AS | Ankit Sarawagi|Founder, CFOmatrix·August 2026·8 min read | Payroll & Labour Law |
The Labour Welfare Fund is the smallest line on your payslip and the one founders forget the most: a few rupees per employee that, unpaid for two years, turns into an awkward open item in a labour audit.
This guide explains the Labour Welfare Fund in plain terms: which states levy it, how much the employee and employer each pay, when you deposit, and how to keep it clean. Because LWF is a state levy, the one rule that matters most is: confirm the figure for your own state.
- When it applies
- Only in states that have an LWF Act (about 16 states and UTs). Coverage usually starts at a small headcount, often 5 or more employees.
- Key numbers
- A small fixed amount per employee, not a percentage. Employer share is usually a multiple of the employee share.
- Where to file
- With your State Labour Welfare Board, mostly online.
- Due date
- Varies: half-yearly (June and December), annual, or monthly, by state.
- Penalty
- Interest and penalty on late or non-payment under the state Act, plus a recoverable due.
1 What the Labour Welfare Fund is
The Labour Welfare Fund is a statutory fund that finances welfare measures for workers: things like medical camps, education aid for employees’ children, and housing or recreation schemes. It is run by a State Labour Welfare Board, not the central government.
Every contributing state has passed its own LWF Act. That single fact drives everything below: there is no national LWF rate, no single portal and no common due date. Your obligation is defined entirely by the state where your office or establishment sits.
2 Does LWF apply to you?
Ask two questions, in order. First, does your state have an LWF Act at all? Second, does your establishment cross the state’s coverage threshold?
States that levy LWF
As of 2026, LWF is operative in roughly sixteen states and union territories, including Maharashtra, Karnataka, Tamil Nadu, Gujarat, Kerala, Madhya Pradesh, West Bengal, Andhra Pradesh, Telangana, Chhattisgarh, Goa, Odisha, Haryana, Punjab, Delhi and Chandigarh.
Several large states do not levy LWF, so businesses there have no filing at all. Rajasthan, Bihar, Uttarakhand and most North-Eastern states currently have no LWF Act in force. (This list moves, so treat it as a starting point, not gospel.)
Who is counted
Most state Acts apply once an establishment employs a small number of people, commonly 5 or more, and cover employees up to a defined wage or designation ceiling. Some states exclude those in a managerial or supervisory role above a salary limit. The exact coverage sits in your state’s Act and rules, so read those before you set up the payroll deduction.
3 How much you contribute, by state
The amount is a fixed number of rupees per employee, not a percentage of wages. Both sides pay, and the employer share is usually a multiple of the employee share. Here are four example states, with amounts verified as of August 2026.
| State | Employee | Employer | Frequency | Deposit months |
|---|---|---|---|---|
| Maharashtra | ₹25 | ₹75 | Half-yearly | June and December |
| Gujarat | ₹6 | ₹12 | Half-yearly | June and December |
| Karnataka | ₹50 | ₹100 | Annual | December (deposit by January) |
| Tamil Nadu | ₹20 | ₹40 | Annual | December (deposit by January) |
Read the table as a pattern, not a promise. States revise these amounts and cycles quietly: Maharashtra moved from ₹12 and ₹36 to ₹25 and ₹75, and Karnataka switched from half-yearly to annual and dropped its coverage threshold. Always confirm the live figure on your State Labour Welfare Board portal before a filing.
4 Two worked examples
The numbers are small per person but add up across a team, and the deposit lands in one or two lumps a year. Here is what that looks like.
Kaveri Labs runs a 40-person office in Pune. Maharashtra LWF is ₹25 (employee) and ₹75 (employer) per half-year, so ₹100 per employee per cycle. Each June and December, Kaveri deducts ₹25 x 40 = ₹1,000 from employees and adds its own ₹75 x 40 = ₹3,000, depositing ₹4,000 per cycle, or ₹8,000 for the full year, with the Maharashtra Labour Welfare Board.
Brewly has a 30-person team in Bengaluru. Karnataka LWF is ₹50 (employee) and ₹100 (employer), collected once a year. In December, Brewly deducts ₹50 x 30 = ₹1,500 from employees and adds ₹100 x 30 = ₹3,000 of its own, depositing ₹4,500 in one annual payment. If Brewly later opens a Pune office, that team moves onto Maharashtra’s separate half-yearly cycle.
5 How to register and deposit
The mechanics are light. The discipline is remembering the cycle. A typical flow, using Maharashtra’s half-yearly pattern, looks like this.
6 Your LWF checklist
- List every state where you have an office or establishment, not just your registered address.
- For each, confirm whether an LWF Act applies and check the current employee and employer amounts.
- Set the correct fixed per-head amount in payroll for each state.
- Add the deposit month for each state (half-yearly, annual or monthly) to your compliance calendar with a named owner.
- Show LWF as a separate deduction line on payslips in the deduction month.
- Deposit the combined amount on time and file the return on the state board portal.
- Save the challan and keep the LWF register updated for audit and due diligence.
Not sure whether LWF applies at your headcount and state?
Use our free Compliance Applicability Checker: enter your team size, state and set-up, and see exactly which labour, payroll and HR filings you owe now, and which switch on as you grow.
Check my compliances7 FAQs
Is the Labour Welfare Fund the same across India?
How much is the LWF contribution?
How often is LWF deposited?
Which employees are counted for LWF?
What happens if I miss the LWF deposit?
Related guides & tools
Minimum wages & statutory registers in India →
Shops & Establishment registration in India →
ESI registration and filing for employers →
Which compliances apply to your company? (free tool) →
AS | Founder, CFOmatrix | Finance Strategy & Compliance CFOmatrix helps Indian startups build finance, tax and compliance functions that stand up to investor due diligence, from process and controls to the filings and the numbers behind them. |
Disclaimer: This article is general information as of August 2026 and is not legal advice. Labour Welfare Fund Acts, contribution amounts, cycles and the list of levying states differ by state and change over time. Confirm your specific obligations with your State Labour Welfare Board or a qualified professional before acting.