PF, ESI, professional tax and TDS — what to get right each month, without needing a full-time compliance team.
Payroll compliance in India isn't one rule — it's several, and they change with company size, employee salary, and state. This isn't tax advice, but here's the shape of what small businesses typically need to track. Always confirm current thresholds and applicability with a qualified compliance advisor.
Thresholds and applicability change periodically — treat this as a checklist of what to check, not the current numbers.
Every statutory calculation starts from days worked and CTC. If attendance is wrong, every downstream number is wrong too — see attendance tracking without spreadsheets.
A clear payslip showing gross, deductions and net pay is both good practice and often a compliance expectation. See CTC vs in-hand salary for what a payslip should contain.
Track when a hike takes effect and what changed — this matters for both compliance and for resolving any future pay dispute.
Deducting PF or TDS from a payslip is only half the job — the amounts also need to be deposited with the relevant authority on time.
Compliance is rarely broken by one big mistake — it's broken by small, repeated gaps in attendance, records, or deposits that compound over a year.
Merik doesn't file statutory returns for you, but it keeps the foundation clean: accurate daily attendance, a full salary-hike history, and a clear monthly payslip per employee — the records a compliance advisor or auditor will ask for first. See common payroll mistakes to avoid, or explore the payroll module.
Since 21 November 2025 the four labour codes govern most of the above — what changed for small business payroll, and the compliance calendar with every recurring date.
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Common statutory items include Provident Fund (PF), Employee State Insurance (ESI) where applicable, professional tax (state-specific), and TDS (tax deducted at source) on salary above the exemption threshold. Applicability depends on company size and employee salary levels — check current thresholds with a compliance advisor.
Registration requirements depend on employee count and wage levels and change from time to time, so they should be confirmed with a compliance professional or the relevant government portal rather than assumed from general guidance.
At minimum: monthly payslips per employee, attendance and leave records used to calculate pay, salary revision history, and proof of statutory deposits (PF, ESI, professional tax, TDS) where applicable.
A practical monthly process for founders and office managers.
The 50% wages rule, fixed-term gratuity, 180-day leave, wages by the 7th — decoded.
What CTC really means and how monthly net pay is calculated.