MONTHLY STATUTORY COMPLIANCES

• The Employees' Provident Funds Scheme, 2026 is now in force under the Code on Social Security, 2020.  
• Existing EPF members continue with the same UAN; no new account is required solely because of the new scheme.  
• Digital compliance and centralized processing have been strengthened through EPFO's upgraded IT platform.  
• Contributions above the statutory wage ceiling are generally voluntary unless otherwise agreed under applicable EPF provisions.  
• Withdrawal processes have been simplified with improved digital claim settlement.  
• The capping amount was Rs. 25000 * 12% = 3000/- Per Month.

• Register eligible employees with EPFO.     | Generate and activate UAN. 
• Deduct employee PF contribution every month. 
• Deposit both employer and employee contributions within the prescribed due date.   | File monthly Electronic Challan-cum-Return (ECR). 
• Maintain statutory records and employee nominations. 
• Complete Aadhaar, PAN, and bank KYC wherever required.  

• Retirement corpus with annual interest. 
• Employees' Pension Scheme (EPS) benefits (subject to eligibility). 
• Employees' Deposit Linked Insurance (EDLI). 
• Partial withdrawals for eligible purposes such as medical treatment, education, marriage, housing, etc., subject to scheme conditions.  

Under the 2026 scheme:

• Up to 75% of the PF balance may be withdrawn after unemployment, subject to the applicable conditions. 
• Full withdrawal is generally permitted only after 12 months of continuous unemployment, subject to the scheme rules.  

• On or before the 15th of the following month. 

Delayed remittance may attract:

• Interest under the EPF Act.   | Damages/penal charges as applicable. 
• Recovery proceedings by EPFO for persistent defaults.

ESIC  The contribution rates remain 0.75% (employee) and 3.25% (employer) in 2026. While there has been discussion about increasing the wage ceiling ₹21,000 eligibility limit. Or ( BASIC+DA + Other Component apart from Salary).

Employees covered under ESIC are eligible for:

• Medical treatment for the insured employee and eligible dependants. 
• Sickness Benefit (cash compensation during certified sickness). 
• Extended Sickness Benefit for specified long-term diseases. 
• Enhanced Sickness Benefit for sterilization procedures. 
• Maternity Benefit.  | Temporary and Permanent Disablement Benefit. 
• Dependants' Benefit in case of employment-related death. 
• Funeral Expenses.   | Vocational Rehabilitation and other welfare benefits.  

• Obtain ESIC registration for eligible establishments. 
• Register all eligible employees and generate Insurance Numbers. 
• Deduct the employee's contribution from wages. 
• Add the employer's contribution.   | Upload monthly contribution details. 
• Deposit contributions within the prescribed due date. 
• Maintain statutory records and cooperate during ESIC inspections.  

• ESIC contributions must be remitted on or before the 15th of the following month.  

• Employees who cross the wage ceiling during a contribution period generally continue to remain covered until the end of that contribution period, subject to ESIC rules. 
• Employee contribution may be exempt in specific cases where the daily average wage falls below the prescribed threshold, while the employer contribution may still be payable.  

• Employee Register  | ESIC Registration Certificate   | Monthly Contribution Register 
• Wage Register   | Attendance/Muster Roll   | Accident Register 
• Inspection Book  | Challans and Online Payment Receipts 

Failure to register eligible employees, delayed contribution payments, or incorrect filings may result in:

• Interest on delayed payments.   | Damages and penalties under the ESI Act. 
• Recovery proceedings.   | Prosecution in serious cases.

 Professional Tax (PT) in Karnataka is levied under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 and administered by the Commercial Taxes Department, Government of Karnataka. Recent amendments effective from FY 2025–26 continue to apply in FY 2026–27.  

- Monthly Gross Salary Professional Tax Up to Rs.25,000  - Nil

- Above Rs. 25,000  Rs. 200 per month (January & March–December)

- February Rs.300 

Professional Tax applies to:

• Salaried employees.  |  Employers deducting PT from employees (PTRC). 
• Businesses, firms, LLPs, companies, proprietors, and professionals required to obtain Professional Tax Enrolment (PTEC), where applicable under Karnataka law.  
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• Obtain Professional Tax Registration Certificate (PTRC). 
• Deduct PT from eligible employees. 
• Deposit PT with the Commercial Taxes Department. 
• File the prescribed monthly/quarterly and annual returns, as applicable. 
• Maintain salary registers, deduction records, challans, and return acknowledgements. 

Certain categories are exempt under the Act, including (subject to statutory conditions):

• Employees earning up to ₹25,000 per month. 
• Other exempt categories notified by the Government of Karnataka (such as specified persons with disabilities and other statutory exemptions).  

Failure to register, delayed payment, non-deduction, or late filing of returns may result in:

• Interest on delayed payment. 
• Penalties under the Karnataka PT Act. 
• Recovery₹25,000  Rs₹200 per month defaults.

 Introduction of TDS

Tax Deducted at Source (TDS) is a mechanism under the Income-tax Act, 1961 through which tax is deducted by the employer at the time of payment of salary and deposited with the Income Tax Department on behalf of the employee. TDS ensures timely collection of income tax and helps employees meet their tax obligations throughout the financial year.

TDS on salary is applicable when an employee's estimated taxable income for the financial year exceeds the exemption limit prescribed under the Income-tax Act after considering eligible deductions, exemptions and the tax regime opted for by the employee.

The employer shall:

• Obtain the employee's Permanent Account Number (PAN).
• Collect the employee's declaration for the applicable tax regime and investment details.
• Estimate the employee's annual taxable income.
• Deduct TDS from monthly salary as per the applicable income tax slab rates.
• Deposit the deducted TDS with the Income Tax Department within the prescribed due date.
• File quarterly TDS returns in Form 24Q.
• Issue Form 16 to employees after the end of the financial year.
• Maintain payroll records, tax computations, declarations and proof of investments.

Employers are required to issue Form 16 to employees on or before 15 June following the end of the financial year.

Employees should:

• Submit PAN and Aadhaar details.   | Declare the applicable tax regime.
• Provide investment declarations and supporting proofs within the prescribed timelines.
• Verify Form 26AS and the Annual Information Statement (AIS).
• File the Income Tax Return (ITR) within the applicable due date.

Failure to comply with TDS provisions may result in:

• Interest on late deduction or delayed payment of TDS.
• Late filing fees for TDS returns under applicable provisions.
• Penalties for incorrect or non-filing of TDS statements.
• Disallowance of eligible expenditure and other legal consequences under the Income-tax Act, where applicable.

Employers should maintain:

• Employee PAN and Aadhaar records.    | Salary register and payroll reports.
• Monthly TDS computation sheets.  | Investment declarations and proof submissions.  | TDS challans.  | Quarterly Form 24Q acknowledgements.
• Form 16 issued to employees.  | Annual payroll reconciliation statements.