Taxation and accounting

Payroll, PF and ESI Basics for Employers

Hiring staff in India? Understand payroll basics, Provident Fund (PF) and Employees' State Insurance (ESI), and your responsibilities as an employer.

Taxation and accounting · 5 min read · Updated 2026-05-15

Payroll is more than paying salaries

Once you employ people, payroll involves calculating salaries, deducting the right amounts, paying statutory contributions, and keeping records. Getting it right keeps employees happy and keeps you compliant with labour and tax laws.

Provident Fund (PF)

The Employees' Provident Fund is a retirement savings scheme. Once an establishment crosses the applicable employee threshold, it generally must register with the EPFO and contribute to employees' PF, with both employer and employee contributing a share. Monthly deposits and filings are required.

Employees' State Insurance (ESI)

ESI provides medical and related benefits to employees earning up to a specified wage limit. Eligible establishments must register and contribute, again with both employer and employee shares. Like PF, it involves monthly compliance.

Other payroll components

  • TDS on salaries where applicable
  • Professional tax in states that levy it
  • Leave and bonus as per applicable rules
  • Payslips and proper record-keeping

Why getting it right matters

Errors or delays in PF, ESI or TDS can lead to penalties and unhappy employees. As your team grows, payroll compliance becomes more complex, which is why many businesses outsource it to specialists.

How Aidwish helps

Aidwish manages your payroll end to end — salary processing, PF and ESI registration and contributions, TDS on salary and statutory filings — so your team is paid correctly and your business stays compliant.

FAQ

Questions, answered

When does PF registration become applicable?

Generally once an establishment crosses the applicable employee threshold; both employer and employee contribute.

Who is covered under ESI?

Employees earning up to a specified wage limit in eligible establishments are covered.

Is TDS deducted on salaries?

Yes, where applicable, employers deduct TDS on salaries and deposit it with the government.

Ready to move forward?

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