Viriksha HR Solution
April Financial Year Compliance Guide for Employers
Payroll, PT, TDS & Labour Laws
15-05-2026 Friday
April is the most compliance-intensive month in the Indian employer calendar. Every statutory obligation resets. New tax declarations are due. Professional Tax slabs apply afresh. TDS calculations start from zero. Salary structures must be verified against revised minimum wage rates. Labour law registers close for the previous year and open for the new one.
For businesses in Chennai and across India, the first week of April determines whether the new financial year begins on solid compliance ground — or begins with carry-forward errors, missed declarations, and misaligned calculations that compound into notices by Q3.
This guide covers every compliance action an employer must complete in April — across payroll, Professional Tax, TDS, PF, ESI, and labour law obligations.
“Compliance is not a cost center. It is a trust signal — to your employees, your investors, your bank, and
your clients. In Chennai’s competitive business landscape, the companies that comply consistently are the ones that scale consistently.”
— VIRIKSHA HR SOLUTION, CHENNAI
Why April Is Different From Every Other Month
Every other month of the financial year, compliance is routine — the same filings, the same deadlines, the same calculations. April is structurally different because it is simultaneously the close of the previous year’s obligations and the opening of the new year’s obligations.
In April, employers must: finalise previous year payroll for Form 24Q Q4 filing, collect new financial year investment and regime declarations, reset TDS calculations for every employee, implement salary revisions, verify minimum wage compliance for the new year, renew any statutory registrations expiring in the new year, and open new registers for the financial year.
A business that treats April as just another payroll month will find itself correcting errors in June — when Form 16 deadlines and quarterly TDS filings make every April mistake visible and expensive.
Compliance Action 1 — Collect Tax Regime and Investment Declarations
The first compliance action of every new financial year is collecting tax regime declarations from every employee. Under the Income Tax Act, the new tax regime under Section 115BAC is the default from FY 2023-24 onwards. Every employee who wants to opt for the old regime must explicitly declare their choice to the employer in April.
What to collect from every employee in April:
Regime declaration — new regime (default) or old regime (explicit opt-in). For old regime employees — Form 12BB with investment declarations covering HRA claim details, LTA claim, home loan interest and principal amounts, and all Chapter VI-A investment intentions — Section 80C, 80D, 80CCD(1B), 80E, and others.
Why this matters immediately: TDS deduction for the entire financial year is calculated from April based on these declarations. An employee who does not submit a declaration is taxed under the new regime — with no deductions. An employee who submits an incorrect declaration creates TDS shortfalls that surface as large deductions in February and March. Collecting accurate declarations in April is the single most important action in getting TDS right for the full year.
Compliance Action 2 — Reset TDS Calculations for Every Employee
Once declarations are collected, recalculate the annual TDS liability for every employee from scratch — April figures, not a continuation of March.
The April TDS reset covers:
Revised annual gross salary — including any salary increment effective April 1. New regime or old regime as declared. Standard deduction of ₹75,000 applicable in both regimes. Exemptions and deductions as declared in Form 12BB for old regime employees. Tax computed on the applicable slabs. Section 87A rebate applied where eligible — ₹7,00,000 income limit for new regime, ₹5,00,000 for old regime. Annual tax liability divided by 12 for the monthly TDS deduction.
The April calculation must be done fresh. Carrying forward last year’s TDS rates or last year’s declarations without fresh collection is one of the most common payroll compliance errors — and one of the most expensive to correct when it surfaces in Q3 or Q4.
Compliance Action 3 — Implement Salary Revisions and Verify Minimum Wage Compliance
April is the most common effective date for annual salary revisions. When revisions are implemented in April, the TDS reset and the salary revision must be done simultaneously — ensuring the revised salary is reflected in the annual tax projection from month one of the year.
More critically, April is the point at which salary structures must be verified against the current applicable minimum wage rates for every employee category in every state the business operates in.
The Tamil Nadu government revises minimum wage rates periodically across scheduled employment categories. The revised rates apply from the notification date — which may fall mid-year. Every April, every salary structure must be checked against the current applicable minimum wage rate for each employee's category of work to ensure no employee is paid below the legal minimum. The Minimum Wages Act does not provide a grace period for implementation. From the date a revised rate is notified, any wage below that rate is an offence. April is the right moment to run this check — before twelve months of potential underpayment accumulate.
The Code on Wages, when enforced, will require basic wages and dearness allowance to constitute at least 50% of total remuneration. Businesses that restructure salary components proactively — before enforcement — avoid the retrospective contribution liability that comes from non-compliance discovered after implementation. April is the most practical point to review and begin restructuring.
Compliance Action 4 — Professional Tax Reset and Compliance
Professional Tax is a state-level tax deducted from employee salaries and remitted to the state government. In Tamil Nadu, PT is levied at ₹208 per month for employees earning above ₹21,000 per month gross.
April PT compliance actions:
Verify PT registration is current for every establishment and every location. Confirm PT deduction is applied to every eligible employee at the correct rate for the state they are employed in. Verify that PT slab rates have not been revised by state government notification — states periodically revise PT slabs and rates, and the new financial year is the right moment to verify current applicability.
For businesses operating across multiple states — Tamil Nadu, Karnataka, Maharashtra, Telangana, Andhra Pradesh, and others — PT rates, slabs, deduction frequencies, and annual return deadlines differ in every state. April is the month to verify every state’s current PT rate and confirm the deduction configuration in your payroll system is accurate.
Karnataka PT note: Karnataka levies PT at rates up to ₹200 per month depending on salary slab and requires an annual PT return. Maharashtra PT note: Maharashtra levies PT up to ₹2,500 per year with a half-yearly return obligation. Every state has its own regime — and a multi-state payroll that applies Tamil Nadu PT rates across all locations is non-compliant in every state where a different rate applies.
Compliance Action 5 — PF and ESI Compliance Reset for the New Year
April marks the start of a new PF and ESI contribution year. Several compliance actions are specifically triggered at the start of the financial year.
Verify that every employee on the payroll who meets the eligibility criteria — earning up to ₹15,000 basic wages as a new joiner, or already enrolled as an existing member — has an active UAN and that KYC is verified on the EPFO portal. Employees who joined during the previous year and whose UAN KYC remains unverified must be resolved at year start. Verify PF contribution is being calculated on the correct wage base — basic salary and dearness allowance — and that no eligible allowances are being excluded from the PF wage base.
April 1 marks the start of a new ESI contribution period (April to September). Verify coverage status for every employee — employees whose gross wages exceeded ₹21,000 during the previous contribution period must exit ESI coverage. New employees joining at salaries below ₹21,000 must be enrolled on the ESIC portal before their first salary is processed. Verify ESI contribution is calculated on total gross wages — including all allowances and overtime — not just basic pay.
Compliance Action 6 — Statutory Register Transition
The new financial year requires a clean register transition. Every statutory register maintained under the Tamil Nadu Shops & Establishments Act and applicable central labour laws must be closed for the previous year and opened for the new year — with opening entries carried forward from the previous year’s closing entries.
Registers requiring fresh year opening in April:
Employee Register — verify every current employee is correctly captured with current designation, current department, and current remuneration. Leave Register — carry forward closing leave balances from March 31 as the opening balance for April 1 — earned leave balance, casual leave entitlement, sick leave entitlement. Wage Register — open fresh for the new financial year with correct salary structures reflecting any April revisions. Overtime Register — open fresh, with previous year’s overtime records retained for the statutory inspection window.
For businesses that have not formally closed and opened registers at year transition — treating them as continuously running documents without year-end entries — the register does not meet the format requirements for inspection purposes.
Several statutory registrations and licences operate on annual or periodic renewal cycles that may fall due in April or in the new financial year. Missing a renewal creates a gap in the establishment’s legal operating status — which is a finding in any labour inspection.
Registrations to verify and renew in April:
Tamil Nadu Shops & Establishments Act registration — annual renewal in many local bodies and municipal corporations. Factories Act licence — annual renewal with the Inspector of Factories. Contract Labour principal employer registration — verify validity period. BOCW registration — verify project duration and renew where project is ongoing beyond the registered period. Any other state-specific registration with annual renewal requirements.
Common April Compliance Mistakes That Cost Businesses All Year
The ESI Act provides a comprehensive package of benefits to insured employees and their dependants:
The most expensive single error in April. Creates systematic TDS miscalculation for all twelve months.
increases annual tax liability. TDS not updated from April creates a shortfall that lands as large deductions in Q3 and Q4.
Employees who should exit coverage remain enrolled. Contributions are deducted unnecessarily — and the recovery from employees creates payroll disputes.
revision was notified after March, it applies from the notification date. The first April salary processed on the old rate is technically a violation.
Registers without formal year-end closing and year-start opening entries are non-compliant in format — regardless of how accurate the underlying data is.
April is the month where the quality of your payroll and compliance partner becomes most visible. A vendor who processes salary and files PF and ESI is not equipped for April. A partner who manages the full compliance cycle — declarations, TDS reset, minimum wage verification, PT configuration, register transition, and registration renewals — is.
Viriksha HR Solutions manages the complete April compliance cycle for businesses in Chennai and across India — as part of our integrated payroll management, statutory compliance, and HR consultancy services.
What Viriksha delivers in April for every payroll client:
- Form 12BB and regime declaration collection process management — ensuring every employee's declaration is received, verified, and applied before April payroll is processed.
- TDS recalculation for every employee under the correct regime — incorporating revised salary, new declarations, and correct exemption and deduction application.
- Minimum wage verification across every employee category and every state — with salary structure update recommendations where a revision has been notified.
- PT rate verification and payroll configuration update for every state in which the client operates — ensuring correct deduction from April 1.
- ESI coverage status review and update for the new contribution period — enrollment of new eligible employees and exit processing for employees crossing the wage ceiling.
- Statutory register year-end closing and new-year opening — with carry-forward entries completed correctly and registers ready for inspection from the first working day of April.
- Statutory registration renewal tracking and renewal management — so no registration lapses unnoticed in the new financial year.
For businesses that manage payroll internally and want a one-time April compliance review — to verify that every April action has been completed correctly before the year progresses — our April compliance audit identifies every gap and provides a specific remediation action list.
April compliance done right sets the entire financial year up correctly. April compliance done wrong creates problems that compound every month until they become notices.