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Executive Overview

The Labour Welfare Fund (LWF) is a statutory contributory fund established under Indian law to promote the welfare of workers and their dependents. Managed by individual state government authorities, the fund serves as a critical social security mechanism aimed at improving working conditions, providing essential services, and raising the standard of living of labourers across India.

The LWF operates through contributions made jointly by employers and employees, and in some states, the government as well. The pooled resources are then utilized by state Labour Welfare Boards to finance a wide range of welfare programmes—spanning healthcare, housing, education, recreational facilities, and financial assistance for workers and their families.

“Labour Welfare Fund” (LWF) is statutory endowment contributed by Employer, Employee and by the Government (in some states) to improve the working conditions, to provide social security and to raise the living standards of Laborers and Workers in unorganized sectors. The quantum and periodicity of contribution is fixed by respective State Labour Welfare Board. This page will show the exact quantum, state wise.

States with LWF
16
Out of 36 states + UTs
Lowest Contribution
₹3
West Bengal (employee share)
Highest Contribution
₹240
Goa (total: ₹60+₹180)
Employer Ratio
2–4×
Employer pays 2x–4x employee share
Haryana 2025 Update
₹34
Max/month (up from ₹31, effective Jan 2025)
Karnataka 2025 Update
₹150
Annual total (₹50 emp + ₹100 er)
2025 Key Updates: Haryana increased its maximum monthly LWF contribution to ₹34/employee (effective 1 January 2025, up from ₹31). Karnataka passed the Karnataka LWF Amendment Bill 2024 (assented 8 Jan 2025) increasing the annual contribution to ₹50 (employee) + ₹100 (employer) = ₹150/year.
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What is Labour Welfare Fund?

The Labour Welfare Fund (LWF) is a statutory payroll contribution mandated by individual state governments under their own Labour Welfare Fund Acts. It was introduced in the framework of the Industrial Disputes Act, 1947, to improve workers' living conditions and social security.
  • Collected from both employers and employees
  • Managed by State Labour Welfare Boards
  • Used to fund welfare programs for workers and their families
  • Applies to factories, shops, commercial establishments and more
  • In some states, the state government also contributes to the fund
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Legal Framework

  • Industrial Disputes Act, 1947: Central framework enabling states to legislate for worker welfare
  • State-specific LWF Acts: Each applicable state has enacted its own Act (e.g., Maharashtra Labour Welfare Fund Act, 1953; Gujarat Labour Welfare Fund Act, 1961)
  • Labour Welfare Boards: Statutory bodies in each state that manage the fund and disburse benefits
  • Factories Act, 1948: Provides additional welfare obligations for factory employers
  • LWF is not deductible under the Income Tax Act (unlike Professional Tax under Sec 16(iii))
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Who is Covered?

LWF generally applies to employees in:
  • Factories and manufacturing establishments
  • Shops and commercial establishments
  • IT / ITES companies (in states like Karnataka, Tamil Nadu)
  • Hotels, restaurants, and hospitality establishments
  • Transport and logistics companies
  • Plantation workers (state-specific)
Usually excluded: Managerial/supervisory staff above a salary threshold, part-time workers (in some states), and establishments below the minimum employee count threshold.
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How Funds Are Utilized

Collected LWF contributions are used by the State Labour Welfare Board for:
  • Education: Scholarships, school uniforms, stationery for workers' children
  • Medical: Healthcare, dental care, maternity benefits for workers & families
  • Housing: Concessional home loans for workers
  • Transport: Cycle purchase assistance, bus services for workers
  • Recreation: Sports facilities, libraries, reading rooms, vocational training
  • Nutrition: Subsidised food/canteens for workers and their children

Professional Tax vs. Labour Welfare Fund — At a Glance

Feature Professional Tax (PT) Labour Welfare Fund (LWF)
Governing Law Article 276 of the Constitution State Labour Welfare Fund Acts
Who Pays Employee only (deducted by employer) Both Employee AND Employer
Max Annual Limit ₹2,500 per person (constitutional cap) No central cap; varies by state
Based On Monthly salary slabs Fixed amounts (not slab-based)
Income Tax Deduction Yes — Section 16(iii) of IT Act No — not deductible under IT Act
Applicable States 21 States + 1 UT 16 States/UTs
Frequency Monthly / Half-yearly / Annual Monthly / Half-yearly / Annual
Purpose State revenue (general) Dedicated worker welfare programs
Registration PTRC (employer) / PTEC (self-employed) Registration with State Labour Welfare Board

State-wise LWF Detail Cards

Full compliance profile for each LWF-applicable state — contribution amounts, due dates, applicable employees, online portal, and compliance form.

States Where LWF is Not Applicable

The following states and union territories have not enacted a Labour Welfare Fund Act. Establishments in these regions have no LWF contribution obligation.

Note: Absence of LWF does not mean absence of all labour obligations. Employers in these states are still subject to the Employees' Provident Fund (EPF), Employees' State Insurance (ESIC), Gratuity, Maternity Benefit Act, and other central labour laws.
State / UT Type LWF Status Other Key Labour Obligations Still Apply
Rajasthan State NOT APPLICABLE EPF, ESIC, Gratuity, Maternity Benefit
Uttar Pradesh State NOT APPLICABLE EPF, ESIC, UP Shops & Establishments Act
Bihar State NOT APPLICABLE EPF, ESIC, Factories Act
Jharkhand State NOT APPLICABLE EPF, ESIC, Factories Act
Himachal Pradesh State NOT APPLICABLE EPF, ESIC, HP Shops & Establishments Act
Uttarakhand State NOT APPLICABLE EPF, ESIC, Factories Act
Haryana (note) State APPLICABLE Punjab LWF Act extended to Haryana — monthly contribution
Assam State NOT APPLICABLE EPF, ESIC, Assam Shops & Establishments Act
Nagaland State NOT APPLICABLE EPF, ESIC (where applicable)
Mizoram State NOT APPLICABLE Central Labour Laws
Manipur State NOT APPLICABLE EPF, ESIC (where applicable)
Meghalaya State NOT APPLICABLE Central Labour Laws
Tripura State NOT APPLICABLE EPF, ESIC
Sikkim State NOT APPLICABLE Central Labour Laws
Arunachal Pradesh State NOT APPLICABLE Central Labour Laws
Jammu & Kashmir UT NOT APPLICABLE Central Labour Laws apply post J&K reorganisation
Ladakh UT NOT APPLICABLE Central Labour Laws
Andaman & Nicobar UT NOT APPLICABLE Central Labour Laws
Dadra & NH / Daman & Diu UT NOT APPLICABLE Central Labour Laws
Lakshadweep UT NOT APPLICABLE Central Labour Laws

Benefits Available to Workers Under LWF

Funds collected under the Labour Welfare Fund scheme are disbursed by State Labour Welfare Boards for the following categories of worker benefits.

How to claim: Workers can apply for LWF benefits by submitting a claim application form to the respective State Labour Welfare Fund Board office, or online where available. Workers must be registered under the scheme to be eligible.
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Education Benefits

  • Scholarships for workers' children (Class 1 to postgraduate)
  • Free/subsidised school uniforms and stationery
  • Special scholarships for girl children
  • Coaching assistance for competitive exams
  • Scholarships for technical/vocational education
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Medical Benefits

  • Free medical examination and general treatment
  • Dental care for workers and dependents
  • Monetary compensation for death on duty
  • Funeral/last rites assistance (₹2,000–₹5,000)
  • Special vehicle/wheelchair for disabled workers
  • Maternity benefits and infant welfare support
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Housing Benefits

  • Concessional housing loans for construction
  • Repair and renovation loans at low interest
  • Priority housing in government schemes
  • Assistance for natural disaster-affected workers
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Transport Benefits

  • Financial assistance for purchase of bicycle (₹2,000–₹3,500)
  • Free bus services for mine workers (state-specific)
  • Commuting allowances in some states
  • Assistance for workers' daily travel
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Recreational & Cultural

  • Sports and games facilities at LWF centres
  • Music, dance, drama, and arts programmes
  • Holiday homes and excursion facilities
  • Annual tours and picnic programmes
  • Cultural festivals and celebration events
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Education & Skill Development

  • Reading rooms and libraries
  • Vocational training and skill upgradation programmes
  • Computer literacy programmes
  • Evening classes for working adults
  • Training for home-based industries for women
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Nutritional Support

  • Subsidised canteen facilities at workplaces
  • Nutritious food for workers' children
  • Mid-day meal support programmes
  • Milk schemes for children of workers
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Women-Specific Benefits

  • Home industry and subsidiary occupation support
  • Vocational training for women workers
  • Creche facilities at workplaces (large establishments)
  • Maternity and childcare assistance
  • Self-help group formation and funding
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Financial Assistance

  • Marriage assistance for workers' children (state-specific)
  • Emergency relief during sickness or accident
  • Financial aid for natural calamity victims
  • Death benefit for family of deceased worker
  • Accident insurance linkages

Compliance Process & Penalties

Employer obligations, step-by-step compliance process, and penalties for non-compliance across major LWF states.

Employer Responsibilities: Employers must (1) register the establishment, (2) deduct the employee share from salary, (3) add their own contribution, and (4) remit the total to the Labour Welfare Board before the due date.

📋 Step-by-step Compliance

1

Check Applicability

Visit the state Labour Welfare Board website to confirm if LWF applies to your establishment type, employee count, and location.

2

Register the Establishment

Register within 15–30 days of commencement. Submit PAN, incorporation proof, address proof, employee list, and bank details to the Labour Welfare Board.

3

Identify Applicable Employees

Determine which employees fall within the LWF net — check salary thresholds and designation exclusions as per your state's Act.

4

Calculate Contributions

Compute employee share to be deducted and employer share to be paid on top. Use exact amounts as prescribed by your state's LWF rules.

5

Deduct & Remit on Time

Deduct employee's share from wages on the prescribed date. Add employer contribution. Remit total online via the state LWF portal before submission deadline.

6

File Return

Submit the prescribed return form (Form A, A-1, B, D, F — varies by state) after making payment. Keep payment challan for records.

7

Maintain Records

Preserve payment receipts, challans, and filed returns for a minimum of 3 years for inspection by Labour Department officials.

🔗 State LWF Online Portals

State Portal / Authority

⚠️ Penalties for Non-Compliance

Violation Consequence Details
Late Payment Interest of 1%–3% per month First 3 months: 1% simple interest on unpaid amount. Subsequent months: 2%–3% per month depending on state
Non-Registration Fine ₹500 – ₹5,000 Varies by state Act. Repeat offences attract higher penalties
Non-Deduction of Employee Share Liability falls on employer Employer is still liable to pay the employee's share to the board even if not deducted from salary
Obstruction of Inspector Imprisonment + Fine First offence: Up to 3 months imprisonment or ₹500 fine or both. Repeat: Up to 6 months or ₹1,000 fine or both
Non-filing of Return Fine + possible prosecution Non-submission of prescribed return forms attracts penalty. Most states prescribe ₹1,000–₹5,000 per default
Furnishing False Information Prosecution under LWF Act Criminal liability under the state's LWF Act. Can result in imprisonment and fines.

FAQ & Glossary

Frequently asked questions about Labour Welfare Fund compliance in India, and definitions of key terms used in this report.

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Is LWF deductible for Income Tax?

No. Unlike Professional Tax (which is deductible under Section 16(iii) of the Income Tax Act), LWF contributions are NOT deductible from income for income tax purposes. The employee's LWF contribution is part of their taxable income and cannot be claimed as a deduction. Employer's LWF contribution is, however, deductible as a business expense.
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Is LWF applicable to contract/temporary workers?

This depends on the state's LWF Act. In states like Haryana, LWF explicitly covers contract workers employed by the principal employer. In most states, LWF applies to any worker who is directly engaged, including temporary workers meeting the wage threshold. Part-time workers are excluded in some states (e.g., Maharashtra). Always check the specific state Act definition of "employee."
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What if both PT and LWF apply in the same state?

Both Professional Tax and LWF can apply simultaneously in the same state. For example, Maharashtra, Karnataka, Tamil Nadu, West Bengal, and Gujarat all have both PT and LWF obligations. Employers must comply with both independently — they are separate statutory deductions managed by different authorities and remitted at different frequencies.
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Is there a minimum number of employees threshold?

Yes, in many states. The minimum employee count varies:
  • Maharashtra: Establishments with 5 or more employees
  • Karnataka: Establishments with 50 or more employees (factories)
  • Tamil Nadu: Shops with 5 or more employees
  • Gujarat: Establishments with 10+ workers
Always verify the threshold with the state LWF Act or local Labour Office.
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Can workers claim LWF benefits directly?

Yes. Eligible workers can apply for benefits directly from the State Labour Welfare Board. They must:
  • Be registered under the LWF scheme (via their employer)
  • Fill and submit the relevant claim application form
  • Provide proof of employment, contribution payment, and eligibility for the specific benefit
  • Submit to the nearest LWF Board office or online where available
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Is LWF applicable to WFH / Remote employees?

Generally, LWF applicability follows the state where the establishment (employer's registered office or place of business) is located, not where the employee works from. However, some states are beginning to review this. For employees working from a different state than the employer's registered state, consult a labour law expert. For multi-state employers, comply with each state's LWF rules based on the establishment registered in that state.
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What happens if an employee quits mid-period?

In states with half-yearly or annual deductions, if an employee leaves mid-period, the employer typically deducts and remits the LWF contribution for the period the employee was in service. The employee does not receive a refund of their LWF contribution regardless of leaving employment — contributions once remitted to the Labour Welfare Board are non-refundable.
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Glossary: Labour Welfare Board

A statutory body constituted by each state government under the state's Labour Welfare Fund Act. The Board is responsible for: collecting contributions, maintaining the welfare fund, disbursing benefits to eligible workers, setting up welfare centres, and administering welfare schemes. The Board typically consists of representatives from employers, workers, and the state government.
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Glossary: Principal Employer

Under labour laws, the "principal employer" is the owner or occupier of the factory, the head of any establishment, or any person responsible for the supervision and control of the establishment. Under LWF (especially in states like Haryana), the principal employer is also liable for the LWF contributions of contract workers employed through contractors, in addition to direct employees.
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