Payroll & Labour Compliance

ESIC provides social security benefits (medical, maternity, disability) to employees with gross salary up to ₹21,000/month. Employer contribution is 3.25% and employee contribution is 0.75% of gross wages. Registration is mandatory for factories and establishments with 10+ employees (20 in some states).

Professional Tax is a state-level tax on salaried employees and self-employed professionals. States levying PT include Maharashtra, Karnataka, West Bengal, Tamil Nadu, Andhra Pradesh, Gujarat, and Telangana. Maximum PT is ₹2,500 per annum. Employers deduct and deposit PT on behalf of employees.

Form 16 is a TDS certificate issued by employers to employees under Section 203 of the Income Tax Act. It contains details of salary paid and tax deducted. Form 16 must be issued by 15th June every year. Employees use it to file their ITR. Part A covers TDS; Part B covers salary breakup.

LWF contributions are mandatory in states like Maharashtra, Karnataka, MP, and Tamil Nadu. Both employer and employee contribute a fixed amount (varies by state, typically ₹6–₹31 per employee per month). Returns are filed biannually or annually, and failure attracts penalties under respective state acts.

Gratuity is payable to employees who have completed 5+ years of continuous service. Formula: (Last drawn salary × 15/26) × Number of years of service. Gratuity is exempt up to ₹20 lakhs for non-government employees under the Payment of Gratuity Act. Curioup structures CTC to optimise gratuity provisions.

The Code on Wages 2019 (pending full implementation) redefines "wages" to include 50%+ as basic salary. This increases PF, gratuity, and leave encashment calculations while reducing take-home pay. Companies must restructure CTC components. Curioup proactively models the impact and restructures payroll accordingly.

Employers must deduct TDS on salary under Section 192 based on the employee's projected annual income at the applicable slab rate. TDS is deposited by the 7th of the next month. Quarterly returns (Form 24Q) must be filed, and Form 16 issued annually. Non-deduction attracts penalties and interest.