1. Employee Provident Fund (EPF) Rules and Formulas
The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 mandates EPF for establishments with 20 or more employees. The standard contribution is 12% of basic wages + dearness allowance (capped at ₹15,000 basic wage ceiling, or on full basic). The employer's 12% contribution is allocated: 3.67% to EPF, 8.33% to EPS (capped at ₹1,250), plus 0.5% EDLI and administrative charges.
2. Employee State Insurance (ESIC) Statutory Compliance
Under the ESI Act, employees earning gross wages up to ₹21,000 per month are covered. The employee contributes 0.75% of gross wages, while the employer contributes 3.25%, totaling 4.0%. Contributions must be deposited with ESIC portals by the 15th of the following month.
3. State-Specific Professional Tax (PT) Slabs
Professional Tax is levied by individual state governments with unique monthly slabs. For instance, Maharashtra levies ₹200/month (₹300 in February), Karnataka charges ₹200/month above ₹15,000 gross, while Delhi imposes no Professional Tax. Modern payroll tools automatically apply the correct state slab based on the employee's designated work location.
4. TDS on Salary (Section 192) & Form 16 Generation
Employers must calculate annual projected income tax liabilities under both the New Tax Regime (Section 115BAC default) and Old Tax Regime, deducting equal monthly installments under Section 192. At the end of the fiscal year, accurate Form 16 Part A and Part B documents must be generated for all employees.
Simplify Your Business Accounting
Automate Indian payroll with instant general ledger posting in LedgerMapz.
Explore Solution