Karnataka payroll: professional tax, LWF and state rules
Last reviewed: 24 Sep 2026 · Author: NeevHR team
Karnataka professional tax is ₹200 a month from ₹25,000 salary, with ₹300 in February from 2025-26. LWF is annual, ₹50 and ₹100, and now covers establishments with 10 or more people.
Professional Tax in Karnataka
Professional tax is levied under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 and paid through the Commercial Taxes Department's PT portal.
Salaries below ₹25,000 a month pay nothing. From 1 April 2025, the Amendment Act, 2025 sets ₹200 a month and ₹300 in February for salaries of ₹25,000 and above, so the annual total reaches ₹2,500. February 2026 was the first month at ₹300.
| Monthly salary | PT per month |
|---|---|
| Below ₹25,000 | Nil |
| ₹25,000 and above | ₹200 a month, ₹300 in February |
| Item | Detail |
|---|---|
| Employer registration | Registration Certificate (RC) on the PT portal, needed even for one employee |
| Monthly statement and payment | Form 5-A, within 20 days of the end of the month |
| Annual return | Form 5, within 60 days of the end of the year |
Labour Welfare Fund in Karnataka
Under the Karnataka Labour Welfare Fund Act, 1965, the employee contributes ₹50, the employer ₹100 and the state ₹50 per employee each year, for employees on the register on 31 December, deducted from December wages and paid by 15 January.
An amendment in force from 7 January 2026 lowers the threshold from more than 50 persons to 10 or more persons. Many smaller offices will contribute for the first time for calendar year 2026, payable by 15 January 2027.
| Item | Detail |
|---|---|
| Contribution | ₹50 employee, ₹100 employer, per year |
| Deduction month | December |
| Due date | 15 January |
| Coverage | 10 or more persons from 2026 |
Minimum wages in Karnataka
Minimum wages are set by scheduled employment, zone and skill, with a variable dearness allowance revised each April.
A notification dated 22 May 2026 revised basic minimum wages for 81 scheduled employments. It has been challenged in the Karnataka High Court, mainly because it was issued under the repealed Minimum Wages Act, 1948; as of late September 2026 there was no stay protecting employers. Treat rates published after 22 May 2026 as subject to the outcome of that litigation and check the Labour Department for updates.
Shops and establishments and other considerations
- Karnataka Shops and Commercial Establishments Act, 1961: overtime is paid at twice the ordinary rate. The Amendment Act notified on 4 September 2026 introduces digital registration with lifetime validity and requires a service certificate to be issued within seven days of it being sought.
- Karnataka PT has two filings, the monthly Form 5-A payment and the annual Form 5 return; do not treat it as monthly only.
Running Karnataka payroll in NeevHR
- PT and LWF follow each employee's work location on the effective-dated record.
- State slab and LWF tables are configurable settings, so a rate change is a settings update.
- PT and LWF challan data is produced from the published payroll run.
- The February ₹300 PT levy and annual December LWF are supported.