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As soon as you start hiring in Karnataka, three statutory registrations become relevant — Provident Fund (EPF), Employees' State Insurance (ESI) and Professional Tax (PT). Missing any of these can attract heavy penalties and interest, disrupt payroll and damage employer credibility.
This guide covers when each applies, the contribution rates, monthly filing dates and how Anagha Solutions helps Bangalore employers stay compliant.
Provident Fund (EPF)
EPF applies when your establishment has 20 or more employees. Voluntary coverage below 20 is also possible. Employees drawing basic + DA up to ₹15,000 must be covered mandatorily; above that it is optional between employer and employee.
- Employee contribution — 12% of basic + DA
- Employer contribution — 12% (split between EPF and EPS)
- Payment and ECR filing — by 15th of the next month
- Universal Account Number (UAN) mandatory for all employees
Employees' State Insurance (ESI)
ESI applies to establishments with 10 or more employees (some states 20) where employees earn gross wages up to ₹21,000 per month (₹25,000 for persons with disability). It provides medical, maternity, disability and dependent benefits.
- Employee contribution — 0.75% of gross wages
- Employer contribution — 3.25% of gross wages
- Payment and return — by 15th of the next month
- ESI card / Pehchan card issued to insured employees
Karnataka Professional Tax
Karnataka levies Professional Tax on salaried employees and on employers themselves. Employers register both an Enrolment Certificate (EC — for their own PT liability) and a Registration Certificate (RC — for employee deductions).
- Salary up to ₹24,999/month — Nil
- Salary ₹25,000/month and above — ₹200 per month
- Employer PT (EC) — ₹2,500 per year
- Monthly deposit and Form 5A filing — by 20th of the next month
- Annual return — Form 5A within 60 days of year-end
Penalties for non-compliance
- EPF — interest 12% p.a. + damages up to 25% p.a. of arrears
- ESI — interest 12% p.a. + damages up to 25%
- PT — interest 1.25% per month + penalty up to 50% of tax
- Prosecution possible for wilful default
Employer monthly checklist
- Process payroll and generate salary registers
- Deduct EPF, ESI and PT correctly
- Deposit contributions and file ECR / ESI return / PT return by due dates
- Issue payslips and update UAN / ESIC portals for new joiners and exits
- Reconcile GL, tax and statutory dues monthly
Frequently asked questions
Is PF mandatory below 20 employees?
No, but voluntary coverage is available and often preferred by employees. Once registered, the same rules apply as for mandatory establishments.
Are stipends and contract workers covered under ESI?
Contract workers deployed through you are covered under ESI/PF as per contribution rules. Stipend to interns may be covered depending on employer-employee relationship.
Does Karnataka PT apply to freelancers and consultants?
Yes. Self-employed professionals (consultants, doctors, lawyers, CAs, etc.) are liable for PT under the Enrolment Certificate.
Talk to Anagha Solutions for practical, Bangalore-based professional support.