A DETAILED ANALYSIS ON PROVIDENT FUND (PF) AND EMPLOYEE STATE INSURANCE(ESI)
Employees Provident Fund and Employees State Insurance are two social security scheme availably to the working class in India. These are the central government schemes, comes under the jurisdiction of The Ministry of Labour and Employment. Both the schemes introduced with the objective to improve the working class condition. It’s the employer’s duty to register under both the schemes.
Employees Provident Fund is a saving fund that accumulates during the employment tenure of an employee. Its objective is to manage the provident fund of the government and private sector employees, helping them financially on their retirement.
Employees State Insurance is a self- financing social security and health insurance scheme offering medical and disability benefits to the Indian workers. It aims to provide medical and cash benefits to the employees and their families through their large network of offices, hospitals and dispensaries throughout the country.
EPF and ESI focus on undertaking the activities that ultimately provide social security to the members of the fund.
The Provident Scheme applies to every establishment where an establishment consists of different departments or has branches, whether situate in the same place or in different places, all such departments or branches shall be treated as parts of the same establishment, which comprises of employees 20 or more persons and every such employer shall be required to be registered under the EPF on the government website known as “Employee Provident Fund Organization”.
The Employee State Insurance Scheme applies to all factories and other establishment’s viz. Road Transport, Hotels, Restaurants, Cinemas, Newspaper, Shops, and Educational/Medical Institutions wherein 10 or more persons are employed. However, in some States threshold limit for coverage of establishments is still 20. Employees of the aforesaid categories of factories and establishments, drawing wages not more than Rs. 21,000/- a month and every such employer shall be required to be registered under the EPF on the government website known as “Employees’ State Insurance Corporation”
List of documents required for registration under these fund Provident Fund/ Employee State Insurance:
For registration under both funds, almost same documents are required. So, following is an illustrative list of documents for your reference:
1. Shop and establishment Certificate/ GST Certificate/ License issued by the Government for factory/Articles of Association or Memorandum of Association
2. Company incorporation certificate/LLP registration certificate/ Partnership Deed
3. PAN Card of Proprietor/Partner/Director
4. Digital Signature Certificate of Proprietor/Partner/Director etc.
5. Aadhar Card of Proprietor/Partner/Director etc.
6. Cancelled Cheque/Bank Statements of the entity
7. PAN Card of the entity
8. Lease or rent agreement (if applicable)
9. Electricity Bill of the Registered Office (not older than 2 months)
10. Contact number and e-mail address of the entity.
Rate of Percentage to be deducted and deposited
Provident Fund: Employee’s contribution to EPF is 12% of salary whereas Employer’s contribution to EPF is 12% of salary. The definition of salary in respect of calculation of PF is Basic pay plus Dearness Allowance, and any other allowance (like House Rent Allowance, City Compensatory Allowance, Meal Allowance etc.) shall not be included.
Employee State Insurance: Employee’s contribution to ESI is 0.75% of salary whereas Employer’s contribution to ESI is 3.25% of salary. For ESI calculation, the salary comprises of all the monthly payable amounts such as Basic pay, Dearness Allowance, City Compensatory Allowance, House Rent Allowance, Incentives (including sales commission), Attendance and overtime payments, Meal Allowance, Uniform Allowance and Any Other Special Allowances.
Due date for payment of contribution amount
Provident Fund/Employee State Insurance contribution amount is to be deposited before 15th of the month following the month in which deductions are made. That is, ESI contribution for the month of January, is to be deposited on or before the 15th of February. However, Government can extend the due date according to situation if it is necessary to the public interest, as last year due to covid pandemic, government had to extend the due date for two months.
Due date for return filing
The entity that has PF registration have to file return monthly. Hence, the PF return filings are to be completed by the 25th of each month. The entity that has ESI registration have to file return half yearly. The ESI return filings for the period of April to September are to completed by 12th November and for the period October to March are to be completed by the 12th May.