PF & ESI Registration
PF & ESI stands for Provident Fund and Employee State Insurance which is a scheme launched by the Government of India to offer medical, monetary, and other benefits to workers. Currently any factor or employment or any establishment that has employed over 10 employees with a minimum salary of Rs. 21,000 has to mandatorily register itself with the ESIC. It is regulated by the Employee State Insurance Corporation which is an autonomous body under the Ministry of Labour and Employment, Government of India.
Book a free consultation
Overview
The Employees’ Provident Fund (EPF) is a savings scheme introduced under Employees’ Provident Fund and Miscellaneous Act, 1952. It is managed by the central board of trustees consisting of the government, employer and employees; it is assisted by The Employees’ Provident Fund Organization. EPFO works under the direct jurisdiction of the government and is managed through the Ministry of Labour and Employment.
EPF is commonly known as PF in India and is a scheme through which a portion of employee’s income is set aside for use during any emergency or post-retirement. The employer and employees deposit a certain percentage towards PF every month. The percentage of money to be deducted from the employee’s salary and percentage to be contributed by the employer is predefined under EPF Act.
ESIC stands for Employee State Insurance Corporation is an autonomous body created by law and is under the control of the Ministry of Labour and Employment, Government of India. It regulates the ESI scheme as per ESI Act of 1948. ESI scheme is set to cater the health and insurance needs of the employees and is funded by the employees and the employer.
Applicability
Employees’ Provident Fund
- Any organization or factory with 20 employees or more needs to get themselves registered under EPF Scheme.
- Establishment with less than 20 employees may get themselves registered voluntarily.
- Employees of an organization, which are already registered under EPF Scheme, are directly eligible for getting their Provident Fund account opened from date of their joining.
- Liability to deduct and deposit EPF arises for all employees with basic wages of Less than INR 15,000 per month,
Employee State Insurance
- All organisations which are listed under Factories Act and Shops and Establishments Act.
- Factories and establishments with atleast 10 employees have to register themselves under ESI schemes.
- Employees earning gross wages not exceeding INR 21000/- per month will be covered to check requirement of ESI registration.
Benefits
Employees’ Provident Fund
- Nearly 8.5% of the employer’s contribution is rendered to the employee pension scheme which would assist in creating good amount for retirement of employees.
- The PF scheme provides a pre-fixed interest on the deposit secured within EPF India
- Earnings made from the EPF are exempt from tax subject to certain conditions.
- The employee can withdraw the amount from the EPF fund during an emergency
Employee State Insurance
- Medical benefits to the employee and his family members.
- Sickness advantages a 70% rate in a salary form if any certified illness exists for a maximum of 91 days in any year.
- Employee’s death during his working period, 90% of the salary is provided to his dependents in the form of the monthly payment post to the employee’s death.
- The maternity advantage to the women who are pregnant is in the form of paid leaves.
- Funeral expenses.
- Identical to the above for the case of the employee’s disability.
- Old age medical care expenses.
List of Documents Required
- Copy of registration certificate or licenses in name of company.
- PAN Card of the Business Entity as well as all the Employees working under the entity.
- Number of Employees and their details
- Primary Business Type of entity.
- A Specimen of Signature.
- Digital Signature.
- Scanned copy of cancelled Cheque.
- Proof of Address of business entity.
- Licence Proof like GST Registration
- Lease deed if Hired/Rented/leased
Process
-
1
Firstly, one account needs to be created in the name of applicant on portal.
-
2
Then click on the tab ‘Under EPF-ESIC Registration’ on right side.
-
3
An application for registration will open and after fill all necessary details submit the application.
-
4
Application can be submitted by DSC or e-signing.
-
5
Registration mail along with your Login Credentials will be sent on your registered Mail-ID.
FAQs
What is the ESI scheme?
The ESI scheme is a comprehensive social security scheme that is designed to accomplish the task of socially protecting the employees in the organized sector against the event of sickness, maternity, disablement, and death due to employment injury.
What is the Salary limit in ESI?
The existing wage limit for coverage under the ESI Act is Rs. 21,000 per month.
Is ESI calculated on basic salary?
The ESI Scheme will be calculated on the gross salary of 21,000 if the salary is above 21,000 the ESI will still be constant.
How does the scheme help the employees?
The scheme provides full medical care to the employee registered under the ESI Act, 1948 during the period of his incapacity, restoration of his health and working capacity. It provides financial assistance to compensate the loss of his/ her wages during the period of his abstention from work due to sickness, maternity and employment injury. The scheme provides medical care to his/her family members also.
Is it mandatory for the Employer to register under the scheme?
Yes, it is the statutory responsibility of the employer under Section 2A of the Act read with Regulation 10-B, to register their Factory/ Establishment under the ESI Act within 15 days from the date of its applicability to them.
Can a factory or establishment once covered go out of coverage if the number of persons employed therein goes down to the minimum limit prescribed?
Once a factory or an Establishment is covered under the Act, it continues to be covered notwithstanding the fact that the number of persons/ coverable employees employed therein at any time falls below the required limit or there is a change in the manufacturing activity.
What are consequences of non / late payment of employees' contribution deducted but not paid?
Any sum deducted by the Principal employer from wages under the ESI Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted as per Section 40 (4) of the ESI Act,1948. Non-payment or delayed payment of the Employee's contribution deducted from the wages of the employee amounts to ' Breach of trust' and is punishable under IPC 406, 409 and also an offence u/s 85 of ESI Act.
Will the delayed payment attract any interest?
An employer who fails to pay the contribution within the limit prescribed under Regulation 31, shall be liable to pay simple interest at the rate of 12% per annum in respect of each day of delay or default in payment of contribution ( Regulation 31-A).
The contribution has been recovered from the wages of the employee but the employer had not paid to the EPF. What is the remedy?
The Employees’ PF Organization will invoke penal provisions of the Act to recover the dues from the employer. Complaint can be lodged with Police under section-406/409 of IPC by the EPFO for action against such employers
Can a member pay contribution in excess of the statutory rate of 12%?
Yes. The member can pay voluntary contribution in excess of his normal contribution of 12% of Rs.15000/-. The total contribution i.e., voluntary + mandatory can be up to Rs.15000/- per month. (The employer may restrict his own share to the statutory rate). The member can also contribute on higher wages i.e., >15000/- after getting permission from APFC/RPFC as per the provisions of para-26(6) of the Scheme.
Is there any time limit for withdrawal of Provident Fund dues?
Only in the case of resignation from service (not superannuation) a member has to wait for a period of two months for withdrawal of the PF amount.
What is contribution rate payable for a member?
At present, an employee contributes 12% of the Basic wages + Dearness allowance + Retaining allowance in EPF. The employer also pays 12% of pay out of which 8.33% of pay is diverted to Pension Fund and the rest 3.67% is diverted to EPF.
Who is not eligible for ESIC registration?
The ESIC scheme does not cover the workers or the employees that earn more than Rs. 21,000 per month and in the case of a person with disabilities, the maximum wage is Rs. 25,000.
Is the family of the employee covered under ESIC?
The employee insured person and the family are entitled to avail of medical benefits from the very first day of his or her joining the insurable employment.
What is the ESI Code number?
The ESI code number is a unique 17-digit identification number allotted to every employee of a factory or establishment registered with the ESIC. The 17 digit number is generated using the ESIC portal after the employer has submitted their employee’s information.
If the wages of an employee exceeds Rs. 21,000 in a month, can he be treated as not covered and deduction of contribution from his wages is stopped?
If the wages of an employee (excluding remuneration for overtime work) exceeds the wage limit prescribed by the Central Government after start of contribution period, he continues to be an employee till the end of that contribution period and the contribution is to be deducted and paid on the total wages earned by him.
What is the time limit for contribution?
Contribution shall be paid in respect of an employee in a bank duly authorized by the Corporation within 15 days of the last day of the calender month in which the contribution falls due for any wage period.
What is the Present Rate of Contribution?
Employer’s contribution: A sum equal to 4.75% of the wages payable to an employee, rounded off to the next higher rupee;
Employee’s contribution: A sum equal to 1.75% of the wages payable to an employee, rounded to the next higher rupee;
Whether an employer can deduct employer’s share of contribution from the wages of employees?
No. It is not permissible. Any such deduction is a criminal offence.
Can the wages be reduced by the employer on account of payment to the EPF?
No. It is specifically barred under section-12 of the EPF & MP Act,1952.
If an employee is drawing more than Rs. 15000/- (Basic + DA only) is he required to become a member of the EPF?
Such employee is not required to become a member, if he is not already holding the PF membership. Otherwise, if both the employer and employee are willing, he can become a member by giving option under Para-26 (6) of the PF Scheme. The option has to be submitted to the EPF office within 6 months of joining of such member.
If an employee is transferred from one establishment to another establishment whether he is required to be enrolled as a member once again?
He is required to be enrolled as a member under the new establishment, for transferring his Provident Fund from his previous account
What is the Universal Account Number?
Universal Account Number (UAN) is a 12 digit number allotted to each subscriber by linking it to the member’s currently active PF account number (from 31/07/2014 to 30/11/2016). From 12/2016 any new member has to be allotted a Universal Account Number linked to the establishment’s code number.
Will my withdrawal be subject to deduction of income tax (TDS)?
In case a member withdraws his EPF and has rendered less than 5 years of service and accumulated amount is more than Rs. 50,000/, TDS shall be applicable on the following rates:-
| Submission of PAN | Non submission of PAN | No TDS deducted in case of |
|---|---|---|
| If 15G/15H is submitted, no TDS is deducted If 15G/15H is not submitted, TDS deducted at 10% |
TDS is deducted at Maximum Marginal Rate (34.606%) | Transfer of Fund Payment of advance Service is terminated by employer beyond control of employee |
