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Managed Payroll Services in India: EPF, ESI, TDS and Labour Law Compliance

Reviewed by CA and CS Team, Patron Accounting LLP ICAI & ICSI Registered| 15+ Years Experience| Last Updated: Verify Credentials →

Full Statutory Compliance: EPF, ESI, TDS, PT, LWF, bonus and gratuity provision - all filings handled on time every month across all states.

Multi-State Payroll: Separate minimum wages, PT slabs and LWF rules managed state by state for distributed teams across India.

Industry Specialist: Dedicated payroll for healthcare, logistics, manufacturing, IT, hospitality, retail and more - see industry pages below.

CA and CS Team: Monthly MIS reports, payroll registers, Form 16, and audit-ready documentation included as standard.

500+ companies and 20,000+ employees trust Patron Accounting for managed payroll across 10+ industries.

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Real Stories from Real People

Hear how teams across industries use Patron to save time, cut costs, & stay in control.

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“
Moved our 280-employee payroll to Patron after struggling with new Labour Code requirements. Within one month, payslips accurate, PF and ESI filed on time, F&F processing done within the prescribed timeline. Excellent transition support.
SD
Sudhir Deshmukh
HR Director, Manufacturing Company, Pune
★★★★★
2 months ago
“
Patron handles our payroll across 6 states. The PT and LWF compliance alone was a nightmare in-house. They have a state-wise matrix and never miss a deadline. Monthly MIS reports are a bonus for our finance team.
AJ
Anuradha Joshi
CFO, Retail Chain, Mumbai
★★★★★
3 months ago
“
As a GCC with 120 India employees, we needed a CA firm that understood both Indian payroll law and cross-border salary components. Patron got our DTAA-based TDS right from month one. Expat payroll handled seamlessly.
MR
Mark Reynolds
India Country Head, Technology GCC, Bangalore
★★★★★
1 month ago
“
Our hospital chain has 450 employees across 3 facilities with shift-based pay, visiting doctor TDS, and ESI for all clinical staff. Patron Accounting's healthcare payroll specialist handles everything perfectly. Zero penalty in 3 years.
DP
Dr. Priyanka Kulkarni
Director, Multi-Specialty Hospital, Hyderabad
★★★★★
4 months ago
“
Started with 12 employees and Patron has scaled with us to 350. Never had to renegotiate or change providers. The monthly payroll MIS and year-end Form 16 reconciliation are consistently perfect. Best payroll decision we made.
RP
Rohit Patil
CEO, SaaS Company, Chennai
★★★★★
2 months ago

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Payroll Services in India - Key Facts for 2026

📌 TL;DR - Payroll Services Services at a Glance

Running payroll in India means navigating EPF under the EPF Act 1952, ESI under the ESI Act 1948, TDS under Section 192, Professional Tax across multiple states, and gratuity under the Payment of Gratuity Act 1972 - plus the November 2025 Labour Code reforms. Patron Accounting delivers end-to-end managed payroll for businesses across all industries, starting from INR 149 per employee per month.

India's payroll compliance landscape became significantly more demanding after the four Labour Codes were notified in November 2025. These codes merged 29 older central labour laws, introduced the 50% basic wage rule, mandated digital record-keeping, and extended social security coverage to gig workers and fixed-term employees.

Key PointDetail
Who needs payroll services?Every employer in India with 1+ salaried employees; statutory obligations begin from the first hire
Mandatory deductionsEPF (12% each), ESI (3.25% employer + 0.75% employee for gross <= INR 21,000), TDS per Income Tax slab, Professional Tax per state
Key regulation (2025-26)Four Labour Codes notified November 2025: basic salary must be >= 50% of CTC; digital wage registers mandatory; fixed-term employees eligible for gratuity after 1 year
Cost of payroll errorMissed EPF deposit: 12% annual interest plus damages up to 25%; missed TDS: 1.5% monthly interest plus INR 200/day penalty
Payroll outsourcing costINR 300-500 PEPM basic; INR 500-800 full compliance; INR 800-2,500 industry-specific managed payroll
Key statutory deadlinesTDS by 7th; EPF/ESI by 15th; salary by 7th (under 1,000 employees); Form 24Q quarterly; Form 16 by June 15th
Starting PriceINR 149 per employee per month (Patron Accounting LLP)

Content is reviewed quarterly for accuracy.

What Is Managed Payroll and What Does It Cover in India?

Payroll in India is not simply crediting salaries to bank accounts. It is a multi-step statutory process governed by at least six central laws and dozens of state-level regulations. A managed payroll service takes ownership of the entire monthly payroll cycle on your behalf - from gross-to-net computation and statutory deductions to return filing and year-end Form 16.

Under the Code on Wages, 2019 (active November 2025), basic salary must be at least 50% of total CTC. This directly affects the PF contribution base and prevents employers from structuring low-basic/high-allowance CTC to minimise PF contributions.

The payroll compliance framework in India includes: EPF under the EPF and Miscellaneous Provisions Act, 1952 (12% employee + 12% employer on Basic+DA), ESI under the ESI Act, 1948 (0.75% + 3.25% for gross <= INR 21,000), TDS under Section 192 of the Income Tax Act, 1961, Professional Tax per state, Labour Welfare Fund per state, Bonus under Payment of Bonus Act, 1965, and Gratuity under Payment of Gratuity Act, 1972.

Key Terms for Payroll Services:

Gross-to-Net Computation: Salary structure design per Code on Wages 2019 (50% basic rule); gross pay including basic, HRA, allowances, bonuses, incentives, and reimbursements minus all statutory deductions.

EPF Contribution: 12% employee + 12% employer on basic+DA; ECR generation; monthly challan to EPFO by 15th; UAN management. [EPF Act, 1952 - Section 1(3)]

ESI Contribution: 0.75% employee + 3.25% employer for employees with gross <= INR 21,000; monthly deposit by 15th; half-yearly returns. [ESI Act, 1948]

TDS on Salary: Per old or new regime as declared by employee; monthly deposit by 7th; Form 24Q quarterly; Form 16 by June 15th. [Income Tax Act, 1961 - Section 192]

50% Basic Wage Rule: Under Code on Wages 2019 (November 2025), basic wages must constitute at least 50% of total remuneration, increasing the PF contribution base.

Managed Payroll EPF ESI TDS PT Payroll Services Payroll Services
Managed Payroll EPF, ESI, TDS, PT, LWF

Why Indian Businesses Outsource Payroll in 2026

India's payroll compliance landscape became significantly more demanding after the four Labour Codes were notified in November 2025. Here is why managing payroll in-house is a growing risk:

  • Regulatory complexity: Payroll touches at least 10 central laws and state-specific rules for every state where you have employees. Multi-state employers face dozens of separate PT, LWF and minimum wage compliance obligations simultaneously.
  • Penalty exposure: A single missed EPF deposit attracts 12% annual interest plus damages up to 25% of arrears under the EPF Act; incorrect TDS attracts interest at 1.5% per month plus INR 200 per day under Section 234E; late salary payments under Code on Wages attract fines up to INR 50,000.
  • The 50% basic wage rule: Under Code on Wages, 2019, basic salary must be at least 50% of total CTC. Companies that previously kept basic pay low to reduce PF and gratuity liability must restructure salary components.
  • Gig and fixed-term worker obligations: Under the Social Security Code, 2020 (notified November 2025), fixed-term employees are now eligible for gratuity after just 1 year of service; platform aggregators must contribute to a social security fund for gig workers.
  • Cost: A full-time payroll manager costs INR 4-8 lakh/year; a payroll specialist adds INR 3-5 lakh; compliance software INR 50,000-2 lakh. Outsourcing costs INR 200-500 per employee per month - delivering 60-80% cost savings.
  • Time: Payroll teams in companies with 50-200 employees typically spend 15-30 hours per month. Outsourcing recovers this capacity for HR, finance and operations work.

12 Payroll Services Included by Patron Accounting

ServiceWhat We Do
Payroll ProcessingMonthly gross-to-net computation; attendance integration; payslip generation; bank transfer file in NEFT/RTGS format
EPF ComplianceECR generation; monthly challan by 15th; UAN management; Form 10C/10D for exits; annual return by April 30; PF withdrawal facilitation
ESI ComplianceMonthly deposit by 15th; half-yearly Form 6 returns; IP number generation; ESIC card facilitation; ESI exit processing
TDS on SalaryMonthly TDS per old/new regime; deposit by 7th; Form 24Q quarterly; Form 16 by June 15th; investment declaration management
Professional TaxState-wise PT deduction per applicable slab; monthly or annual remittance; PT registration for new states
Labour Welfare FundHalf-yearly contributions for Maharashtra, Karnataka and all applicable states; June 30 and December 31 deadlines
Bonus ComputationAnnual bonus under Payment of Bonus Act, 1965 at 8.33%-20% for eligible employees (20+ establishments)
Gratuity ProvisionActuarial provision annually; gratuity on separation; 1-year threshold for fixed-term staff (November 2025)
Full-and-Final SettlementGratuity, leave encashment, salary arrears, EPF transfer/withdrawal, ESIC exit - all within 30 days
MIS ReportingMonthly payroll summary; cost-by-department; headcount reconciliation; statutory liability tracker; audit trail
Industry-Specific PayrollSpecialist services for Healthcare, Logistics, Manufacturing, IT, Hospitality, Retail - see industry pages below
Multi-State PayrollSeparate minimum wage schedules, PT slabs, LWF contributions and Shops & Establishments compliance per state
Our Process

9-Step Monthly Payroll Processing Cycle

Our CA team follows this cycle for every client - from input cutoff on the 22nd to MIS report delivery. Each step is documented and verified before moving to the next stage.

Step 1

Input Cutoff (by 22nd)

Attendance, leave, new joinings, exits, salary revisions and variable pay submitted via standardised template, HRMS export, biometric data or Excel.

Data standardised Cutoff enforced
Data Collected 01
Step 2

Salary Structure Validation

Salary components verified for Code on Wages 2019 compliance: basic confirmed at >= 50% of total CTC; allowances checked not to exceed 50% of total remuneration.

50% basic verified CTC compliant
50%BASIC
CTC Validated 02
Step 3

Gross-to-Net Computation

Monthly gross salary computed; all deductions applied: EPF (12%), ESI (0.75%), TDS per slab, PT per state, LWF, loan recoveries and other authorised deductions.

All deductions applied Net pay computed
GROSS- EPF 12%- ESI 0.75%- TDS SlabNET PAY
Net Pay Ready 03
Step 4

Multi-State Minimum Wage Check

Every employee's location verified against the current state minimum wage for the applicable skill category; any shortfall flagged before payroll is finalised.

State wages checked Shortfalls flagged
MHKADLTN
Wages Verified 04
Step 5

TDS Computation and Draft Review

Individual TDS per old/new regime; investment declarations applied; projected annual tax reconciled. Draft payroll summary shared with HR/Finance for approval.

TDS optimised Client approved
OK
Approved 05
Step 6

Salary Disbursement (by 3rd-5th)

Bank transfer file in NEFT/RTGS format submitted; digital payslips distributed to employees. Salaries credited by 7th of following month per Payment of Wages Act.

Bank file sent Payslips issued
NEFTRs
Salaries Credited 06
Step 7

Statutory Filings (by 7th and 15th)

EPF ECR by 15th; ESI contribution by 15th; TDS by 7th; PT by state deadline; Form 24Q quarterly. All filings with acknowledgement copies retained.

EPF/ESI by 15th TDS by 7th
Returns Filed 07
Step 8

F&F and Exit Processing

Full-and-final settlement: gratuity, leave encashment, PF withdrawal, ESIC exit, TDS adjustments. All processed and documented within the prescribed timeline.

F&F computed Exit documented
F&F Done
Exit Settled 08
Step 9

Monthly MIS Report

Payroll cost summary by department; headcount report; statutory liability register; compliance status dashboard; year-to-date TDS tracker delivered to client.

MIS delivered Audit trail ready
MIS Delivered 09

Documents Required to Onboard Payroll Services

Keep the following documents ready for a smooth payroll onboarding:

  • Employee master data: name, designation, department, date of joining, work location (state)
  • PAN and Aadhaar for all employees for TDS and EPF/ESI registration
  • Bank account details for salary disbursement (account number and IFSC code)
  • UAN numbers for employees already covered under EPF at a previous employer
  • Existing EPF and ESIC establishment registration numbers
  • Salary structure for each employee: basic, HRA, allowances, and variable components
  • Previous 3 months payroll data if switching from another provider
  • PT registration certificates for all states where employees are based
  • LWF registration certificates for applicable states
  • Attendance and leave records for the first payroll month

November 2025 Labour Code Reforms - 5 Changes That Affect Your Payroll

ChallengeImpactHow Patron Accounting Solves It
50% Basic Wage RuleBasic+DA must be >= 50% of total CTC under Code on Wages, 2019. Companies with allowance-heavy structures face higher EPF and gratuity liability.Patron Accounting validates all client salary structures for compliance and restructures CTC where needed to meet the 50% threshold.
Gratuity for Fixed-Term StaffFixed-term employees now eligible for gratuity after 1 year (was 5 years) under Social Security Code, 2020 (November 2025)Gratuity provision computed from year 1 for all contract and fixed-term workforce; liability tracked monthly.
Gig Worker Social SecurityAggregators required to contribute to a social security fund for gig workers under Social Security Code, 2020New liability tracked for companies using delivery, freelance or platform-based workers; compliance calendar maintained.
Digital Wage RegistersAll payroll records must be in digital format and retained 7 years under Labour Codes 2025All wage registers, attendance, payslips, and statutory challans maintained digitally with 7-year archive compliance.

Payroll Service Fees - Transparent Per-Employee Pricing

Fee ComponentAmount
Basic Payroll ProcessingINR 300-500 per employee per month
Payroll + Full Compliance (EPF, ESI, TDS, PT, LWF)INR 500-800 per employee per month
Industry Managed Payroll (CLRA, Motor Transport, PSARA)INR 800-1,500 per employee per month
Enterprise / Multi-State PayrollINR 1,500-2,500 per employee per month
Minimum Monthly Engagement (under 20 employees)INR 5,000 per month
Setup / Onboarding (one-time, waived on annual contracts)INR 3,000-20,000 one-time
Patron Accounting Professional FeesStarting from INR 149 per employee (Exl GST and Govt. Charges)

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free Payroll Services consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

Monthly Payroll Compliance Calendar

StageEstimated Timeline
TDS deposit on salaries (Section 192)7th of each month
Salary credit to employees7th (under 1,000 employees) or 10th (1,000+)
EPF ECR filing and challan payment15th of each month
ESI contribution deposit15th of each month
Professional Tax remittance15th or per state deadline
TDS return - Form 24Q (salaries)Quarterly (Apr, Jul, Oct, Jan)
Annual EPF returnApril 30 annually
ESIC half-yearly returns - Form 6Half-yearly (April and October)
Form 16 issued to all employeesJune 15 annually
Labour Welfare Fund contributionJune 30 and December 31
Full-and-final settlement on exitWithin prescribed timeline per applicable Act

Important: Every deadline in this calendar is tracked by Patron Accounting with built-in buffers. Late EPF deposit attracts 12% annual interest plus damages of 5-25% under Section 14B. Late TDS attracts 1.5% monthly interest plus INR 200/day under Section 234E.

Key Benefits

Why Outsource Payroll to Patron Accounting?

Zero Penalty Guarantee

SLA-backed filing calendar with acknowledgement records for every submission. Near-zero penalty risk across all statutory filings.

CA and CS Expertise

Your payroll is managed by qualified Chartered Accountants and Company Secretaries - not just software. TDS optimisation and regime advisory included.

10+ Industries Served

Specialist payroll for healthcare, logistics, manufacturing, IT, hospitality, retail, security, construction, education, and NBFC sectors.

Labour Code 2025 Ready

50% basic rule, digital registers, gig worker social security, fixed-term gratuity - all November 2025 reforms already live in our payroll processes.

Scalability

Scales instantly from 5 to 5,000 employees. New states onboarded within 2 weeks. No renegotiation or additional lead time needed.

Audit-Ready Documentation

7-year document retention; wage registers in statutory format; reconciliation reports included. Always ready for EPF, ESI, IT or labour inspection.

Trusted by 500+ Indian Businesses Across 10+ Industries

4 Offices: Pune, Mumbai, Bangalore, Delhi NCR

500+ Companies with managed payroll across IT, manufacturing, healthcare, education, retail, logistics, hospitality, and financial services.

20,000+ Employees under Patron Accounting managed payroll processing.

12,000+ Statutory Filings managed annually - EPF ECR, Form 24Q, ESI Form 6, PT returns, and LWF contributions.

15+ Years zero-penalty statutory compliance track record.

In-House Payroll vs Patron Accounting Managed Payroll

FactorIn-House PayrollPatron Accounting Managed Payroll
Annual cost (50 employees)INR 8-16 lakh (HR manager + specialist + software + advisory)INR 1.5-3 lakh per year - 65-85% lower
Statutory complianceDependent on team's knowledge; risk of missing revisionsDedicated CA/CS team; compliance calendar maintained; revisions tracked within 30 days
Labour Code 2025 readinessRequires training, system updates, salary restructuringAlready incorporated; salary structures validated for 50% basic rule
Multi-state payrollComplex; requires state-by-state PT, LWF, minimum wage knowledgeAll states covered as standard; separate compliance calendars per state
Penalty riskHigh: EPF, TDS and ESI defaults attract interest, damages and criminal liabilityNear-zero: SLA-backed filing calendar with acknowledgement records
ScalabilityStaffing cost scales with headcount; new states require new expertiseScales instantly; new employees same month; new states within 2 weeks
Audit readinessVariable; depends on in-house documentation disciplineAlways audit-ready: 7-year retention; statutory format registers
TechnologyEnterprise HRMS costs INR 2-10 lakh annuallyIncluded: payroll dashboard, employee portal, compliance calendar

Industry-Specific Payroll and Related Services

Patron Accounting provides specialist payroll services for each industry vertical, plus complementary compliance services:

  • Healthcare Payroll - Shift-based pay, visiting doctor TDS (Section 194J), ESI for clinical staff, multi-facility hospital chain payroll.
  • Logistics and Transport Payroll - Motor Transport Workers Act compliance, driver allowances, CLRA for contract drivers, multi-state wages.
  • IT and Software Payroll - High-income TDS structuring, ESOP/RSU taxation, remote workforce, expat payroll, variable pay management.
  • Hospitality Payroll - Service charge distribution, seasonal workforce, high-attrition F&F, multi-property hotel chain payroll.
  • PF Registration - EPFO establishment code registration and ongoing PF compliance for new establishments.
  • ESIC Registration - ESIC employer code registration, IP number generation, and half-yearly return filing.

Legal Framework for Payroll Services in India

Payroll processing in India is governed by a comprehensive statutory framework:

  • EPF and Miscellaneous Provisions Act, 1952 (Section 1(3)) - Mandatory for 20+ employees. 12% employee + 12% employer on Basic+DA. Monthly ECR through EPFO Unified Portal by 15th. Penalty: 12% interest (Section 7Q) + damages 5-25% (Section 14B).
  • ESI Act, 1948 (Section 2(22)) - Applicable for 10+ employees; gross <= INR 21,000. 0.75% employee + 3.25% employer. Deposit by 15th. Half-yearly Form 6 returns.
  • Income Tax Act, 1961 (Section 192) - TDS on salary at applicable slab rate. Deposit by 7th. Form 24Q quarterly. Form 16 by June 15. Penalty: 1.5%/month interest (Section 201A) + INR 200/day (Section 234E).
  • Code on Wages, 2019 (November 2025) - Basic wages >= 50% of CTC; salary payment by 7th/10th; unified definition of wages. [Ministry of Labour and Employment]
  • Payment of Bonus Act, 1965 (Section 10) - 8.33% minimum to 20% maximum for eligible employees; applicable to establishments with 20+ employees.
  • Payment of Gratuity Act, 1972 - 15/26 x last drawn salary x years of service; fixed-term employees eligible after 1 year from November 2025.

Frequently Asked Questions - Payroll Services in India

Find answers about managed payroll, statutory deductions, Labour Codes 2025, outsourcing costs, and compliance requirements.

Quick Answers

Q: EPF rate? A: 12% employee + 12% employer on Basic+DA. Deposit by 15th monthly. [EPF Act 1952, Section 1(3)]

Q: ESI rate? A: 0.75% employee + 3.25% employer. Applicable for gross <= INR 21,000/month. Deposit by 15th. [ESI Act 1948]

Q: TDS deposit deadline? A: 7th of following month under Section 192 of the Income Tax Act, 1961.

Q: Salary payment deadline? A: 7th (under 1,000 employees) or 10th (1,000+). [Code on Wages 2019 / Payment of Wages Act 1936]

Q: Basic wage minimum? A: 50% of total CTC. [Code on Wages 2019, November 2025]

Q: Form 16 deadline? A: To all employees by June 15 annually. Form 24Q quarterly: Apr, Jul, Oct, Jan.

Payroll Compliance Has Changed - Is Your Business Ready?

India's four Labour Codes are active since November 2025. The 50% basic wage rule is live. Digital registers are mandatory. Fixed-term employees are eligible for gratuity after 1 year. A missed EPF deposit attracts 12% interest plus up to 25% damages. A missed TDS attracts INR 200/day.

Request a Free Payroll Audit: We review your current payroll for compliance gaps - free, no obligation. Call +91 945 945 6700 or WhatsApp us.

CA-Managed Payroll for Every Industry in India

Payroll in India is not an administrative task - it is a multi-law statutory obligation that affects every employee, every month. With the November 2025 Labour Codes, the 50% basic rule, gig worker social security, and digital record mandates, the compliance bar has never been higher.

Patron Accounting delivers managed payroll services for 500+ companies across 10+ industries - from healthcare to logistics, IT to manufacturing. Our CA and CS team handles everything from monthly gross-to-net computation to annual Form 16, with zero-penalty statutory compliance guaranteed.

Starting from INR 149 per employee per month. Contact us for a free payroll health check and compliance audit.

Book a Free Consultation - No Obligation.

Payroll Services Across India - City-Wise Coverage

Expert payroll processing with local compliance expertise. Click your city for state-specific PT, LWF, and minimum wage information.

Pune
Maharashtra
Mumbai
Maharashtra
Delhi
NCR
Gurugram
Haryana
Bangalore
Karnataka
Hyderabad
Telangana
Chennai
Tamil Nadu
Kolkata
West Bengal
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Content Created: 11 March 2026  |  Last Updated:  |  Next Review: June 2026  |  Reviewed By: CA & CS Team, Patron Accounting LLP

This page is reviewed quarterly. Content is aligned with the four Labour Codes (active November 2025), EPF Act 1952, ESI Act 1948, Income Tax Act 1961, Code on Wages 2019, Payment of Gratuity Act 1972, and Payment of Bonus Act 1965. Next review: June 2026.

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