The 4 Labour Codes - What Changed (Effective 21 November 2025)
India's four new Labour Codes - the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health & Working Conditions (OSH) Code - came into force on 21 November 2025, consolidating 29 central labour laws into four.
What this means for Karnataka employers:
- The Codes now sit above many existing Karnataka state laws. Several state acts (Shops & Establishments, Professional Tax administration, Labour Welfare Fund) continue to operate, but increasingly within the framework of the Codes.
- "Wages" is now defined uniformly - basic pay must be at least 50% of total CTC, which changes PF, gratuity and bonus calculations for most salary structures.
- Appointment letters are now mandatory for every employee.
- Important: the Codes are in force and their principal rules were notified in May 2026; some Karnataka state-level rules are still being aligned. During this transition, employers should comply with both the existing Karnataka acts and the new Codes - we track both so you stay covered.
Content current as of June 2026. Labour Code rules are evolving; we update these guides as new notifications are issued.
Karnataka-Specific Labour Laws
1. Karnataka Professional Tax
| Monthly Salary | PT per Month |
|---|---|
| Up to ₹15,000 | Nil |
| ₹15,001 to ₹25,000 | ₹150 |
| Above ₹25,000 | ₹200 |
- Maximum annual PT: ₹2,500
- Monthly filing with Karnataka Commercial Tax Department
- Due date: 20th of the following month
- Annual return: Within 60 days of financial year end
2. Karnataka Labour Welfare Fund (KLWF)
- Employee contribution: ₹20 per year (deducted annually in December)
- Employer contribution: ₹40 per year per employee
- Due date: 1st January each year
- Applicable to: All establishments with employees in Karnataka
3. Karnataka Shops & Commercial Establishments Act, 1961
Key Provisions:
- Registration: Within 30 days of commencement
- Working hours: Maximum 9 hours/day, 48 hours/week
- Overtime: Twice the ordinary rate of wages
- Weekly holiday: One day per week (Sunday by default)
- Annual leave: 15 days for every 240 days worked
- IT/ITES exemptions: Relaxations on working hours and night shift for women
4. Central Laws Applicable in Karnataka
- EPF: 12% employer + 12% employee on basic + DA (establishments with 20+ employees)
- ESIC: 3.25% employer + 0.75% employee for workers ≤₹21,000/month
- Payment of Bonus: 8.33% to 20% for eligible employees
- Payment of Gratuity: After 5 years, formula-based calculation
- Minimum Wages: Karnataka state-specific minimum wage rates (zone-wise)
Karnataka Compliance Calendar
| Compliance | Frequency | Due Date |
|---|---|---|
| PF Payment | Monthly | 15th of following month |
| ESIC Payment | Monthly | 15th of following month |
| Karnataka PT | Monthly | 20th of following month |
| TDS Payment | Monthly | 7th of following month |
| KLWF Payment | Annual | 1st January |
| TDS Returns | Quarterly | End of month following quarter |
Penalties for Karnataka Labour Law Violations
| Violation | Penalty |
|---|---|
| Late Karnataka PT | 1.25% per month interest |
| Non-registration under Shops Act | Fine up to ₹25,000 |
| Late PF payment | 12% p.a. interest + damages |
| KLWF non-compliance | Penalties under KLWF Act |
| Working hours violation | Fine up to ₹10,000 |
Special Provisions for IT/ITES Companies in Karnataka
Karnataka provides specific relaxations for IT/ITES companies:
- Flexible working hours beyond standard 9-hour limit (with conditions)
- Women employees allowed to work night shifts with transportation and safety provisions
- Relaxed overtime provisions for project-based work
- These relaxations must be correctly reflected in payroll and leave calculations
How HRTailor Manages Karnataka Compliance
- Automated Karnataka PT calculation and filing
- KLWF annual contribution management
- Shops Act registration guidance
- IT/ITES-specific compliance handling
- Zone-wise minimum wage tracking
- Regular compliance audits and documentation
FAQs - Karnataka Labour Compliance
What is the PT rate for IT employees in Bangalore?
Karnataka PT for IT employees follows the same slabs - ₹200/month for salary above ₹25,000, ₹150 for ₹15,001-₹25,000, and nil below ₹15,000. There is no special IT exemption for Professional Tax.
Is KLWF mandatory for all Bangalore companies?
Yes, Karnataka Labour Welfare Fund contributions are mandatory for all establishments with employees in Karnataka. The total cost is ₹60 per employee per year (₹40 employer + ₹20 employee).
Do IT companies get overtime exemptions in Karnataka?
Karnataka provides certain relaxations on working hours for IT/ITES companies, but overtime payments must still be made at double the ordinary rate when employees work beyond the agreed hours. The relaxation is primarily on the definition of standard hours.
What is the minimum wage in Karnataka 2025?
Karnataka minimum wages vary by zone (Zone I includes Bangalore) and industry. The state government revises minimum wages periodically. HRTailor tracks current rates and ensures all client employees are paid at or above the applicable minimum wage.
How can HRTailor help with Karnataka compliance?
HRTailor manages complete Karnataka compliance including PT filing, KLWF contributions, Shops Act documentation, PF/ESIC monthly filing, TDS returns, and bonus/gratuity calculations. Our team has specific expertise in Karnataka IT/ITES compliance rules.
Need Help with Karnataka Compliance?
HRTailor manages your complete compliance across Karnataka - PT, KLWF, PF, ESIC, and more.
Call: +91-22-4896-7640