The way it works in Offrd
Pick a salary structure. Deductions, the PT slab by state, and the gratuity reserve compute on their own. The PDF is ready in minutes.
Statutory compliance topics for Indian SMEs
If you employ even one person in India, the government has rules you have to follow. PF, ESI, professional tax, gratuity, the new Labour Codes that took effect on 21 November 2025. None of it is hard the second time. The trouble is doing it every month, without slips, while your one HR person is also running onboarding and attendance. This page is the index. Eleven short guides, one per topic.
Statutory compliance for a small Indian employer covers the deductions, contributions, and paperwork the government expects from every business with staff. That means PF, ESI, professional tax, gratuity, and a written appointment letter for every hire. The eleven links below take you to a guide for each one.
Last updated 26 May 2026.
What you actually have to do
There is no small employer exemption from most of this. The PF Act, the ESI Act, the Payment of Gratuity Act, your state's professional tax law, and the new Labour Codes apply once you cross the threshold for each one. Below the threshold you can still register voluntarily, and a few of your customers and bank lenders will ask you to.
A 30 person firm in Bengaluru runs the same checks as a 3,000 person firm in Pune. The penalties scale, not the rules. EPF arrears earn 12 percent interest plus damages of up to 25 percent of the dues. ESIC inspectors can turn up unannounced. A missing appointment letter is a finding before anyone has argued the merits.
The work is repetitive, not difficult. Payroll runs once a month. Form 16 goes out by 15 June. Gratuity gets paid on the last working day of an exit. PT challans land in their own rhythm. Once the formula sits inside a template, the error rate falls sharply. Until then, every month is a fresh edit and a fresh chance to miss something.
The list below is a map. Each entry is one rule, with a link to the deeper guide on the same site. Read the one you need this week. Come back for the rest later.
The guides on this page
Eleven topics. Two are about money the government takes. Three are about what the employee receives or carries forward. Four are about the paperwork that proves what happened. Two are about the moments of change. Pick what fits the week.
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01
How is PF calculated
A 12 percent cut from basic wages, matched 12 percent by the employer. The Para 26A ceiling sits at ₹15,000. The maths is small. The trip ups are not.
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02
ESI contribution in India
0.75 percent from the employee, 3.25 percent from the employer, on gross wages up to ₹21,000 a month. The ceiling moves to ₹25,000 for staff with disability.
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03
What is gratuity
Five years of continuous service for most staff, one year for fixed term hires under the new code. The formula is wages times fifteen, times years, divided by twenty six. Statutory ceiling ₹20 lakh.
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04
What is Form 16
The annual TDS certificate. Has to reach the salaried employee by 15 June of the next financial year. Part A comes from TRACES. Part B carries the salary detail you provide.
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05
What is CTC in India
Cost to company gathers salary, benefits, employer PF, gratuity reserve, and any insurance you pay for. Reading a CTC sheet correctly is the difference between a clean offer letter and a long argument later.
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06
HRA exemption
House rent allowance is exempt from income tax under Section 10(13A) of the Income Tax Act of 1961. The exemption is the least of three figures, worked out one employee at a time.
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07
HR statutory compliance in India
A longer essay that takes the whole scaffold in one read, rather than topic by topic. Start here if you are new to the role.
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08
Notice period in India
Notice period sits in the appointment letter for most staff, with the Industrial Disputes Act setting a floor for those it covers. Common SME practice is 30 to 90 days.
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09
Relieving letter vs experience letter
They look alike and are not. The relieving letter closes the employment relationship. The experience letter records what the person did for you. Most exits need both.
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10
Full and final settlement
FnF pulls together the salary you owe, the leave you must encash, the gratuity if eligible, and any recoveries. Do it inside the timeline the wage code sets, not when payroll feels ready.
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11
What is probation period
Probation is the window you keep to confirm a hire. It is contractual, not statutory. The appointment letter should say how long it runs and what notice applies during the window.
What the Labour Codes changed
The four Labour Codes consolidate 29 older statutes into a single, slightly slimmer book. They were notified to commence on 21 November 2025 by the Ministry of Labour and Employment. Draft Central Rules were issued the following month and are still finding their final form. State rules are landing on a rolling basis.
The change that matters most for a small employer is the wage definition. Basic pay now has to be at least 50 percent of total remuneration. That moves how PF and gratuity get computed for many staff, especially anyone on a structure stacked with allowances.
The Social Security Code pulls gig and platform workers into the net for the first time. Aggregators contribute 1 to 2 percent of annual turnover, capped at 5 percent of what they pay those workers. If you run a platform business, this is new ground.
A written appointment letter is now a statutory requirement for every employee, not a courtesy. Gratuity is payable to fixed term staff after one year of service, instead of the older five year threshold for permanent employees. Both call for a small update to your contract templates.
Where Offrd fits
Most readers land on a page like this after a payroll slip, an EPFO notice, or a CA who has had enough. The choice is rarely about which feature list wins. It is about whether next month feels less brittle than the last one.
Offrd does the maths inside the document. When you generate an offer letter or run payroll, EPF, ESI, the PT slab for your state, and the gratuity reserve compute from the salary structure you set. PIN code resolves city, district, and state, so PT lands on the right slab without a manual lookup. The settlement letter pulls from the same heads as the payslip, which means a separating employee gets a number that matches their own payroll history.
The old way
A Word offer letter copied from last quarter, with manual EPF and ESI lines that someone has to recheck against the current ceilings.
The old way
Payroll month is a workbook with twelve tabs, a tired HR person, and an email thread asking the CA which head moved this time.
The way it works in Offrd
Payslips and a clean payroll export each month, ready for your CA to file PF, ESI, PT, and TDS without rebuilding the maths first.
The old way
An exit drags on because the FnF number does not match the payslip history, and someone has to reconcile both before anyone signs.
The way it works in Offrd
FnF pulls from the same salary heads as the payslip. Nineteen standard deduction heads, thirteen exit specific payouts, one closing PDF.
What Offrd does not do, on purpose. No Form 16 generation. No 24Q filing to TRACES. No ECR push to EPFO. Your CA does those, and Offrd hands them clean payroll data each month. Offrd also is not a performance review tool, an ATS, or an expense module. The pitch is narrower than that, and that is the point.
Setup takes under two minutes. 50 free credits land on signup. Pay per document is ₹99. There is no monthly minimum to start. Create your account and try it on the next hire.
Questions readers ask
Does every Indian employer have to deduct PF?
Most do. The Employees Provident Funds and Miscellaneous Provisions Act of 1952 kicks in once an establishment has twenty or more employees. Below that, registration is voluntary. Once you register, every employee earning basic wages up to ₹15,000 a month is covered automatically. Higher earners can be enrolled with the conditions in Para 26A.
When are the Labour Codes actually in force?
The Ministry of Labour and Employment notified commencement on 21 November 2025. Draft Central Rules were issued in December 2025. Several operational pieces depend on each state notifying its own rules, which is happening on a rolling basis. Your immediate steps are appointment letters, the 50 percent basic wage rule, and fixed term gratuity at one year.
What is the cheapest way to stay compliant as a five person company?
Your offer letters and payslips have to carry the right statutory deductions. Your CA has to file PF, ESI, PT, and TDS on time. Offrd handles the first end for ₹99 per document, with 50 free credits on signup. Your CA handles the filing. There is no monthly subscription to start.
Do I need a written appointment letter for every hire?
Yes. The Code on Wages of 2019 and the Occupational Safety, Health and Working Conditions Code of 2020 both require a written appointment letter for every employee. The exact format is set by each state. Offrd's templates carry the standard clauses, including the new wage definition under the Code on Wages.
What happens if I miss EPF or ESI deadlines?
EPF arrears earn 12 percent interest a year and damages of up to 25 percent under Section 14B of the EPF Act. ESIC charges 12 percent interest on late contributions, with damages of 5 to 25 percent depending on the delay. Both authorities can issue notices and attach assets. Pay on time.
Sources: EPFO, ESIC, Ministry of Labour and Employment, Income Tax Department, Press Information Bureau.
Where to start
Pick the guide that matches the question you walked in with. Read it. If the work is worth doing inside Offrd rather than inside a folder of Word templates, open a free account with 50 credits already on it, or book a demo if you want to see it first.