Payroll compliance for a Private Limited Company in India means fulfilling all statutory obligations when paying employees: deducting and depositing TDS, contributing to Provident Fund (PF) and ESI, paying Professional Tax, and filing periodic returns. Non-compliance attracts penalties up to ₹5,000 per day under the Employees' Provident Funds Act and 1.5% per month interest on delayed TDS. This guide covers every requirement your Pvt Ltd must meet in 2026-27.

• PF registration is mandatory once your headcount crosses 20 employees.
• ESI applies when you have 10 or more employees earning up to ₹21,000/month.
• TDS on salary (Section 192) must be deposited by the 7th of the following month.

What Is Payroll Compliance for a Pvt Ltd?

Payroll compliance is the process of accurately calculating employee salaries, making the right statutory deductions, and filing the required returns with government authorities on time. For a Private Limited Company, this involves five distinct compliance streams: Income Tax (TDS), Provident Fund (PF), Employees' State Insurance (ESI), Professional Tax (PT), and Labour Welfare Fund (LWF). Each stream has its own registration, deposit schedule, and filing deadline.

TDS on Salary (Section 192)

Every Pvt Ltd company is required to deduct Tax Deducted at Source (TDS) on the salary paid to each employee based on their projected annual income and applicable tax slab. The deducted amount must be deposited with the government and reported to employees and authorities.

Key TDS Obligations

Obligation	Due Date
Monthly TDS deposit (April – February)	7th of the following month
Monthly TDS deposit (March)	30th April
TDS Return (Form 24Q) – Q1 (Apr–Jun)	31st July
TDS Return (Form 24Q) – Q2 (Jul–Sep)	31st October
TDS Return (Form 24Q) – Q3 (Oct–Dec)	31st January
TDS Return (Form 24Q) – Q4 (Jan–Mar)	31st May
Form 16 (TDS Certificate to employee)	15th June (after year-end)

Penalty for late deposit: Interest at 1.5% per month from the date tax was deductible to the date of deposit. Late filing of Form 24Q attracts ₹200 per day under Section 234E, capped at the TDS amount.

Provident Fund (PF) Compliance

Under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, a Pvt Ltd company with 20 or more employees must register with the Employees' Provident Fund Organisation (EPFO) and contribute to PF every month.

PF Contribution Rates

Contributor	Rate (% of Basic + DA)
Employee contribution (EPF)	12%
Employer contribution (EPF + EPS)	12% (3.67% EPF + 8.33% EPS)
Employer contribution to EDLI	0.5% (capped at ₹75/month)
Employer admin charges	0.5% (minimum ₹500/month)

Deposit deadline: 15th of the following month. Late deposits attract interest at 12% per annum and a damages penalty ranging from 5% to 25% per annum depending on the delay period.

Monthly PF Filings

• ECR (Electronic Challan cum Return): Filed monthly on the EPFO portal along with the payment.
• Annual PF Return: To be filed before 25th April each year for the preceding financial year.

ESI Compliance

The Employees' State Insurance Act, 1948 applies to Private Limited Companies with 10 or more employees where any employee draws a gross salary of ₹21,000 or less per month (₹25,000 for persons with disability). ESI provides medical and cash benefits to insured employees.

ESI Contribution Rates

Contributor	Rate (% of Gross Wages)
Employee contribution	0.75%
Employer contribution	3.25%

Deposit deadline: 15th of the following month. ESI returns are filed half-yearly: 11th November for April–September and 11th May for October–March.

Professional Tax (PT) Compliance

Professional Tax is a state-level tax and its applicability, rates, and filing schedules vary by state. States like Maharashtra, Karnataka, West Bengal, Tamil Nadu, Gujarat, and Andhra Pradesh levy PT on employed individuals. As of July 2026, the maximum Professional Tax that can be charged is ₹2,500 per year per employee.

A Pvt Ltd company must register for PT in every state where it has employees, deduct PT from salaries each month, and remit it to the state authority. Typically, monthly returns are due on the last day of each month, though exact dates differ by state.

Labour Welfare Fund (LWF)

LWF contributions are applicable in states such as Maharashtra, Karnataka, Andhra Pradesh, and Tamil Nadu. Rates and periodicity differ: Maharashtra requires a bi-annual contribution (June and December), while other states may require monthly contributions. Ensure you check the specific LWF Act applicable in your state of operations.

Payroll Compliance Checklist for Pvt Ltd (2026-27)

• Obtain TAN (Tax Deduction Account Number) before the first salary payout.
• Register with EPFO once you reach 20 employees.
• Register with ESIC once you reach 10 employees (with eligible salary brackets).
• Register for Professional Tax in all states where employees are located.
• Issue salary slips showing gross pay, all deductions, and net pay.
• Deposit TDS by the 7th of every month (30th April for March).
• Deposit PF and ESI by the 15th of every month.
• File Form 24Q quarterly.
• File ECR monthly on the EPFO portal.
• Issue Form 16 to all employees by 15th June each year.
• Maintain registers and records under the Shops and Establishments Act and Payment of Wages Act.

What Are the Penalties for Non-Compliance?

Payroll non-compliance is treated seriously under Indian labour law. Below is a summary of key penalties your Pvt Ltd may face:

Violation	Penalty
Late TDS deposit	Interest: 1.5% per month + penalty up to TDS amount
Non-filing of Form 24Q	₹200/day under Section 234E
Late PF deposit	12% p.a. interest + 5%–25% damages
Failure to register under EPFO	Prosecution + penalty up to ₹5,000/day
Late ESI contribution	Interest at 12% p.a. + penalties under ESI Act
Non-deduction of PT	Penalties as per applicable state PT Act

Why Outsource Payroll Compliance?

For most Pvt Ltd founders, managing payroll compliance in-house diverts time away from core business activities. Frequent regulatory changes — such as revised PF wage ceilings or state-specific PT amendments — mean that even minor errors can trigger audits or penalties.

Outsourcing to a compliance specialist like Taxocity gives your company access to real human experts who track regulatory changes in real time. With more than three decades of experience and a 4.8/5 rating from over 5,000 clients, Taxocity provides end-to-end payroll compliance support: from initial registrations (TAN, EPFO, ESIC, PT) through monthly depositing, quarterly return filing, and annual reconciliation — all backed by a 100% compliance guarantee.

Other Annual Compliance for Pvt Ltd

Payroll compliance is one part of your overall obligations as a Private Limited Company. You also need to stay on top of:

• Annual statutory compliance for Private Limited Companies including board meetings, ROC filings, and audit requirements.
• GST registration and monthly/quarterly GST filings if your turnover crosses the threshold.
• Private Limited Company registration if you are yet to incorporate.
• Benefits of a Private Limited Company structure over other business forms.

Key Takeaways

1. TDS on salary must be deposited by the 7th of each month and Form 24Q filed quarterly.
2. PF registration is mandatory at 20 employees; deposit by the 15th monthly.
3. ESI registration is mandatory at 10 employees earning up to ₹21,000/month; deposit by the 15th monthly.
4. Professional Tax obligations depend on the state where employees are located.
5. Penalties for non-compliance are steep and can result in prosecution under EPF and ESI Acts.
6. Outsourcing payroll compliance to experts avoids missed deadlines and costly errors.

Stay Fully Compliant in 2026-27

Payroll compliance involves multiple authorities, monthly deadlines, and state-specific rules. One missed deadline can trigger interest, penalties, and even prosecution. Let real compliance experts handle it for you so you can focus on growing your business.

Talk to a Payroll Compliance Expert at Taxocity Today

Disclaimer

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Payroll compliance requirements may vary based on your specific circumstances, state of operations, and applicable regulations. Please consult a qualified tax advisor or compliance professional before making any decisions.