Zoho Payroll Statutory Compliance
Zoho Payroll does the arithmetic. Getting the inputs right — wages, states, ceilings, regimes — is the setup work.
Every Zoho Payroll plan, including Free, calculates EPF, ESI, state-wise professional tax, labour welfare fund and income tax on salary. Whether those numbers are right depends on how salary components are classified, which state each employee works in, and whether recent changes are reflected. Two changes matter most this year: the labour codes' wage definition, in force since 21 November 2025, and the EPF wage ceiling rising from ₹15,000 to ₹25,000 on 17 September 2026.
Last reviewed — prices, plan details and other figures on this page were checked then.
Each statutory item, and what we set up for it
The figures below were checked on the date shown at the top of this page. Statutory rates change; we check them again at every setup and at the start of each financial year.
Employees' Provident Fund (EPF)
12% of PF wages from the employee and 12% from the employer, with 8.33% of the employer's share going to the pension scheme on wages up to the ceiling, plus EDLI and administration charges. From 17 September 2026 the mandatory wage ceiling is ₹25,000 a month, up from ₹15,000, so more employees are covered and contributions for those above ₹15,000 rise.
- Wage ceiling updated to ₹25,000 in the setup
- Employees newly covered by the higher ceiling identified
- Contributions due by the 15th of the following month
Employees' State Insurance (ESI)
For employees earning up to ₹21,000 gross a month: 0.75% from the employee and 3.25% from the employer. The ESI ceiling did not change with the EPF revision. Coverage is decided per contribution period, so a salary increase does not remove someone mid-period.
- Eligibility checked against gross wages, not basic
- Contribution periods tracked so coverage stays correct
Professional tax
Levied by states, not the centre, and capped at ₹2,500 a year per employee. Slabs and deduction periods differ: some states deduct monthly, others half-yearly. In Kerala it is collected by the local body, and slabs can differ between corporations and panchayats.
- Each employee mapped to the state they work in
- Slabs checked for every state you employ people in
Labour welfare fund
Applies only in some states, with amounts and frequency — monthly, half-yearly or annual — set by each state. Zoho Payroll calculates it per state once the work location is set correctly.
TDS on salary
Tax is deducted each month from the projected annual tax under the regime the employee chooses; the new regime is the default. Under the Income-tax Act, 2025, the annual salary TDS certificate is Form 130, replacing Form 16 from the 2026-27 tax year, and the quarterly return is Form 138.
- Regime choice and declarations collected in the portal
- Proofs approved before the year-end recalculation
- Form 130 generation from the Standard plan
Statutory bonus
For eligible employees, calculated in Zoho Payroll from the Standard plan instead of in a separate spreadsheet at the end of the year.
Why salary structures need checking before setup
Many Indian salary structures keep basic pay low and put most of the salary into allowances, which keeps PF wages, and so PF contributions, down. The Code on Wages, in force since 21 November 2025, limits this: excluded allowances may not exceed half of total pay, and anything above that is counted back into wages for PF and other benefits.
So a salary structure copied into Zoho Payroll as it stands can calculate PF on the wrong base. Before configuring anything, we check each salary template against the wage definition and show you which employees' PF wages change, and by how much. The decision about restructuring is yours and your accountant's; our job is to make sure Zoho Payroll calculates whatever you decide correctly.
The same review picks up employees newly covered by the ₹25,000 EPF ceiling. Both changes affect take-home pay, so it is better to explain them to staff before the payslip does.
What Zoho Payroll does, and what stays with you
Zoho Payroll calculates and records. Registrations, filings on government portals and decisions about salary structure remain the employer's responsibility, usually with an accountant.
| Task | Zoho Payroll | You or your accountant |
|---|---|---|
| EPF and ESI contributions | Calculates per employee and per pay run | Registers the establishment and files on the EPFO and ESIC portals |
| Professional tax | Calculates by state slab | Registers in each state and pays by the state's due dates |
| Labour welfare fund | Calculates where the state requires it | Pays to the state welfare board |
| TDS on salary | Projects tax, deducts monthly, generates Form 130 (Standard plan up) | Deposits TDS and files the quarterly Form 138 return |
| Salary structure | Applies the components and templates you approve | Decides the structure, including any labour-code restructuring |
Compliance errors we find in existing setups
The EPF wage ceiling left at ₹15,000 after 17 September 2026.
Every employee assigned to the head-office state, so professional tax uses the wrong slab for branch staff.
ESI eligibility judged on basic pay instead of gross wages.
Labour welfare fund switched off in a state that requires it, or on in one that does not.
Mid-year joiners' previous-employer income missing, so TDS is under-deducted until March.
Allowances above half of total pay left outside PF wages under the new wage definition.
State-wise compliance in practice
SWA Diamonds runs payroll for 215+ employees across multiple stores, with statutory settings configured state by state.
- SWA DiamondsZoho People & Zoho PayrollMulti-store jewellery retailer, 215+ employees. Biometric attendance across stores, mobile check-in with GPS for field staff, department-wise shifts, loss-of-pay calculated from attendance, state-wise statutory compliance, and a custom Deluge function that expires unused compensatory leave automatically.
- Diya and Thomas CompanyZoho People & Zoho PayrollManual attendance, leave and salary calculation replaced with one system: employee records migrated into Zoho People, shift schedules and leave policies configured, salary structures built in Zoho Payroll, and a self-service portal for leave, attendance and payslips.
Zoho Payroll Statutory Compliance — common questions
What is the EPF wage ceiling now?
₹25,000 a month, raised from ₹15,000 with effect from 17 September 2026 through a Gazette notification under the Code on Social Security, 2020. Employees earning up to ₹25,000 who were outside mandatory coverage only because of the old ceiling now fall within it. Payroll settings should reflect the change from that date.
Did the ESI threshold change too?
No. ESI still covers employees earning up to ₹21,000 gross a month, with 0.75% from the employee and 3.25% from the employer. The September 2026 revision applied to EPF only.
Does Zoho Payroll file PF and ESI returns for us?
Zoho Payroll calculates contributions for each pay run. Filing on the EPFO and ESIC portals, and paying the dues, remains the employer's responsibility. We set up the payroll reports you file from, so the figures on the portal match the pay run.
How does Zoho Payroll handle professional tax in different states?
Each employee is tied to a work location, and professional tax is calculated on that state's slab and deduction period. It is capped at ₹2,500 a year per employee. We check the slabs for every state you employ people in during setup.
What replaced Form 16?
Form 130, under the Income-tax Act, 2025, for salary income from the 2026-27 tax year onward. Certificates for 2025-26 income are still Form 16. The quarterly salary TDS return is Form 138. Zoho Payroll's Standard plan generates Form 130 with a digital signature.
Do the labour codes change how PF is calculated?
They can. The Code on Wages limits allowances excluded from wages to half of total pay; anything above that counts as wages for PF. Salary structures with low basic and high allowances may need PF calculated on a higher base. We check your templates before configuring Zoho Payroll.
Related pages
- Zoho PayrollWhat Zoho Payroll covers, the plans, and how we implement it.
- Payroll migrationBringing year-to-date figures across so compliance stays right mid-year.
- Zoho People integrationAttendance and leave as the source of loss-of-pay.
- Zoho PeopleEmployee records and work locations that statutory settings depend on.
- Zoho BooksStatutory liabilities posted from each pay run.
- Zoho Partner in KeralaPayroll setups with Kerala professional tax across all 14 districts.
Get your payroll compliance checked
Send us one month's salary sheet and the states you employ people in. We will show you where the labour codes and the new EPF ceiling change your numbers, before Zoho Payroll is set up.
- Salary templates checked against the wage definition
- EPF ceiling and newly covered employees identified
- Professional tax and LWF set per state
- A parallel pay run reconciled before go-live
We implement Zoho People and Zoho Payroll for businesses across India and the GCC, and for Kerala and its fourteen districts from our base in Malappuram.