Payroll Compliance Checklist for Indian Businesses 2026

Why Payroll Compliance Is Non-Negotiable

In India, payroll compliance involves multiple overlapping regulatory frameworks — the Employees' Provident Fund (EPF) Act, the Employees' State Insurance (ESI) Act, Income Tax (TDS), state-level Professional Tax, the Payment of Wages Act, and the Labour Welfare Fund. Missing a filing deadline or calculating a deduction incorrectly can result in penalties ranging from ₹5,000 to several lakhs, plus interest and potential prosecution.

The following checklist is designed to help Indian HR and finance teams stay on top of every obligation — monthly and annually.

Monthly Compliance Checklist

By 7th of Every Month

• Deposit TDS deducted from employee salaries (Challan 281)
• Deposit TDS on other payments (rent, professional fees, contractor)

By 15th of Every Month

• Deposit EPF contribution (employer 12% + employee 12% of basic salary)
• Deposit ESI contribution (applicable to employees earning ≤ ₹21,000/month)
• File ECR (Electronic Challan cum Return) on EPF portal

By 21st of Every Month

• File monthly ESI return (Form 6)
• Generate and distribute payslips to all employees

By Last Working Day of the Month

• Deposit Professional Tax (state-specific — check your state deadlines)
• Process all salary payments as per the Payment of Wages Act timelines

Quarterly Compliance Checklist

• TDS Return — Form 24Q (salary TDS): Due 31st July, 31st October, 31st January, 31st May
• TDS Certificates — Form 16A: Issue to employees within 15 days of quarterly filing

Annual Compliance Checklist

Before 31st March (Financial Year End)

• Ensure all TDS has been deducted and deposited for the full year
• Calculate investment proof adjustments and finalize Form 16
• Complete EPF annual return (Form 3A and Form 6A)
• File ESI annual return
• Reconcile Labour Welfare Fund contributions

Before 31st May

• Issue Form 16 (TDS certificate) to all employees
• Submit Q4 TDS return (Form 24Q)

Common Mistakes to Avoid

The most frequent compliance failures Indian businesses encounter are: depositing EPF/ESI on gross salary instead of basic + DA; not updating employee records when there are salary revisions mid-year; missing the ESI coverage review when employee salaries cross the ₹21,000 threshold; and failing to register new employees within 30 days of joining.

Download the Full Checklist

We've compiled this into a ready-to-use PDF checklist that your HR team can print and use every month. Download it free below — no email required.

📥 Download Free PDF Checklist