The Government of Karnataka vide its Notification No. DPAL 60 SHASANA 2024 has changed the Labour Welfare Fund (LWF) annual contribution payable for Calendar year 2025. The LWF deductions and remittance shall be implemented by employers no later than 15 January 2026. The new rates would be applicable to all eligible employers as per the Karnataka Labour Welfare Fund Act, 1965.

Key Impacts:

1. More expensive for employers to fund the LWF, due an increased employer’s annual contribution amount.

2. All factories, plantations, workshops, motor buses, rental service establishments with power employing 10 or more employees and without power 20 or more employees.

3. It applicable on contract labour act employing 20 or more contract labour and 50 or more employees in shop and establishment under Karnataka shop and establishment act 1961.

4. Employee deduction amendment as Payroll software includes changes to the LWF employee expenses for 2025.

5. Contribution from employee is Rs. 50 and for employer is Rs. 150 through online payment.

6. Compulsory change, meaning establishments must apply the revised rates to their payroll and HR systems before they run payroll for December 2025/January 2026.

7. Time-sensitive remittance, the new LWF amount needs to be paid by 15 January 2026, so prompt action is needed.

8. Penalty risk if the new structure is not applied by establishments or if they pay less.

9. Record updating Changes should be made in LWF challans and registers, revised one of which you submitted to us.

Revised Annual LWF Contribution in Karnataka