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Lesson 2 of 3Payroll & HR

Statutory Compliance

Every employer must comply with statutory obligations — PF, ESI, Professional Tax, Gratuity, minimum wages, and more. Missing deadlines or short payments can result in penalties, interest, and even prosecution. This lesson covers what you must do and when.

Major Statutory Obligations (India)

Provident Fund (EPF & MP Act, 1952)

Rate: Employee: 12% of Basic | Employer: 12% of Basic (3.67% EPF + 8.33% EPS)
Applicability: Establishments with 20+ employees. Voluntary for smaller firms.
Deadline: 15th of following month
Returns: ECR (Electronic Challan cum Return) — monthly
Penalty: Interest @ 12% p.a. + Damages 5-25% of arrears

ESI (Employees' State Insurance Act, 1948)

Rate: Employee: 0.75% of Gross | Employer: 3.25% of Gross
Applicability: Employees earning ≤ ₹21,000/month gross. Establishments with 10+ employees.
Deadline: 15th of following month
Returns: Half-yearly return — April & October
Penalty: Simple interest @ 12% p.a. + Damages up to 5x contribution

Professional Tax

Rate: Varies by state (max ₹2,500/year). Monthly or half-yearly deduction.
Applicability: All salaried employees in states that levy it (MH, KA, TN, WB, AP, TG, GJ, etc.)
Deadline: Varies by state (usually last day of month or quarter)
Returns: Monthly/quarterly/annual — depends on state
Penalty: Interest + penalty per state rules. 1.5-2% per month in most states

TDS on Salary (Section 192)

Rate: As per income tax slab applicable to employee. Old or New regime.
Applicability: All employers paying salary above basic exemption limit.
Deadline: 7th of following month (April to February). 30th April for March.
Returns: Form 24Q — quarterly
Penalty: ₹200/day late filing (max = TDS amount). Interest @ 1-1.5% per month

Gratuity (Payment of Gratuity Act, 1972)

Rate: 15 days wages × years of service ÷ 26. Max ₹25 lakh (2024).
Applicability: Establishments with 10+ employees. Payable after 5 years of continuous service.
Deadline: Within 30 days of it becoming payable (resignation/retirement/death)
Returns: No regular return. Payment on event basis.
Penalty: Interest @ 10% p.a. on delayed payment. Imprisonment up to 2 years.

Monthly Compliance Calendar

DateComplianceForm / Portal
7thTDS payment for previous monthChallan 281 (TRACES)
10thProfessional Tax (varies by state)State PT portal
15thPF payment + ECR filingEPFO Unified Portal
15thESI paymentESIC Portal
25thLWF contribution (half-yearly states)State LWF office
Last daySalary processing + payslip distributionPayroll system
QuarterlyTDS return (Form 24Q)TRACES portal
AnnualForm 16 issuance to employees (by June 15)TRACES

Global Statutory Obligations

🇮🇪 Ireland

  • • PRSI (Pay Related Social Insurance)
  • • USC (Universal Social Charge)
  • • Income Tax (PAYE)
  • • Employer PRSI: 11.05%

🇦🇺 Australia

  • • Superannuation (11.5% employer)
  • • PAYG Withholding (income tax)
  • • Payroll Tax (state-based)
  • • Workers Compensation insurance

🇸🇬 Singapore

  • • CPF (Central Provident Fund)
  • • Employer: 17% / Employee: 20%
  • • SDL (Skills Development Levy)
  • • Foreign Worker Levy

🇺🇸 USA

  • • Social Security (6.2% each)
  • • Medicare (1.45% each)
  • • Federal & State income tax
  • • FUTA (unemployment, 6%)

Key Takeaways

India has 5 major statutory obligations: EPF, ESI, Professional Tax, TDS on Salary, and Gratuity — each with its own rates, deadlines, and penalties

PF and ESI payments are due by the 15th of each month. TDS by the 7th. Missing deadlines triggers automatic interest and penalties

Professional Tax varies by state and is capped at ₹2,500/year. Some states don't levy it at all

Every country has equivalent statutory requirements — PRSI (Ireland), Super (Australia), CPF (Singapore), FICA (USA)

Automate compliance tracking with payroll software to avoid missed deadlines and ensure accurate calculations

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