Tag: TDS on salary

Running payroll in India means more than paying salaries on time. Every month the employer must deduct and deposit provident fund, employees’ state insurance, professional tax and income tax, and then file returns on a separate cycle. Missing any one of these can bring interest, damages or a notice, even when the amounts are small. A single calendar for payroll compliance in India is the simplest way to keep everything in order.

This guide sets out the key statutory dates, explains what each one involves and shares a few habits that make month-end payroll smoother. It reflects the new income-tax form numbers from 1 April 2026 and the EPF wage ceiling of ₹25,000 from 17 September 2026.

Key takeaways

• Salary TDS is deposited by the 7th of the following month (30 April for March).
• PF and ESI contributions are paid, and the PF ECR filed, by the 15th of the following month.
• Quarterly salary TDS statements are now filed in Form 138 (earlier Form 24Q), and salary TDS certificates are issued in Form 130 (earlier Form 16).
• Professional tax and labour welfare fund rules differ by State; confirm the rules where each employee works.
• Under the labour codes, monthly wages should be paid by the 7th of the following month.

The monthly payroll compliance calendar

Date (following month)	Compliance	Notes
7th	Pay salaries (monthly wage period)	Required under the Code on Wages
7th	Deposit TDS on salary	30 April for deductions made in March
15th	Pay PF and file the ECR	Employee 12% and employer 12% of PF wages
15th	Pay ESI contributions	For employees earning up to ₹21,000 a month
As per State	Pay professional tax	Monthly, quarterly or annual depending on the State and employer size
As per State	Labour welfare fund	Monthly, half-yearly or annual in States that levy it

A practical rule: finalise payroll and statutory computations by the 1st or 2nd working day, so salaries go out well before the 7th and statutory payments before the 15th.

Provident fund (PF)

• Applies to establishments with 20 or more employees, and voluntarily to others.
• Contributions are 12% from the employee and 12% from the employer on PF wages; part of the employer’s share goes to the Employees’ Pension Scheme (EPS).
• From 17 September 2026 the wage ceiling for mandatory coverage is ₹25,000 a month, up from ₹15,000. September 2026 contributions needed a split computation in one ECR.
• The ECR (electronic challan cum return) is filed on the EPFO portal and payment made against it by the 15th.
• New joiners must be linked to a UAN with Aadhaar-seeded KYC.

Late payment can attract interest and damages, so the 15th is worth treating as a hard deadline.

Employees’ State Insurance (ESI)

• Applies to employees earning up to ₹21,000 a month in covered establishments.
• Contribution rates are 0.75% from the employee and 3.25% from the employer.
• Contributions are paid monthly by the 15th through the ESIC portal.
• Register new employees on the portal before or on the day of joining so that medical benefits are available from day one.

Professional tax and labour welfare fund

Professional tax is a State levy with a constitutional ceiling of ₹2,500 a year per person. Rates, slabs and payment frequency vary: some States such as Maharashtra and Karnataka levy it, while others such as Uttar Pradesh and Delhi do not. Employers with staff in several States need a separate registration and return for each State that levies it.

Labour welfare fund contributions are similar: small amounts, but State-specific and easy to overlook.

TDS on salary under the new Income-tax Act

From 1 April 2026 the Income-tax Act 2025 applies to salary paid in the tax year 2026-27. The substance of salary TDS is familiar, but several form numbers have changed:

Purpose	Earlier form	New form
Quarterly TDS statement on salary	Form 24Q	Form 138
Salary TDS certificate	Form 16	Form 130
Employee’s declaration of claims	Form 12BB	Form 124

Quarterly statement due dates remain 31 July, 31 October, 31 January and 31 May. The annual salary certificate is issued after the year ends, typically by mid-June. Our guide to new income-tax form numbers lists the full mapping.

Each month, compute TDS on projected annual salary under the regime the employee has chosen, and adjust for declarations and proofs. Late deposit or late statements can bring interest and fees; our article on TDS default notices explains how these are computed.

Annual and event-based tasks

1. Start of the year: collect regime choice and investment declarations; update salary structures and the 50% wages test under the labour codes.
2. January to March: collect investment proofs and finalise TDS for the year.
3. After year-end: file the Q4 statement by 31 May and issue Form 130 certificates.
4. Bonus: pay statutory bonus within the prescribed time after the close of the accounting year, where applicable.
5. Exits: complete full and final settlement within two working days of the last working day, including gratuity where due.
6. Registers and returns: maintain wage, attendance and leave records in the formats applicable in your State.

For how the labour codes affect salary structure, PF and gratuity, see our guide on new labour codes and payroll.

Habits that keep payroll compliance on track

• One master calendar for every State and entity, with owners and reminder dates.
• Monthly reconciliation of payroll register, PF ECR, ESI challan, TDS challan and the bank statement.
• Employee master hygiene: PAN, Aadhaar, UAN, ESIC number and bank details verified at joining.
• Maker-checker review before payments are released.
• A compliance folder each month with challans, acknowledgements and reconciliations, ready for any inspection or query.

Frequently asked questions

What is the due date for PF and ESI payment?

Both are due by the 15th of the month following the wage month.

When should TDS on salary be deposited?

By the 7th of the following month, and by 30 April for deductions made in March.

Is Form 24Q still used for salary TDS?

For the tax year 2026-27 onwards, the quarterly salary TDS statement is Form 138. Statements for earlier periods continue under the old forms.

Is professional tax payable in every State?

No. It is levied only by some States, and rates and due dates vary, so check the rules in each State where you have employees.

This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.