Labour Welfare Fund in Karnataka, Rates and Due Dates 2026

Last updated: 16 October 2026

Quick Answer: Karnataka Labour Welfare Fund contribution is ₹50 from the employee and ₹100 from the employer, payable on or before 15 January. The employer remits both shares, ₹150 per employee, and the State Government adds ₹50 separately. Section 7A(2) counts every employee on the establishment register on 31 December.

Karnataka runs an annual cycle, not a half-yearly one, and the Act was amended twice in two years. Both amendments came through the State Legislature rather than a notification, so the current position sits in the amended text of the Karnataka Labour Welfare Fund Act, 1965. The table below is the operative position for the contribution year ending 31 December 2026.

What Is the Karnataka Labour Welfare Fund Contribution Rate in 2026?

The employee pays ₹50 and the employer pays ₹100, for each employee, once a year. The State Government adds a third share of ₹50, which it pays itself rather than through the employer.

Section 7A(2) sets all three figures in one phrase, which is why they always move together. Karnataka Act No. 05 of 2025 substituted the words "fifty rupees, one hundred rupees and fifty rupees" for "twenty rupees, forty rupees and twenty rupees" in that sub-section. It received the Governor's assent on 8 January 2025 and was first published in the Karnataka Gazette Extraordinary on 10 January 2025, with effect at once.

Which Rates Are Now Out of Date?

Three sets of figures are still in circulation, and two of them are stale by a full amendment each.

Does the Employer Pay the State Government's ₹50?

No. Section 7A(1) makes the employer's, the employee's and the State Government's contributions payable respectively by the employer, the employee and the State Government. Section 7A(3) then requires the employer to pay only the employer's and the employee's shares to the Board. The employer's remittance is therefore ₹150 per employee, and the ₹50 government share is paid by the State Government itself.

When Is the Karnataka Labour Welfare Fund Due?

On or before 15 January of the year following the contribution year. Section 7A(3) uses the words "on or before", so the fifteenth itself is still within time.

Why Does 31 December Matter More Than 15 January?

Liability is fixed earlier than payment. Section 7A(2) charges a contribution for every employee whose name stands in the register of the establishment on 31 December of the contribution year. The register position on that single date governs, not the headcount averaged over the year and not the payroll month in which a deduction was processed.

For the calendar year 2025, the Board gave 15 January 2026 as the last date for payment. The same pattern applies to the year ending 31 December 2026, which falls due on or before 15 January 2027.

Who Must Pay Labour Welfare Fund Contribution in Karnataka?

Every establishment inside the section 2(4) definition, which is wider than most employers assume and which carries a headcount test on only one of its four limbs.

An establishment of the Central Government or any State Government is excluded, but read where that carve-out sits: it is inside sub-clause (iii) alone. It therefore does not reach a government motor omnibus service under limb (ii), or a government plantation or workshop under limb (iv), and those remain covered.

What Changed on 7 January 2026?

The threshold on the third limb fell from fifty to ten. Karnataka Act No. 05 of 2026 substituted the words "ten or more persons" for "more than fifty persons" in section 2(4)(iii). It received the Governor's assent on 6 January 2026 and was first published in the Karnataka Gazette Extraordinary on 7 January 2026, with effect at once.

Confirm the obligation for the year ending 31 December 2026 if your Karnataka headcount sits anywhere between ten and fifty, and register the establishment if it is not already on the Board's rolls. LexComply's registration support covers State labour registrations of this kind.

Does the Ten-Person Test Apply to a Factory?

No. The test sits inside sub-clause (iii) and nowhere else. A factory under section 2(4)(i), a motor omnibus service under section 2(4)(ii) and a plantation or workshop under section 2(4)(iv) are covered with no minimum headcount at all. A small factory in Karnataka contributes, while a nine-person software office that has never reached ten persons does not.

How Is the Karnataka Labour Welfare Fund Return Filed?

The employer files the annual statement in Form D, prescribed under the Karnataka Labour Welfare Fund Rules, 1968, and pays the two shares with it. Both steps carry the same 15 January date.

1. Take the establishment register as it stood on 31 December and count every name on it.
2. Deduct ₹50 from each of those employees and add ₹100 of the establishment's own money for each.
3. Remit the total through one of the channels now named in section 7A(3).
4. File the Form D statement for the same contribution year on or before 15 January.

Which Payment Channels Are Now Permitted?

Section 7A(3) was rewritten in the same 2026 amendment. The words "cheque or by crossed demand draft" were replaced with "online payment channels i.e., Net banking or National Electronic Funds Transfer (NEFT) or Real Time Gross Settlement (RTGS) or Unified Payments Interface (UPI) or demand draft".

Where Does the Employee's ₹50 Come From?

The December payroll, and in Karnataka that is a statutory requirement rather than a convention. Section 7A(4) permits the employee's contribution to be deducted from the wages for December only, and a deduction from any other month's wages needs the prior written permission of an Inspector appointed under the Act.

The practical consequence is a diary note, not a payroll preference. An employer that misses the December deduction cannot simply take it in January: it must either obtain that written permission first or carry the employee's ₹50 itself, because it still owes the Board both shares by 15 January. Payroll teams that run Karnataka alongside other States should check this against the statutory deduction cycle for the rest of the payroll, which does not share the Labour Welfare Fund calendar.

What Does a Late Karnataka Payment Cost?

Interest, and then recovery as a revenue arrear. The sequence in section 7B matters more than the rate, because interest does not begin on 16 January.

Section 7B(1) provides that where an employer does not pay the contribution within the time required, the Welfare Commissioner may cause a notice to be served requiring payment within a period specified in it. That period "shall not be more than thirty days from the date of service of such notice". Section 7B(2) then charges simple interest only if the employer fails to pay within the period specified in the notice.

What Else Can Follow?

Two things, and they are separate from interest. Section 17 makes any sum payable into the Fund recoverable on behalf of the Board as an arrear of land revenue, without prejudice to any other mode of recovery. Section 17B makes a wilful contravention of the Act an offence, and section 17C bars any court from taking cognizance of it except on a complaint filed by an Inspector with the previous sanction of the Welfare Commissioner.

A single-State employer can hold this in a spreadsheet. A multi-State employer cannot, because Karnataka's annual 15 January date, its 31 December register cut-off and its ten-person threshold are set by its own enactment and are not shared conventions. LexComply gives each State obligation a named owner, a due date and a document trail, lists the Central and State Acts it tracks, and its labour-law assistant answers the applicability question for a specific establishment. For employers tracking several jurisdictions at once, the same discipline applies to due dates that move during the year.

Common Mistakes to Avoid

• Using ₹20 and ₹40, or the older ₹6 and ₹12. Section 7A(2) has read "fifty rupees, one hundred rupees and fifty rupees" since Karnataka Act No. 05 of 2025 took effect on 10 January 2025. The ₹20 figures are the exact words that amendment removed.
• Applying the fifty-person threshold. Section 2(4)(iii) now reads "ten or more persons", substituted for "more than fifty persons" with effect from 7 January 2026. An establishment of exactly ten is caught, where one of exactly fifty previously was not.
• Running the headcount test over a factory or a plantation. The test lives only in section 2(4)(iii). Sub-clauses (i), (ii) and (iv) carry no minimum, so a factory of five contributes.
• Charging by the payroll month instead of the register date. Section 7A(2) charges for every employee whose name stands in the register on 31 December. Joiners after that date are outside the contribution year.
• Deducting the employee's ₹50 from a month other than December. Section 7A(4) confines the deduction to December's wages unless an Inspector has given prior written permission. The payroll month is prescribed, not chosen.
• Starting interest on 16 January. Section 7B(2) runs interest from the end of the period specified in the Welfare Commissioner's notice, and section 7B(1) caps that period at not more than thirty days from service.

Legal Disclaimer

This article is general information on the Karnataka Labour Welfare Fund Act, 1965 and the amendments made to it, and it is not legal advice. Confirm the position for your own establishment with a qualified professional or with the Welfare Commissioner before acting on it.