Payroll Compliance Health-Check — Free 10-Point Workbook

Payroll Compliance Health-Check

A 10-point self-audit workbook for Indian employers: verify salary-date, PF/ESIC/PT/LWF, TDS, wage-definition and Labour-Code basics — and get a free 10-minute review of your answers by the TMS payroll team.

Statutory rates maintained by the TMS compliance team · Last updated 2026-07-06 · Please re-verify against the official government notification before relying on them.

Compliance areas to verify

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Full report ready

Ten checks, ten minutes — before an inspector does it for you

The full workbook lists every verification step and red flag, plus what a formal TMS payroll review covers.

Salary-date & wage-definition checks

Code on Wages basics

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PF / ESIC / PT / LWF remittance proof

What to pull, what to look for

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TDS & Form 16 timeline checks

Deposit and issuance discipline

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Free 10-minute TMS review

Walk your answers with our team

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What the payroll compliance health check covers

A quick diagnostic of where your payroll stands against India’s statutory requirements — so you can close gaps before an inspection or audit finds them.

Areas we check

Provident Fund (PF) — registration, monthly challans and returns.
ESIC — coverage, contributions and half-yearly returns.
Professional Tax & LWF — state-wise registration and remittance.
TDS on salaries — deduction, deposit and quarterly returns.
Minimum wages — against the applicable state and category rates.
Statutory registers & records — as required under the labour codes.

Common gaps we find

Late PF/ESIC deposits, missing PT registration in a new state, incorrect minimum-wage categorisation, and payslips that do not meet the wage-record rules — each carrying interest, damages or penalties.

Frequently asked questions

What does the health check assess?

PF, ESIC, PT, LWF, TDS, minimum wages and statutory registers against current rules.

What are the risks of non-compliance?

Interest and damages on late statutory deposits, penalties, and exposure during inspections.

Can TMS fix the gaps it finds?

Yes — see Statutory Compliance and Payroll Outsourcing.

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What a payroll compliance check is actually looking for

Payroll goes wrong quietly. Salaries land on time, nobody complains, and the problem only surfaces when an inspector asks for a register or an ex-employee cannot find their provident fund. By then the arrears have interest on them.

These are the areas worth auditing, in the order they tend to cause damage.

1. Filing dates, not filing intent

Contributions deposited late are still late even if the money was always going to be paid. Interest and damages are assessed on the delay, not on the intention. Pull twelve months of challans and check the deposit dates rather than the amounts.

2. The salary structure itself

If basic wages sit at a low fraction of gross, provident fund and gratuity are both understated. The wage definition in the Labour Codes was written precisely to close that gap, and it is the single structural exposure most Indian employers still carry. Model the cost of correcting it before someone else does it for you.

3. State-level items

Professional tax and labour welfare fund follow the state where the employee works. Companies running payroll centrally tend to apply the head-office state to everyone, which is wrong in both directions: under-deducting creates a liability, over-deducting creates a refund claim and an annoyed employee.

4. Registers and records

An inspection usually opens with a request for documents rather than questions. Have these retrievable:

Wage register and wage slips for the period under review
Attendance and leave records that reconcile to the wage register
Provident fund and employee state insurance challans with deposit dates
Professional tax and labour welfare fund payment proofs, state by state
Contractor licences and the compliance records of any contract labour on site
Appointment letters and the standing orders or policy set that applies

5. Contract labour and vendors

The principal employer carries liability for provident fund and employee state insurance that a contractor failed to deposit. Collecting a monthly compliance certificate from every labour vendor is dull, and it is the cheapest insurance available to you. Ask for the challan, not the certificate.

How to run this yourself in an afternoon

Take one month at random from the last year. Reconcile the wage register to the bank debit, the provident fund challan to the register, and the professional tax deduction to the state slab for three employees in three different states. If all four tie out, your process is probably sound. If any one of them does not, the same break is almost certainly present in every other month.

Payroll compliance questions

What is the most common payroll compliance failure in India?

Late deposit of statutory contributions, followed closely by professional tax applied at the wrong state's slab for employees who do not sit at head office.

Are we liable for our contractor's provident fund defaults?

As principal employer, yes, exposure sits with you. Collect the actual challan from each labour vendor every month rather than a signed compliance certificate.

Why does the basic-to-gross ratio matter so much?

Provident fund and gratuity are computed on basic wages. A low basic understates both, and the wage definition in the Labour Codes is designed to close exactly that gap.

What does an inspector ask for first?

Documents, not explanations: the wage register, attendance records, challans with deposit dates, and the compliance records of any contract labour on the premises.

How often should payroll be audited?

Once a year end to end, plus a spot reconciliation of one random month each quarter. The spot check catches process drift long before the annual audit would.

Payroll Compliance Health-Check

Statutory rates maintained by the TMS compliance team · Last updated 2026-07-06 · Please re-verify against the official government notification before relying on them.

Payroll Compliance Health-Check — Free 10-Point Workbook