Employee Provident Fund (EPF) and Employee State Insurance (ESI) are crucial components of the Indian employment landscape, designed to safeguard the financial well-being and health of employees. In this article, we will delve into the intricacies of PF and ESI applicability, wage limits, and the process of return filing.
| Sr. No. | Particulars | PF | ESI |
| 1 | Applicability | If there are 20 or more persons employed in a concern | If there are 10 or more persons employed in a concern |
| 2 | Employer Contribution | 12% | 3.25% |
| 3 | Employee Contribution | 12% | 0.75% |
| 4 | Maximum Wage Limit* | INR 15,000 pm | INR 21000 pm (w.e.f. 01.01.2017) |
| 5 | Due date of Payment | 15th of next month | 21st of next month |
| 6 | Due Date of Return | Monthly Return: 25th of every next month
Annual return: 30th April of the following FY |
Half yearly Return:
April-Sep: 12th November Oct-March: 12th May |
*Maximum Wage ceiling limit: This is the maximum salary/ wage limit upto which deduction of PF & ESI by employer is mandatory.
Now, let us understand the Employer and Employee Contribution in detail under different situation as explained below:
| Particulars | Employer’s Contribution | Employee’s Contribution | |||
| Salary | Up to INR 21000 | Above INR 21000 | Up to INR 21000 | Above INR 21000 | |
| If employee is having UAN No | If employee is not having UAN No | ||||
| ESI | 3.25% of Gross Salary | NA | NA | 0.75% Of Gross Salary | NA |
| Particulars | Employer’s Contribution | Employee’s Contribution | |||
| Salary | Below INR 15000 | INR 15000 or above | Below INR 15000 | 15000 or above | |
| If employee is having UAN No | If employee is not having UAN No | If employee is having UAN No** | |||
| PF | Mandatory to deposit at least INR 1800 p.m. (12% on INR 15000), although they can voluntarily contribute more. | Mandatory to deposit at least INR 1800 p.m. (12% on INR 15000), although they can voluntarily contribute more. | PF not to be deposited | Mandatory to deposit at least INR 1800 p.m. (12% on INR 15000), although they can voluntarily contribute more. | Mandatory to deposit at least INR 1800 p.m. (12% on INR 15000), although they can voluntarily contribute more. |
**If an employee with a salary exceeding INR 15,000 does not possess a UAN (Universal Account Number) and the employer is not contributing to the EPF, the employee cannot deposit their share of EPF contributions.
It may be noted that PF cannot be deposited if the employee does not have a UAN, but it does not provide relief to employer from PF deduction and its deposit, if they fall under the statutory limits. In such cases, either the employer or the employee can initiate the process to obtain a UAN for the employee.
Let us understand this with few examples:
Eg.1: Let us say there are 25 employees in a concern out of which 5 employees have salary of INR 22000 p.m. and rest 20 employees have a salary of INR 14000 p.m.
| PARTICULARS | PF | ESI |
| Applicability | Applicable | Applicable |
| Registration | Yes | Yes |
| Deduction | Only on 20 employees having a salary of INR 14,000 pm. For rest 5 employees, it is optional.
Note: A minimum of INR 1800 (15000 * 12%) shall be deposited each by Employer and Employee as minimum Wage Limit is INR 15000 |
Only on 20 employees having a salary of INR 14,000 pm |
Eg.2: Let us say there are 9 employees in a concern all having a salary of INR 2000 p.m.
| PARTICULARS | PF | ESI |
| Applicability | Not Applicable | Not Applicable |
| Registration | No | No |
| Deduction | No | No |
Eg.3: Let us say there are 25 employees in a concern and all employees have a salary of INR 14000 p.m.
| PARTICULARS | PF | ESI |
| Applicability | Applicable | Applicable |
| Registration | Yes | Yes |
| Deduction | On all 25 employees | On all 25 employees |
Eg.4: Let us say there are 25 employees in a concern and 5 employees have salary 30000, out of which 2 employees already have UAN, and rest 20 employees have a salary of INR 14000 p.m.
| PARTICULARS | PF | ESI |
| Applicability | Applicable | Applicable |
| Registration | Yes | Yes |
| Deduction | On 22 (20+2) employees, for rest 3 employees it is voluntary.
Note: A minimum of INR 1800 (15000 * 12%) shall be deposited each by Employer and Employee as minimum Wage Limit is INR 15000 |
On 20 employees having Salary of INR 14000 |
Eg.5: Let us say there are 15 employees in a concern out of which 5 employees have salary of INR 16000 p.m. and rest 10 employees have a salary of INR 14000 p.m.
| PARTICULARS | PF | ESI |
| Applicability | Not Applicable | Applicable |
| Registration | No | Yes |
| Deduction | No | On all 25 employees as all are below INR 21000 |
Conclusion: Applicability of PF & ESI arises as soon as the number of employees reaches the specified limit. But the PF & ESI Contribution has to be deducted by the employer only if the employees have a salary below maximum wage ceiling limit.
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