PF and ESI for Employers: Registration, Contributions and Monthly Returns

Provident fund and Employees' State Insurance are the two main social security obligations for Indian employers. Both are now part of the Code on Social Security, 2020, though the schemes and portals continue. This guide explains how they work.

When PF Applies

EPF generally applies to establishments employing 20 or more people. Smaller employers can register voluntarily. Once covered, an establishment remains covered even if headcount falls.

PF Contributions

• Employee: 12% of wages, deducted from salary.
• Employer: 12% of wages, of which 8.33% goes to the pension scheme, capped on a ₹15,000 wage.
• Contributions are mandatory on wages up to ₹15,000 a month; many employers contribute on actual wages.
• Administrative and EDLI insurance charges are payable on top.

When ESI Applies

ESI generally applies to establishments with 10 or more employees in areas notified by ESIC, which cover most of India. Employees earning up to ₹21,000 a month are covered.

ESI Contributions

• Employee: 0.75% of gross wages.
• Employer: 3.25% of gross wages.

Registration

1. Register the establishment on the EPFO and ESIC portals, using the company's PAN, incorporation and address documents.
2. Generate or link UANs for employees, and complete Aadhaar-based KYC.
3. Register employees on the ESIC portal to generate insurance numbers.

Monthly Returns

Both PF and ESI contributions are due by the 15th of the following month. PF is paid through an electronic challan-cum-return (ECR), and ESI through the monthly contribution filing on the ESIC portal.

Late Deposit

Late PF deposits attract interest and damages. Late deposit of employees' contributions can also lead to disallowance of the amount as a business deduction. Deducting contributions and not depositing them is treated as a serious offence.

Getting Help

Think Filing registers employers under PF and ESI and handles monthly returns.