All about Provident Fund (PF) and ESIC (Employee State Insurance Corporation).
We know most of us don't really understand or know much about PF and ESIC so don't worry you are not alone here!!
We'll try our best to let you understand these two schemes.
Do you know what is the funniest thing in this world? Paying for something and not knowing what it is for. Sounds confusing right? Imagine a scenario like this one - Every month, a sum of money is going out of your salary, but you don’t really understand where it is actually going. Business owners and Employees all around the country have been paying for EPF and ESIC with their hard earned money, but more than half of them are clueless about it.
You may have many questions about this, but you’ve probably been too hesitant to ask them. What he heck is that? Am I contributing to this unnecessarily or am i contributing much more than others? When will I be able to get the benefits of this? Are there any current changes in the scheme? So in this light, let’s go over some FAQs about PF and ESI.
What is EPF and ESI?
Before diving deep into anything about the two concepts, you should first know the basics about them. The Employee Provident Fund, popularly known as PF or EPF is a retirement saving scheme that is available to all salaried employees and is backed by the government on which fixed interest is paid. It is important to know that both the employees and employers contribute to the Provident Fund.
The Employee State Insurance Scheme, also known as ESI is a self-financed social security scheme that is made to protect employees who are covered under financial problems arising out of the events of illness, disability or death due to injuries while working.
How do I know if this is applicable to my Company and my Employees?
Previously, any company having 20 employees or more had to be registered under this scheme. But as per the new rules, this limit is now going to be halved. This means that any Firm which has a minimum of 10 employees has to be registered with the Provident Fund.
Whereas, for ESI, all Factories where 10 or more people are employed, are to be registered under ESI Act. It is important for establishments like Shops, Hotels (only engaged in ‘sales’), Cinemas (including preview theaters), Road Motor Transport Establishments, Newspaper establishments, Private Educational Institutions to be registered under ESI scheme.
Whom does the PF and ESI cover?
Any establishment having more than 10 employees and those Employees whose salary is less than Rs. 21000 have to be covered under ESI mandatorily.
As per the rule, in EPF, a fresher whose ‘pay’ (Basic + Dearness Allowance) is less than Rs.15,000 per month at the time of joining, is eligible for EPF and have to mandatorily become members of the EPF.
Establishments with less than 10 Employees can also join EPF if the Employer and Employees want to do so.
How much do I need to contribute? Am I giving more?
As far as the contribution to these two schemes goes, here is the break up for you!
For ESI,
- If you are a business owner, you have to pay 3.25% of your Gross Salary.
- And if you are an employee, you have to pay 0.75% of your Gross Salary.
For PF,
- 12% of the Employees Total Salary (Basic Salary + Dearness Allowance + Retaining Allowance) shall be contributed by the Employer.
- When it comes to the Employees share, an equal contribution of 12% is expected from their salary as well.
How Do I Register For this?
Let’s say you are about to start your own business and are looking to hire people to work for you. It may also be possible that you now have 10 + employees and are now looking at implementing these schemes. Registration for EPF and ESI is a very important process and is a function of having the right documents and following the right steps.
While EPF and ESI is something that benefits the employees more than the business owner, it is the duty of all employers to protect their employees by making these facilities available to them, thus, not only securing their futures, but also giving them the opportunity to get safe returns with great interest.
This ensures that each and every one of your employees has a happy retirement with long term financial security.
Documentation-
- Pan card of the business/owner.
- Aadhar card of owner
- GST registration certificate
- Income Tax Jurisdiction
- Details of authorised Representative
- Number of employees along with their basic details
- Employee's pay slip
Contact Us for PF/ESIC registration,challans,returns and any other matters related there to.
