States & Union Territories Where LWF Is Not Applicable (2026)
In India, the Labour Welfare Fund (LWF) is governed by state-specific enactments. Because it is not a central legislative scheme, a significant portion of Indian states and Union Territories have either never enacted a Labour Welfare Fund statute or have not established active Labour Welfare Boards or contribution enforcement rules.
For establishments and employees operating within these jurisdictions, no LWF deductions are required, and employer contributions are 100% exempt.
🚫 Comprehensive Roster of Non-Applicable Jurisdictions
The following 21 States and Union Territories do not enforce Labour Welfare Fund contributions as of 2026:
| Northern & Western Region | Eastern & Central Region | North-Eastern Region | Union Territories |
|---|---|---|---|
| Uttar Pradesh | Bihar | Assam | Andaman & Nicobar Islands |
| Rajasthan | Jharkhand | Arunachal Pradesh | Dadra & Nagar Haveli and Daman & Diu |
| Himachal Pradesh | Uttarakhand | Manipur | Ladakh |
| Jammu & Kashmir | Meghalaya | Lakshadweep | |
| Mizoram | Puducherry | ||
| Nagaland | |||
| Sikkim | |||
| Tripura |
🔍 Statutory Breakdown of Major Non-LWF States
1. Uttar Pradesh
- Statutory Status: The Uttar Pradesh Labour Welfare Fund Act, 1956 was legislated primarily for managing housing and recreation for select factory establishments, but no mandatory periodic payroll contribution scheme (employee/employer matching deduction) is enforced for private commercial establishments or IT companies.
- Payroll Rule: Set LWF employee and employer share to ₹0.00.
2. Rajasthan
- Statutory Status: Rajasthan has not framed mandatory payroll deduction rules under any operational state labour welfare fund act.
- Payroll Rule: Set LWF employee and employer share to ₹0.00.
3. Bihar & Jharkhand
- Statutory Status: Both Bihar and Jharkhand (post-reorganization) operate without an active tripartite monthly, half-yearly, or annual LWF payroll deduction levy.
- Payroll Rule: Set LWF employee and employer share to ₹0.00.
4. Uttarakhand & Himachal Pradesh
- Statutory Status: Neither Himalayan state requires commercial establishments or shops to deduct or remit LWF contributions.
- Payroll Rule: Set LWF employee and employer share to ₹0.00.
5. North-Eastern States (Assam, Meghalaya, Tripura, etc.)
- Statutory Status: With the exception of specialized statutory tea plantation welfare cess funds in Assam (which are levied on production tonnage, not employee salaries), general commercial and industrial employers do not deduct LWF from staff wages.
- Payroll Rule: Set LWF employee and employer share to ₹0.00.
📋 Compliance Checklist for Multi-State Employers
- State-Level Payroll Configuration: Ensure payroll software configures LWF rules strictly based on the state of employment / branch location where the employee is deployed on muster roll.
- Transfer of Employees: If an employee is transferred from an applicable state (e.g., Maharashtra or Karnataka) to a non-applicable state (e.g., Uttar Pradesh or Rajasthan), update their statutory profile immediately to cease future LWF deductions.
- Audit Readiness: For tax and statutory audits, document that non-deduction in these territories is based on the absence of state-notified contribution rules.
❓ Frequently Asked Questions (FAQs)
Is LWF applicable for an IT company located in Noida (Uttar Pradesh)?
No. Noida falls under Uttar Pradesh, where no statutory LWF deduction is enforced on commercial or IT/ITeS establishments.
Is LWF applicable in Jaipur (Rajasthan)?
No. Establishments and employees in Rajasthan are completely exempt from LWF payroll deductions.
If an employee works remotely from Bihar for a Mumbai company, is LWF deducted?
Statutory deductions are governed by the establishment's registered location where the employee is maintained on the statutory muster roll. If the employee is on the Mumbai office muster roll, Maharashtra LWF (MLWF) applies. If they are formally transferred to a registered establishment in Bihar, LWF ceases.