Salary and payroll entries with PF, ESI, PT and TDS

Example: one employee, gross salary ₹30,000

ESI does not apply here because wages are above ₹21,000. Where it applies, it is 0.75% from the employee and 3.25% from the employer.

1. Salary due (F7)

Salary A/c                     Dr   30,000
    To Salary Payable A/c                          28,000
    To PF Payable A/c                               1,800
    To Professional Tax Payable A/c                   200

2. Employer's share (F7)

Employer PF Contribution A/c   Dr    1,800
    To PF Payable A/c                               1,800

3. Pay salary (F5)

Salary Payable A/c             Dr   28,000
    To Bank A/c                                    28,000

4. Pay PF by the 15th of next month (F5)

PF Payable A/c                 Dr    3,600
    To Bank A/c                                     3,600

Why timing matters

Employee PF and ESI deducted from salary are allowed as a business expense only if deposited by the EPFO/ESIC due date. Late deposit means the employee share is added to your income.