Indian employment compliance is layered: central social-security and tax laws apply nationally, while registration, working hours, holidays and leave are largely set by each state. Since 21 November 2025 the four Labour Codes have been in force, consolidating 29 earlier central labour laws, but several central and state rules were still being notified in 2026. This checklist maps the obligations a growing employer usually meets, in roughly the order headcount triggers them.
The core checklist at a glance
| Obligation | Usually triggered by | Authority | Detail |
|---|---|---|---|
| Shops & Establishments registration | Opening an office or shop in a state | State labour department | Leave and S&E guide |
| TDS on salary | Paying salary above the tax-free level | Income Tax Department | TDS on salary guide |
| Professional tax | Employing staff in a state that levies it | State commercial tax department | Professional tax guide |
| EPF | Generally 20+ employees (voluntary below) | EPFO | EPF guide |
| ESI | Generally 10+ employees in notified areas | ESIC | ESI guide |
| POSH Internal Committee | 10+ employees | Ministry of Women & Child Development / district officer | See below |
| Gratuity | 10+ employees; payable after qualifying service | Labour Codes (Code on Social Security) | Gratuity guide |
| Maternity benefit | 10+ employees | Ministry of Labour & Employment | 26 weeks for the first two children |
1. Register the establishment first
Each state's Shops and Establishments Act (or its replacement under the OSH Code framework) governs registration, working hours, weekly offs, holidays and leave for offices and shops. Registration is usually online through the state's labour portal and is the document most other registrations ask for.
2. Payroll-linked deductions
Four deductions touch almost every Indian payslip: EPF (12% employee and employer contributions on PF wages, with the pension share computed on a wage ceiling of ₹15,000), ESI (0.75% employee and 3.25% employer for employees earning up to ₹21,000 a month), professional tax (state-set, constitutionally capped at ₹2,500 a year per person) and TDS on salary (deducted at the employee's average slab rate). Each has its own monthly deposit and periodic return.
3. Workplace obligations that start at 10 employees
- POSH: The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 requires every workplace with 10 or more employees to constitute an Internal Committee and publish the policy. Complaints can also be filed on the government SHe-Box portal.
- Maternity benefit: The Maternity Benefit Act, 1961 (amended 2017, now part of the Code on Social Security) provides 26 weeks of paid maternity leave for the first two children, and requires a crèche facility for establishments with 50 or more employees.
- Gratuity: establishments with 10 or more employees fall under gratuity rules.
4. Keep records you can produce
Every regime above assumes you can produce attendance, wage and leave records on inspection. The practical job is keeping one reliable employee record — joining date, wages, state of work, UAN and ESI numbers — so each register is generated from the same facts. See a single source of truth for employee records.
5. Watch the Labour Codes transition
The Code on Wages, Code on Social Security, Industrial Relations Code and OSH Code changed definitions that ripple through payroll — notably a uniform definition of "wages" under which excluded allowances above 50% of total remuneration are added back. Read the Labour Codes status explainer before restructuring salaries.
6. Employee data and the DPDP Act
Payroll and HR records are personal data. The Digital Personal Data Protection Act, 2023 and the DPDP Rules, 2025 phase in obligations through May 2027 — see the DPDP timeline for HR teams.
Sources and review date
Facts in this article were checked against the official sources below as of 8 October 2026. Rates, wage ceilings, due dates and forms change by notification, so confirm on the source before acting.
- Labour Codes page, Ministry of Labour & Employment
- EPFO (epfindia.gov.in)
- ESIC (esic.gov.in)
- Income Tax Department (incometaxindia.gov.in)
- Ministry of Women & Child Development SHe-Box
- India Code (indiacode.nic.in) — official text of central Acts
This is a general explainer written by the Kyrospect editorial team, not legal, tax or payroll advice. Applicability depends on your state, headcount, establishment type and contracts — confirm with a qualified professional or the authority concerned.
Where Kyrospect fits: Kyrospect HRMS holds employee records and Tracking records shift hours on the same identity. It does not calculate or file PF, ESI, professional tax, TDS or gratuity today — payroll is planned and gated on statutory compliance work. See the roadmap for current status.