Employees Provident Fund
Employees Provident Fund [EPF] is a scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. It is one of the most beneficial investment methods for salaried employee for their retirement benefits.
1. For every factory engaged in any industry employing 20 or more employees,
2. For every other establishment having 20 or more employees during previous year, for which the government may specify on this behalf.
The employer must should get itself registered within 1 month of attaining the strength, else penalties will be applicable. Central Government may apply the provisions to any establishment employing less than 20 employees after giving not less than two months’ notice for compulsory registration.
The employer’s contribution is 12% of basic salary.
Special 10% Deduction for following establishments: –
1. If the establishment has employed less than 20 employees
2. Any sick industrial company and which has been declared as such by the Board for Industrial and Financial Reconstruction
3. Any establishment which has at the end of any financial year, accumulated losses equal to or exceeding its entire net worth and
Any establishment in following industries: –
4. Guar gum Factories.
For PF contribution, the salary comprises of fewer components:
1. Basic wages,
2. Dearness Allowances (DA),
3. Conveyance allowance and
4. Special allowance.
|Contribution Rate (%)
||Employee’s Contribution Rate (%)
||Employer’s Contribution Rate (%)
A/c No. 1: PF Contribution Account*
A/c No. 2: PF Admin Charges Account
|A/c No. 10: EPS Contribution Account
|A/c No. 21: EDLIS (Deposit Insurance) Contribution Account
Monthly payable amount under EPF Administrative charges is rounded to the nearest rupee and a minimum of Rs 500/- is payable.
Note: – If the establishment has no contributory member in the month, the minimum administrative charge will be Rs 75/-
” The Government of India will pay the employer and employee contribution to EPF account of employees for another three months from June to August 2020. The benefit is for establishments with up to 100 employees and where 90% of those employees draw a salary of less than Rs 15,000 per month. The contribution to EPF is reduced to 10% from 12% for non-government organizations. “
Employee State Insurance
ESI is for Employee State Insurance managed by the Employee State Insurance Corporation which is a body created by the law under the Ministry of Labour and Employment, Government of India.
Any Company having more than 10 employees (some states like Maharashtra, Madhya Pradesh, Chandigarh etc. have limit of 20) who have a maximum salary of Rs. 21000/- has to mandatorily register itself with the ESIC.
Under this scheme, the employer needs to contribute an amount of 3.25% of the total monthly salary payable to the employee whereas the employer needs to contribute only 0.75% of his monthly salary every month of the year.
For ESI calculation, the salary comprises of all the monthly payable amounts such as
1. Basic pay,
2. Dearness allowance,
3. City compensatory allowance,
4. House Rent Allowance (HRA),
5. Incentives (including sales commissions),
6. Attendance and overtime payments,
7. Meal allowance,
The gross monthly salary, however, does not include Annual bonus (such as Diwali bonus), Retrenchment compensation, and Encashment of leave and gratuity.
Earlier registration under EPF and ESIC was done separately which is now segregated by EPFO by creating “Common Registration Under (EPFO & ESIC)” which directly opens another tab for single common registration of EPF & ESIC.
Documents required for ESIC/EPF Registration
1. A registration certificate obtained either under the:
a. Factories Act
b. Shops and Establishment Act
2. PAN Card of the Business Entity as well as all the Employees/Partner/Director/Proprietor
3. Copy of the licenses available in the name of the company/Firm. (like GST/MSME).
4. Memorandum of Association and Articles of Association of the Company/Society/Trust
5. Copy of the licenses available in the name of the company/Firm. (like GST/MSME).
6. A list of all the employees working in the Establishment
7. Email address, Mobile number of Proprietor / Director / Partner of the company.
8. A cancelled cheque of the Bank Account of the Company/Firm/Society/Trust.
9. Digital Signature
10. Specimen Signature as per attached format
11. Consent Letter as per attached format (In case EPF Voluntary Registration)
How many returns are filed every year after the registration is finalized?
|Period of Return
||Due Date of Filing of Return
April to September
October to March
Provident Fund (PF) payments are due on the 15th of each month.
Provident fund return must be filed by all entities having PF registration every month. PF return is due on the 25th of each month. Further, a final PF return is due on the 25th of April for the year ended on 31st March
Interest for Delayed Payments for ESI/EPF
The ESI payment interest is 12% for each day of delay in payment.
The person who fails to complete the payment within the given deadline shall be responsible for paying 12% per year interest for each day he has delayed.
Penalty for Delayed Payments for ESI/EPF
||Time-Period of Delay
||Rate of Penalty
|Delay for up to 2 months
||5% per annum
|Delay ranging from 2 months to 4 months
||10% per annum
||Delay ranging from 4 months to 6 months
||15% per annum
||Delay exceeding 6 months
||25% per annum (It may correspondingly go up to 100%)
Further, to promote the timely payment of ESI and PF to employees’ accounts, the income tax act also provides for disallowance of PF and ESI deposited after the due date. Accordingly, employers shall not get the deduction of EPF or ESI deposited after the due date under Income tax and they will end up paying income tax on it.
” In a relief to establishments registered with Employees’ Provident Fund Organization (EPFO) but not qualified for benefits under Pradhan Mantri Garib Kalyan Yojana (PMGKY), the government on Friday said their deferred remittances of statutory contributions towards EPF for three months starting March will not attract penalty. However, the interest part will remain. “
Frequently Asked Questions