Labour Welfare Fund (LWF) India 2026: State-Wise Contribution Rates, Applicability, and Compliance Guide for Employers

Every October and November, HR teams across India face the same compliance question. Karnataka has sent a reminder. The half-yearly LWF deduction is due. The payroll manager searches the internal records and finds that the company has been operating in Bengaluru for fourteen months. The Karnataka LWF registration was never done. The contributions were never deducted. The employer contribution was never remitted.

This happens in companies with functioning compliance departments. It is not carelessness. It is a knowledge gap. The Labour Welfare Fund is one of the most consistently overlooked statutory payroll obligations in India, precisely because the amounts involved are small, the filing is infrequent, and no central authority sends automatic reminders. But the penalties, interest, and inspection exposure are real.

Understanding Labour Welfare Fund applicability requires knowing which of India’s 36 states and union territories have enacted LWF legislation, what each state’s contribution rates are, when each state’s due dates fall, and what happens when an employer misses them. This guide answers all of it, with verified data from state-specific LWF Acts and the most recent government notifications as of 2026.

What Is the Labour Welfare Fund?

The Labour Welfare Fund (LWF) is a statutory fund that individual state governments in India establish to provide welfare benefits to workers and their families. Resources in the fund come from periodic contributions by both employers and employees. The State Labour Welfare Board administers the fund and deploys it for worker welfare programmes.

LWF-funded benefits typically include financial assistance to workers and their families in times of need, medical care and health facilities, educational scholarships for employees’ children, housing assistance at concessional rates, vocational training and skill development programmes, recreational and library facilities at the workplace, and transport facilities in some states.

How LWF Differs from PF and ESI

PF and ESI are central government schemes with uniform national rates, administered by EPFO and ESIC respectively. LWF, in contrast, is entirely state-governed. There is no single Central LWF Act. Each state that levies it has its own legislation — the Maharashtra Labour Welfare Fund Act 1953, the Karnataka Labour Welfare Fund Act 1965, the Gujarat Labour Welfare Fund Act 1953, and so on.

As a result, LWF contribution amounts are fixed per employee per period — not calculated as a percentage of salary. The amounts are typically small (ranging from Rs. 6 to Rs. 480 per employee per contribution period), but the compliance obligation is as real as any other statutory deduction. Labour inspectors specifically check LWF registration and contribution receipts during workplace inspections.

Legal Basis for LWF

Labour is a Concurrent List subject under Entry 22 of List III of the Seventh Schedule to the Constitution of India. Both Parliament and State Legislatures can pass laws on labour matters. This concurrent jurisdiction is the constitutional foundation for each state’s authority to enact a Labour Welfare Fund Act independently of the Centre.

Under the Code on Social Security 2020, which commenced on 21 November 2025, the Central Government has the power to frame social security schemes that may eventually subsume some state-level welfare funds. However, as of May 2026, state LWF Acts continue to operate independently. Employers must comply with each state’s specific requirements until a transition is formally notified.

Labour Welfare Fund Applicability in India

Labour Welfare Fund applicability depends entirely on whether the state where your employees work has enacted an LWF Act. This is the first question every employer must answer: does my state have an operative LWF law?

States Where LWF Is Currently Applicable (2026)

As of May 2026, the following states and union territories have enacted and operative Labour Welfare Fund legislation:

Source: State Labour Welfare Board notifications, Patron Accounting LWF guide (April 2026), EligibilityTools.in LWF applicability guide (March 2026), ClearTax, Greythr, Futurex LWF India guide. Verify with the respective State Labour Welfare Board before filing.

States Where LWF Does Not Currently Apply

The following major states do not have an operative standalone Labour Welfare Fund Act applicable to private commercial establishments as of May 2026:

• Uttar Pradesh: No active LWF Act for private establishments.
• Bihar and Jharkhand: No active LWF Act.
• Rajasthan: Has partial welfare board frameworks but no comprehensive standalone LWF Act applicable to all commercial establishments. (Some sources cite Rajasthan; verify with the state Labour Department before assuming applicability.)
• Most Northeastern States: Including Assam, Meghalaya, Manipur, Mizoram, Nagaland, Arunachal Pradesh, Tripura, and Sikkim — no standalone LWF Acts for private commercial establishments.
• Himachal Pradesh and Uttarakhand: No standalone active LWF Act for commercial establishments.

Which Establishments and Employees Does LWF Cover?

Labour Welfare Fund applicability does not extend automatically to every establishment and every employee in an LWF state. Each state’s Act defines the establishments and workers covered.

Types of Establishments Generally Covered

• Factories as defined under the Factories Act, 1948 — manufacturing units with 10 or more workers using power, or 20 or more without power.
• Shops and Commercial Establishments registered under the applicable state Shops Act — offices, retail outlets, IT companies, service businesses.
• Motor Transport Undertakings — logistics companies, transport businesses.
• Plantations — tea, coffee, rubber, and other plantation establishments in applicable states.
• Societies and trusts — charitable, educational, and cooperative societies in some states.

Employee Applicability: Who Is Covered

Each state defines employee coverage differently. Common exclusion categories include:

• Managers and supervisors above a wage threshold: Many states exclude employees in managerial or administrative capacities earning above a specified salary — for example, supervisors earning more than Rs. 10,000 per month in some states, or Rs. 2,500 per month in others.
• Part-time and contractual workers: Excluded in some states, included in others. Karnataka, for instance, covers all employees including contract workers after its 2025 revision.
• Apprentices: Typically excluded in most states.

Importantly, after Karnataka reduced its applicability threshold from 50 employees to 10 employees in 2025, a significantly larger number of Karnataka establishments now carry LWF obligations than they did previously. Smaller IT companies and service firms in Bengaluru that were previously below the threshold now need to register and contribute.

State-Wise LWF Contribution Rates Table for 2026

The following table provides verified LWF contribution rates as of May 2026. All rates reflect the most recently enacted state amendments. Note that several states revised their rates between 2022 and 2025 — using old rate tables is a common source of compliance errors.

Employer and Employee Contribution Rules

Under every state’s LWF Act, both the employer and the employee contribute to the fund. However, the employer holds the primary compliance responsibility. The employer deducts the employee’s share from the monthly salary and then adds the employer’s own share before remitting the combined amount to the State Labour Welfare Board.

Key Rules That Apply Across All LWF States

• Deduction timing: The employee contribution is deducted from salary in the applicable deduction month specified by the state. For most states, this is June and December for half-yearly states, or December for annual states. The employer cannot deduct LWF contributions in any month other than the prescribed deduction month.
• Contribution amounts are fixed per employee: Unlike PF (which is a percentage of salary), LWF contributions are fixed rupee amounts per employee regardless of the salary level, except in states that have salary-slab-based structures.
• Employer contribution is mandatory: Even if the employee’s contribution is waived or the employee falls in an excluded category, the employer may still owe its own contribution for certain establishment types. Verify this with the applicable state Act.
• Contract workers: In several states, including Karnataka after its 2025 amendment, contract workers deployed at the establishment are covered and their LWF contributions must be deducted and remitted. The principal employer carries responsibility if the contractor does not comply.
• No salary cap in some states: States like Maharashtra include all employees without a salary cap. Others like Gujarat apply LWF only to employees earning up to Rs. 15,000 per month. Always verify the applicable threshold for the specific state.

LWF Registration Process: What Employers Need to Do

Registration with the State Labour Welfare Board is the first step. Most states require registration within 15 to 30 days of the establishment commencing operations or crossing the applicable employee threshold. The registration process is now online in most states.

Documents Required for LWF Registration

• Certificate of Incorporation or Partnership Deed or LLP Agreement
• PAN of the establishment
• GST registration certificate (where applicable)
• Shops and Establishments registration certificate or Factory licence
• List of employees with names, designations, and monthly salaries
• Bank account details of the establishment
• Authorised signatory details

Standard LWF Compliance Process After Registration

• Step 1 — Deduct: In the applicable deduction month (June and December, or December, or as specified by the state), deduct the employee’s LWF contribution from each covered employee’s salary.
• Step 2 — Add employer share: Before payment, add the employer’s own contribution amount to the deducted employee contributions.
• Step 3 — Remit: Pay the combined contribution to the State Labour Welfare Board through the state’s online portal before the due date.
• Step 4 — File return: Submit the prescribed return form (Form A, Form D, or the state-specific equivalent) to the Labour Welfare Board by the due date, with employee-wise contribution details.
• Step 5 — Maintain records: Keep copies of all challans, return forms, and employee-wise deduction registers. Labour inspectors can demand these during routine or triggered inspections.

Due Dates and Return Filing Requirements by State

Note: Due dates are based on most recent state notifications. Always confirm with the specific State Labour Welfare Board before remitting, as state portals occasionally revise deadlines. Online payment is now available in most states; physical payment is being phased out in major LWF states.

Penalties for LWF Non-Compliance

Non-compliance with Labour Welfare Fund applicability — whether registration failure, late payment, or failure to file returns — attracts penalties, interest, and in some cases prosecution under the applicable state LWF Act.

Common LWF Compliance Mistakes Employers Make

Based on compliance audits across multi-state businesses, the following mistakes appear consistently. Each one is preventable with the right system in place.

Best Practices for Multi-State LWF Compliance

For businesses operating in multiple states, LWF management requires a structured system rather than individual manual tracking. The following practices reduce the risk of missed deductions, late payments, and audit exposure.

• Map all state locations against LWF applicability first. Before configuring payroll, determine which of your office locations are in LWF states and which are not. Update this mapping whenever you open a new location.
• Register in each LWF state within 30 days of opening the office. Treat LWF registration as part of the standard new-office compliance checklist — alongside Shops Act registration and PT registration.
• Configure payroll software with state-specific LWF rules. Each state needs its own configuration: the correct contribution amounts, the correct deduction months, and the correct employee eligibility filters. A single national LWF configuration does not work.
• Monitor state LWF Act notifications for rate revisions. There is no central repository for LWF amendments. Subscribe to each state’s Labour Department notification service or assign a compliance team member to check quarterly.
• Maintain a separate LWF compliance calendar. Add all LWF deduction months and payment due dates to your compliance calendar alongside PF, ESIC, and PT deadlines. Maharashtra’s June and December deductions, Karnataka’s December contribution, and Haryana’s January deadline all need individual calendar entries with advance reminders.
• File returns promptly after payment. Remit the contribution and then immediately file the prescribed return form. Do not treat these as the same step — they are two separate compliance actions.
• Maintain deduction registers for all states. Keep a register showing employee name, month of deduction, amount deducted, employer contribution, and date of remittance for each state. This register is what a labour inspector asks for during an LWF inspection.

Frequently Asked Questions About Labour Welfare Fund

What is Labour Welfare Fund applicability in India?

Labour Welfare Fund applicability depends entirely on the state where your employees work, not where the company is registered. As of 2026, 16 states and union territories have active LWF legislation. For each state where you have employees, you must assess applicability separately, register with the State Labour Welfare Board if applicable, and comply with that state’s contribution rates, deduction months, and filing requirements. States like Uttar Pradesh, Bihar, and most northeastern states do not have an active LWF Act.

Is LWF mandatory for all companies in India?

No. LWF is mandatory only in states where the state legislature has enacted an LWF Act. If all your employees work in states without an active LWF Act, you have no LWF obligation. However, if any employees work from offices in LWF states, compliance is mandatory for those employees regardless of where your company is registered.

What is the difference between LWF and Professional Tax?

Professional Tax is a direct tax on income remitted to the state’s commercial tax department. LWF is a welfare contribution managed by an autonomous State Labour Welfare Board specifically for worker welfare programmes. The two are entirely separate obligations. A state can have PT without LWF (Andhra Pradesh), LWF without PT (Haryana), both (Maharashtra and Karnataka), or neither (Uttar Pradesh).

How often should LWF be deducted from employee salaries?

The deduction frequency depends on the state. In Maharashtra, Tamil Nadu, Gujarat, Madhya Pradesh, and West Bengal, LWF contributions are deducted half-yearly in June and December only. In Karnataka, Andhra Pradesh, Telangana, Haryana, Punjab, and Delhi, contributions are deducted annually. LWF is not a monthly deduction in most states. Employers who deduct LWF every month are over-deducting from employees, which is itself a statutory violation.

What are the LWF rates in Maharashtra and Karnataka for 2026?

In Maharashtra, the LWF contribution is Rs. 25 (employee) and Rs. 75 (employer) per employee per half-year, revised in March 2024 from the earlier Rs. 12 / Rs. 36. In Karnataka, the contribution is Rs. 50 (employee) and Rs. 100 (employer) per employee per year, revised in 2025. Karnataka also reduced its applicability threshold from 50 to 10 employees in 2025. Any payroll system using the old rates for either state is under-contributing and carries arrear exposure.

Does LWF apply to contract workers?

It depends on the state. Karnataka explicitly covers contract workers after its 2025 amendment. Maharashtra includes all employees. Gujarat excludes part-time and managerial positions. In states where contract workers are covered, the principal employer carries responsibility if the contractor fails to comply. Always verify the contract worker coverage rule for each applicable state before finalising your LWF headcount.

Does LWF apply in Noida (UP) or Gurugram (Haryana)?

Noida is in Uttar Pradesh, which does not have an active standalone LWF Act for private establishments. Therefore, LWF does not apply to Noida employees. Gurugram is in Haryana, which has an active LWF Act. LWF therefore applies to Gurugram employees, with annual deduction in December and remittance by 31 January. Employers operating in both cities must apply LWF only to Gurugram employees.

Conclusion: Labour Welfare Fund Applicability Demands Active Management

Labour Welfare Fund applicability is not a one-time compliance check. It is an ongoing management obligation that changes when you open new offices, when states revise rates, when applicability thresholds change, and when contract worker coverage rules evolve.

For single-state businesses, the obligation is manageable with a correctly configured payroll system and a compliance calendar. For multi-state businesses, however, tracking 16 different state Acts with different rates, different deduction months, different due dates, and different portals requires either a dedicated compliance team or a professional service provider with pan-India LWF management capability.

The contribution amounts are small. The penalties are real. The arrears accumulate silently. Getting LWF right is not about the money involved — it is about maintaining a clean compliance record across every state where your employees work.