50% of total remuneration and raises PF and gratuity outgo for many employers.
| Code | Consolidates | Key payroll impact |
|---|---|---|
| Code on Wages, 2019 | Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act | Statutory floor wage; uniform “wages” definition caps excluded allowances at 50% of pay |
| Industrial Relations Code, 2020 | Trade Unions Act, Standing Orders Act, Industrial Disputes Act | Fixed-term employment recognised; revised retrenchment thresholds |
| Code on Social Security, 2020 | EPF & MP Act, ESI Act, Gratuity Act, Maternity Benefit Act | Extends social security cover to gig and platform workers |
| Occupational Safety, Health and Working Conditions (OSH) Code, 2020 | Factories Act, Contract Labour Act, and others | Consolidated registration, working-hour, and safety rules |
What GST Filing Compliance Do Businesses in India Need?
GST registration is required at ₹40 lakh turnover for goods and ₹20 lakh for services (₹10 lakh in special category states), per the GST portal. Registered businesses file GSTR-1 for outward supplies and GSTR-3B for summary and payment, plus the annual GSTR-9 and, above ₹5 crore turnover, the GSTR-9C reconciliation.
E-invoicing is mandatory for businesses above ₹5 crore aggregate turnover, per the GST portal. GSTR-1 is generally due on the 11th and GSTR-3B on the 20th of the following month.
What Corporate and Income Tax Compliance Applies Beyond Payroll?
Companies pay advance tax in four instalments (15 June, 15 September, 15 December, and 15 March), file corporate income tax returns, and undergo a tax audit above the Section 44AB thresholds, per the Income Tax Department. They must also collect and deposit Tax Collected at Source (TCS) on specified transactions.
TCS is tax the seller collects from the buyer on certain sales and remits to the government. It follows the same deposit-and-return discipline as TDS, with monthly deposit and quarterly returns.
What Are the Annual ROC Filings Under Corporate Compliance in India?
Every company files AOC-4 for financial statements and MGT-7 for its annual return with the Registrar of Companies through the MCA21 portal run by the Ministry of Corporate Affairs (MCA). Directors complete DIR-3 Know Your Customer (KYC) annually.
Boards must hold the required board meetings and an Annual General Meeting (AGM), and keep updated registers of members and shareholders. All filings are digital through MCA21.
What Does a Statutory Compliance Calendar Look Like for Payroll Teams?
Most payroll statutory deadlines repeat monthly: TDS by the 7th, PF and ESI by the 15th. Quarterly TDS returns and annual filings layer on top. The consolidated calendar below puts the recurring dates in one place; Commenda’s compliance calendar tool tracks these deadlines by entity.
| Obligation | Frequency | Due date | Portal | Source |
|---|---|---|---|---|
| TDS on salary deposit | Monthly | 7th (30 April for March) | Income tax e-filing | Income Tax Department |
| PF ECR filing | Monthly | 15th of next month | EPFO Unified Portal | EPFO |
| ESI contribution | Monthly | 15th of next month | ESIC portal | ESIC |
| Professional tax | Monthly (varies) | Often 20th–21st | State portal | State commercial tax dept |
| GSTR-1 | Monthly | 11th of next month | GST portal | GSTN |
| GSTR-3B | Monthly | 20th of next month | GST portal | GSTN |
| TDS return (Form 24Q) | Quarterly | Month-end after quarter | Income tax e-filing | Income Tax Department |
| Form 16 issuance | Annual | 15 June | Income tax e-filing | Income Tax Department |
| Advance tax | Quarterly | 15 Jun/Sep/Dec/Mar | Income tax e-filing | Income Tax Department |
| ROC AOC-4 / MGT-7 | Annual | After AGM | MCA21 | MCA |
What Should a Statutory Compliance Checklist for Startups in India Include?
A startup’s obligations switch on by headcount and turnover, so the checklist is threshold-driven. ESI, gratuity, and a Prevention of Sexual Harassment (PoSH) internal committee start at 10 employees; PF and statutory bonus at 20; GST at ₹20 or ₹40 lakh turnover; professional tax on the first hire in a levying state; and ROC filings from incorporation.
| Trigger | Obligation switches on | Source |
|---|---|---|
| First employee in a levying state | Professional tax registration | State commercial tax dept |
| 10+ employees | ESI registration; gratuity accrual; PoSH committee | ESIC / Payment of Gratuity Act |
| 20+ employees | EPF registration; statutory bonus | EPFO / Payment of Bonus Act |
| Turnover ₹20 lakh (services) / ₹40 lakh (goods) | GST registration | GSTN |
| From incorporation | ROC annual filings; DIR-3 KYC | MCA |
How Can Employers Avoid Penalties for Non-Compliance in India?
Pay and file on time, because penalties compound through interest, damages, per-day fees, and prosecution for repeat default. The table below sets out the main figures with their statutes and sources. Every one is a documented default a payroll team can eliminate simply by hitting the calendar dates above.
| Violation | Penalty | Statute | Source |
|---|---|---|---|
| Late PF deposit | Interest 12% p.a. + damages 5%–25% p.a. by delay | EPF & MP Act, Sec 7Q & 14B | EPFO |
| Late ESI deposit | Interest 12% p.a. + damages | ESI Act & regulations | ESIC |
| Late TDS deduction | Interest 1% per month | Income Tax Act, Sec 201 | Income Tax Department |
| Late TDS payment | Interest 1.5% per month | Income Tax Act, Sec 201 | Income Tax Department |
| Late TDS return | ₹200 per day | Income Tax Act, Sec 234E | Income Tax Department |
| Late or no GST registration | ₹10,000 or 10% of tax due, whichever is higher | CGST Act, Sec 122 | GSTN |
| GST evasion | Up to 100% of tax due | CGST Act, Sec 122 | GSTN |
| GST invoice failure | ₹50 per day | CGST Act | GSTN |
How Commenda Helps With Statutory Compliance in India
Compliance certainty comes from tracking every filing, deadline, and threshold in one place instead of across spreadsheets and calendar reminders. Commenda’s entity management platform runs managed India entities with every MCA, PF, ESI, and payroll filing tracked and handled, and Commenda incorporation stands up new India entities from scratch. For GST registration and return filing, Commenda’s global indirect tax software keeps registrations current and returns filed on time.
Pair that with Commenda’s compliance calendar to keep every monthly PF, ESI, TDS, and GST deadline visible by entity. Book a demo to get a compliance gap assessment for your India entity.
