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All-in-one HR platform · v2.0
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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
EPF, ESI, Professional Tax, Labour Welfare Fund and TDS are calculated inside the payroll run from the salary structure on the employee record and the registrations you hold, and the same run produces the files each authority expects. This page is a reference rather than an argument: the register first, the rhythm second.
Each head with the condition that brings it into play, the basis it is computed on, and the output the run produces. Rates are stated only where central statute fixes them.
EPF
Employees' Provident Fund
Applies
Generally from twenty employees in a covered establishment, and by voluntary coverage below that where the employer has opted in.
Basis
12% of the PF wage from the employee and 12% from the employer, of which 8.33% is diverted to the pension scheme within the statutory ceiling. The PF wage is basic plus dearness allowance, subject to the ₹15,000 ceiling where the employer applies it.
EPFO-ready electronic challan receipt (ECR) text file
ESI
Employees' State Insurance
Applies
Generally from ten employees in a covered establishment, for employees whose monthly gross is at or below the ₹21,000 threshold.
Basis
0.75% of gross from the employee and 3.25% from the employer. Eligibility is fixed for the whole contribution period rather than retested monthly, which is the single most misunderstood rule in the head.
ESIC monthly contribution return and challan report
PT
Professional Tax
Applies
In the states that levy it, on the registration the employer holds in each state where it employs people. Commonly applicable from the first employee.
Basis
A state subject. Slabs, exemptions and periodicity differ by state, and at least one state deducts a different amount in a single month of the year. HRMagix applies the slab configured for the registration rather than a national assumption.
State-wise PT working, per registration
LWF
Labour Welfare Fund
Applies
In the states that operate a fund, at the periodicity that state sets, half-yearly and annual cycles are both common.
Basis
Also a state subject, with employer and employee shares set by the state. Deadlines are matched to the state cycle and applied inside the run rather than remembered separately.
State LWF statement
TDS
Tax deducted at source on salary, Section 192
Applies
Where an employee's projected annual income for the financial year exceeds the exemption limit.
Basis
Projected across the remaining months of the financial year, against the employee's election between the old and new regimes and their verified declarations under 80C, 80D, HRA and home-loan interest. HR verification of proofs feeds the deduction schedule.
Quarterly Form 24Q and annual Form 16 Part B
Gratuity
Payment of Gratuity Act
Applies
On separation, to employees who have completed five years of continuous service, and without that qualifying period in the case of death or disablement.
Basis
Fifteen days' wages per completed year on the last drawn basic, using the 26-day divisor. Provisioning runs alongside so the liability is visible before it falls due.
Provision schedule and settlement working
Compliance is a calendar problem as much as an arithmetic one. This is the order the month runs in, and what each step exists for.
As the month closes
Attendance, approved leave and overtime stop feeding the run
Every statutory figure is computed on wages, and wages depend on paid days. The cut-off is therefore an attendance decision before it is a payroll one.
On processing
Each head is derived from the salary structure and the registrations held
Nothing is entered. A rate cannot be stale, because it is not stored twice, the deduction is computed from the structure at the moment the run executes.
With the run
Payslips, the bank transfer batch and every statutory file are produced together
The return and the ledger are built from one set of figures, so they cannot disagree. A reconciliation step between them would only exist if they had been calculated separately.
Monthly
ECR and the ESIC contribution return go out against their registrations
Both are per-establishment obligations with fixed dates that do not move because the month was busy.
Quarterly
Form 24Q reports the TDS deducted and deposited
It reconciles to the deductions the runs actually made, which is why the run and the return share a source.
Annually
Form 16 Part B is issued to employees
It has to reconcile across the whole financial year regardless of which system produced each month of it, the reason a mid-year migration must carry year-to-date figures across.
It computes and produces. It does not submit on your behalf, and it does not hold professional opinions. Filing stays with you, which also means every figure can be checked before anything goes out under your registration.
It also does not decide applicability for you. Whether an establishment is covered, which state registrations you hold and whether you have opted into voluntary coverage are facts about your business that you supply. The engine applies them consistently, it cannot know them.
Nothing on this page is tax or legal advice. The rates named are provisions of central statute, and the state heads are described as configurable precisely because printing a single slab for them would be wrong for most employers reading this.
The ones that decide whether a payroll month closes cleanly.
The rates fixed by central statute, EPF at 12% each side, EPS at 8.33% within the employer share, ESI at 0.75% and 3.25%, are built in. What you supply is the registrations you hold and the salary structure, because those decide applicability and the wage base. State heads work differently: see the next answer.
By configuration against the registration, not by a national default. PT and LWF are state subjects whose slabs, exemptions and periodicity differ, so the platform applies the schedule attached to the registration for the state an employee works in. A product that printed one PT slab would be wrong in most of India.
Because eligibility is fixed for the contribution period rather than retested each month. An employee who is covered at the start of a period stays covered for its duration even if a revision takes their gross above the threshold partway through. Treating it as a monthly test is a common and expensive error.
To the employee. They make the election and submit declarations under 80C, 80D, HRA and home-loan interest through the self-service portal, where they can compare the two regimes on their own salary. Your side is verification of proofs, which then feeds the deduction schedule for the remaining months.
The affected months are recomputed and the difference is paid as an identified arrear. The arrear counts toward the PF wage of the month it is paid, and it moves the year-to-date figure the TDS projection is built on. The original payslips and the returns already filed against them stay as they were.
Each entity keeps its own EPF and ESI registrations, its own PT registrations by state, and its own run and returns. Statutory totals stay attached to the entity that owes them, because that is the level at which they are filed.
It produces the files the portals expect, the ECR text file, the ESIC contribution return, the PT working, Form 24Q and Form 16 Part B, from the run that generated the figures. Submission remains yours, which also means the numbers can be checked before anything is filed in your name.
No. Whether an establishment is covered, which state registrations you hold and whether you have opted into voluntary coverage are facts you supply. The engine applies them consistently.
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