India statutory payroll calculations: EPF, ESI, PT, and TDS

This primer is educational. It explains what EPF, ESI, professional tax (PT), and TDS are as components inside an Indian pay-run calculation. It does not publish current rates, contribution slabs, wage ceilings, percentages, due dates, form numbers, or section numbers. If you need a number for the period you are running, verify it on official EPFO, ESIC, Income Tax Department, and state professional-tax materials (and any gazette or circular that applies). Do not copy a neighbour company’s PDF. This is not legal advice and not tax advice. Pending SME review. This article remains a draft.

Calculation, government filing, and paying people through the bank are three different jobs. That distinction is owned by payroll calculation versus filing. The happy-path sequence of a pay run is owned by the payroll run checklist. Product calculation — including EPF, ESI, PT, and TDS components, attendance and LOP sync, and payslip PDFs — is described on Dayzen payroll. Dayzen calculates those components. Dayzen does not auto-file returns, does not remit to government, and does not pay the bank. There is no unpublished statutory-compliance product URL on this site.

Four names, one pay run

A pay run starts from who is employed, for which period, what was earned, what is deducted, and what is net. Statutory lines, where they apply to a person in that period, are calculation components in that story. They are not the filing. They are not proof that the establishment has discharged every obligation that might exist outside payroll software.

Who is in scope for each component is a configuration and eligibility question against official definitions for the period — not a slogan in a blog. This page uses “typically” only as a concept: someone other than the employee may also have a share on the same wage idea. It does not assign percentages to those shares.

EPF as a calculation idea

Employees’ Provident Fund, in payroll language, is a retirement-savings style deduction (and often a matching employer cost) calculated on a wage base your configuration named, for people your configuration treats as covered. The employee share appears as a deduction on the payslip story. The employer share typically appears as an employer cost in the run — a concept, not a rate. This article will not name statutory percentages or wage ceilings. Those move. Look them up for your period on official EPFO materials.

What belongs in the wage base (which earnings attract the calculation) is a configuration decision that must follow the rules that apply to you, not a template copied from another company. If you are unsure which allowances sit in the base, do not invent a list here. Stop and verify. Software will happily calculate the wrong base with great confidence.

PF is not a bank salary. Calculating a PF line does not file an ECR, does not create a UAN, and does not mean the establishment’s registration story is complete. Those are filing and registry jobs. Keep them on the calculation-versus-filing guide.

ESI as a calculation idea

Employees’ State Insurance, in payroll language, is a social-insurance style contribution calculated on a wage base for people your configuration treats as covered in that period. There is typically an employee deduction and an employer cost — again as concepts, without numbers on this page. Coverage can depend on wage levels and other official conditions that this article will not quote. When those conditions change, your configuration must change after you verify, not after a blog rumour.

ESI is easy to confuse with a medical insurance vendor deduction. They are not the same idea. ESI is a statutory calculation component where it applies. A private policy is a company benefit line. Mixing the two on one payslip label is how employees cannot see what was sent where — and “sent” is still a filing and remittance job, not the calculation itself. Verify ESI figures on official ESIC materials for the period; this article contains none.

Professional tax as a calculation idea

Professional tax is a state levy on professions, trades, and employment in states that charge it. It is not one national slab table. Payroll’s job, where PT applies, is to calculate a deduction using the state rule you configured for that employee’s location (and any other dimension your reviewer said matters). Employer obligations around registration, collection, and payment to the state are real-world compliance jobs. This page does not list states, slabs, or due dates. If the person moved states mid-year, do not guess; verify the state PT materials and your own location setup.

PT is often a small line. Small is not optional configuration. A wrong state code is still a wrong calculation. A right calculation still is not the state return.

TDS as a calculation idea

Tax deducted at source on salary, in payroll language, is an estimate of income-tax to withhold from the employee’s pay based on the tax regime and the income picture your process uses for that person. Dayzen payroll includes old and new tax regime support as a verified capability. That is configuration of a calculation, not advice about which regime a person should choose. This article will not paste slabs, cess names as if they were rates, surcharge thresholds, or calendar deadlines.

TDS on the payslip is not the income-tax return. It is not a refund. Employees still have their own tax-filing story. Employers still have their own withholding and statement story. Those sit on the filing side of the owner guide.

Declarations, proofs, and regime choice change the inputs to the calculation. They do not change the fact that the run is still arithmetic on those inputs. If proofs arrive after freeze, that is a next-cycle or exception path — not a reason to pretend the last payslip was a suggestion.

Employee share versus employer share, without numbers

Some components typically show an amount withheld from the employee (a deduction). Some typically also show an amount the employer bears as a cost, calculated on a related base. EPF and ESI are the usual classroom examples of “both sides can exist as concepts.” PT and TDS are usually discussed as amounts withheld from the employee, with the employer’s job being to calculate, withhold, and (separately) pay onward under applicable rules — the onward payment is remittance, not the payslip line.

This page will not say “the employer pays this percent.” Percent is a rate. Rates are out of scope. If a component has only an employee deduction in your configuration, that is a setup fact you should be able to explain from official materials, not from a vendor myth.

Net pay is what remains after deductions you configured, including statutory ones that applied. Employer cost is not net pay. Do not present employer PF or ESI cost as money the employee received.

Configuration versus filing versus bank pay

Configuration is: who is covered, which wage heads sit in which base, which state PT table, which tax regime, and which period. Filing is: returns, statements, and remittances to government on official timelines you must verify yourself. Bank pay is: actually moving net pay to people. Dayzen payroll is in the calculation box. It is not the filing box. It is not the bank box. Read the owner guide instead of stretching this primer into a compliance manual.

Payslip PDFs show the calculation you ran. They are not EPFO or ESIC or income-tax department documents. Do not tell an inspector that a Dayzen PDF is a filed return.

If a rate or ceiling changed in the period, updating configuration is a controlled change: who approved the new official source, from which pay month it applies, and whether a prior month needs a separate correction run. This article will not tell you the effective date of any change. Official materials will.

What Dayzen does and does not do

Verified payroll behaviour relevant here: calculation including EPF, ESI, PT, and TDS components; old and new tax regime support; attendance and LOP sync; other earning and deduction inputs such as advances, loans, bonuses, and LOP; payslip PDFs; templates, adjustments, and reports; employee self-service payslips. That list is calculation and document generation.

Dayzen does not auto-file EPF, ESI, PT, or TDS returns. It does not remit to government. It does not pay bank salaries. Do not link or expect a statutory-compliance feature lander. If you need a filing product, that is outside this page.

How to use this primer safely

• Teach new payroll coordinators the four names as calculation lines, then send them to official portals for current figures.
• Keep the run checklist for the monthly sequence; do not duplicate those steps here.
• Keep calculation-versus-filing language consistent with the owner guide.
• Flag establishment-specific coverage (who must be in PF or ESI) for SME and counsel. This draft does not settle those debates.

EPF, ESI, PT, and TDS are pay-run calculation components where they apply. Employee and employer shares are concepts without rates on this page. Verify numbers on official materials. Calculating is not filing and not paying the bank. This remains a draft pending SME review. It is not legal or tax advice.

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A practical test before you go live on a new entity: for one sample employee, name which of the four components you expect to calculate, which official page you used last to confirm the current figure, and which human files the related return. If the answer to the second question is “the software default,” you are not configured; you are hoping. If the answer to the third question is “the HRMS will send it,” you have misread this product. Put the calculation in payroll, put the sequence on the checklist, and keep filing in the process your reviewer owns.

When rates change, do not edit this article to insert them. It is empty of figures so it cannot go stale as a fake gazette. Update configuration from official sources, record the source and the effective pay month, and leave this primer as concepts. Point employees who want a percentage to the official explainer for that component, not to a Dayzen blog paragraph pretending to be EPFO.