Why Compliance Can't Be an Afterthought
In India, HR compliance isn't just a legal formality — it's a minefield. Late PF filings attract interest at 12% per annum plus damages up to 100% of arrears. ESI non-compliance can mean imprisonment of up to 2 years. And with labour inspectors increasingly using digital audit trails, "we didn't know" is no longer a defence.
This checklist covers every major compliance requirement for employers in India in 2026.
Provident Fund (PF) — The Essentials
Applicability
Mandatory for establishments with 20+ employees (10+ for some notified industries). Once applicable, PF continues even if employee count drops below the threshold.
Contribution Rates (2026)
| Component | Employee | Employer |
|---|---|---|
| EPF (Employee Provident Fund) | 12% of basic | 3.67% of basic |
| EPS (Employee Pension Scheme) | — | 8.33% of basic (max ₹15,000 basic) |
| EDLI (Employee Deposit Linked Insurance) | — | 0.50% of basic |
| PF Admin charges | — | 0.50% of basic |
| Total employer contribution | 12% | 13% |
Key Rules
- Basic salary for PF calculation: Typically 40-50% of gross salary. If basic + DA exceeds ₹15,000/month, PF contribution on the excess is optional for existing members.
- Filing deadline: 15th of each month for the previous month's contribution.
- ECR (Electronic Challan cum Return) must be filed monthly on the EPFO portal.
- International workers: Special provisions apply — 12% on full salary, no wage ceiling.
Penalties for Non-Compliance
- Late payment interest: 12% per annum
- Damages: 5% to 100% of arrears depending on delay period
- Criminal prosecution for persistent defaulters
ESI (Employee State Insurance) — The Essentials
Applicability
Mandatory for establishments with 10+ employees where any employee earns up to ₹21,000/month (₹25,000/month for persons with disability).
Contribution Rates (2026)
| Contributor | Rate |
|---|---|
| Employee | 0.75% of gross wages |
| Employer | 3.25% of gross wages |
| Total | 4% |
Key Rules
- Contribution period: April-September and October-March (two half-yearly periods).
- Filing deadline: 15th of each month.
- Benefits include medical, sickness, maternity, disablement, and dependent benefits.
- Once covered, an employee continues to be covered for the full contribution period even if wages exceed ₹21,000.
Professional Tax (PT)
Professional Tax is a state-level tax on employment. Rates and rules vary by state:
| State | Max Annual PT | Filing Frequency |
|---|---|---|
| Maharashtra | ₹2,500 | Monthly |
| Karnataka | ₹2,400 | Monthly |
| West Bengal | ₹2,500 | Monthly |
| Andhra Pradesh | ₹2,500 | Monthly |
| Telangana | ₹2,500 | Monthly |
| Tamil Nadu | ₹2,500 | Half-yearly |
| Gujarat | ₹2,500 | Monthly |
| Delhi | Not applicable | — |
Note: Companies with employees in multiple states must register and file PT separately in each applicable state.
The Four New Labour Codes — Status in 2026
India's four new labour codes, which consolidate 29 existing laws, have been passed by Parliament but implementation has been phased:
1. Code on Wages, 2019
- Status: Rules notified, implementation in progress
- Key impact: Universal minimum wage, new definition of "wages" (basic + DA must be ≥50% of total remuneration), overtime at 2x wages
- Action item: Restructure salary components to ensure basic + DA ≥ 50% of CTC
2. Industrial Relations Code, 2020
- Status: Rules notified, phased implementation
- Key impact: Standing orders mandatory for 300+ employees (up from 100), fixed-term employment formalized, retrenchment permission threshold raised to 300
- Action item: Review termination policies and standing orders
3. Code on Social Security, 2020
- Status: Rules notified, implementation ongoing
- Key impact: Gig/platform workers brought under social security, PF/ESI expansion to more establishments
- Action item: Identify gig/contract workers who may need social security registration
4. Occupational Safety, Health and Working Conditions Code, 2020
- Status: Rules notified, phased implementation
- Key impact: Single licence for contract labour, annual health check-ups mandatory, women allowed in night shifts (with conditions)
- Action item: Update workplace safety policies and health check-up schedules
Monthly Compliance Calendar
| Date | Compliance | Details |
|---|---|---|
| 7th | TDS deposit | Deposit TDS deducted in previous month to government |
| 10th | GST return (if applicable) | GSTR-1 for outward supplies |
| 15th | PF payment + ECR filing | Pay PF and file Electronic Challan cum Return |
| 15th | ESI payment | Deposit ESI contributions for previous month |
| 21st | PT payment (state-specific) | Professional Tax deposit in applicable states |
| 25th | PF return verification | Verify ECR acceptance and download confirmation |
| Last day | Salary processing | Process payroll with all deductions applied |
Annual Compliance Deadlines
- April 30: PF Annual Return (Form 3A consolidated)
- May 15: ESI Annual Return
- June 30: Gratuity valuation (for companies with 10+ employees)
- July 31: Income Tax Return filing (company)
- November 14: ESI half-yearly contribution statement (April-September)
- December 31: Labour Welfare Fund (state-specific)
- February 15: Professional Tax annual enrollment renewal (state-specific)
Common Penalties to Avoid
- PF late payment: 12% interest + damages up to 100% of arrears
- ESI non-registration: Fine up to ₹5,000 + imprisonment up to 2 years
- PT non-compliance: Penalty of 10% per month of outstanding amount
- Non-maintenance of registers: Fine up to ₹1,00,000 under new labour codes
- Non-payment of minimum wages: Fine up to ₹50,000 (repeat offence: ₹1,00,000 + imprisonment)
Key Takeaways
- PF and ESI deadlines are the 15th of every month — miss them and interest accrues from day one.
- Professional Tax varies by state. Multi-state operations need separate registrations.
- The new labour codes are being implemented in phases — restructure salary components now to ensure compliance.
- Set up automated compliance calendars with reminders at least 5 days before each deadline.
- Consider outsourcing payroll and compliance to a specialist partner if you operate across 3+ states — the complexity of multi-state filing makes in-house management error-prone.