ESI PF Registration

About Employees State Insurance(ESI)

Applicability for ESI
ESI is regulated by Employees' State Insurance Act, 1948 and Employees' State Insurance (Central) Rules, 1950. ESI scheme applies to all types of establishments, including corporates, factories, restaurants, cinema theatres, offices, medical and other institutions. Such units are called Covered Units.It is a self-financing social security scheme in India.ESI functions as an independent corporation and comes under Ministry of Labor and Employment in India.

What is the criteria for Covered Units
– All units that are covered under Factory Act and Shops and Establishment act are eligible for ESI.
– Where 10 or more people are employed irrespective of their monthly earnings. Note: Some states (such as Gujarat and Punjab) have upper limits on the number of employees for eligibility of the ESI scheme.
– Units which are located in the scheme-implemented areas. The government plans to implement ESI across the entire country by 2022 so all units will be considered as Covered Units.

Eligible Employees

All employees of a covered unit, whose monthly incomes (excluding overtime, bonus, leave encashment) is less then Rs. 21,000 per month, are eligible to avail benefits under the Scheme.

Employees earning daily average wage up to Rs.176 are exempted from ESIC contribution.
However, employers will contribute their share for these employees.

in curx Currently, any factory or establishment employing ten or more persons drawing wages of up to Rs.21,000 per month must obtain ESI registration.

ESIC contribution rates (Reduced w.e.f. 01/07/2019)
Particulars    Current Rate    Reduced Rate
Employer Share    4.75%    3.25%
Employee Share    1.75%    0.75%
Total    6.50%    4.00%

Benifit of ESI Regisration
Employees registered under the ESI scheme are entitled to a range of benefits. Employees and their families can avail medical treatment and attendance including not only medical but surgical and obstetric treatment as well. Supply of medicines, super specialty consultations, etc. can also be availed. Sick pay benefits also included. Thus, it advised for employees to register under ESI scheme.

other benefits are
Medcial benifit: full medical care being provided to the insured and his family after insurable employment.there is no maximum limit of expenditure.Medical care is also being provided to retired and permanently disabled insured persons and their spouses on payment of a token annual premium of Rs.120/-.
Sickness benifit:
Maternity Benefit:Maternity benefit for pregnancy is provided for three months, which is further extended to one month on medical advice at the rate of full wage subject to contribution for minimum 70 days in the preceding year.
Disablement Benefit:
Dependant Benefit: Dependant benefit is paid at the rate of 90% of wage in the form of monthly payment to the dependants of a deceased insured person, in cases death occurs due to employment injury or occupational hazards.
Funeral Expenses: An amount of Rs.10,000/- is payable to the dependents or to the person who performs last rites.
Unemployment Allowance: Under the RGSKY(Rajiv Gandhi Shramik Kalyan Yojana), unemployment allowance is payable to an insured Person who become unemployed after being insured three or more years, due to closure of factory/establishment, retrenchment or permanent invalidity. The applicable unemployment allowances provided are:

Unemployment Allowance equal to 50% of wage for a maximum period of up to one year.
Medical care for self and family from ESI Hospitals/Dispensaries during the period IP receives unemployment allowance.
Vocational Training provided for upgrading skills – Expenditure on fee/travelling allowance borne by ESIC.

About Providend Fund(PF)

PF Registration:To provide financial stability and security to employees when they are temporarily or no longer fit to work, the Parliament enacted the Employee’s Provident Fund Scheme (EPFS) 1952. The central government trust manages these funds, and employees are require to contribute a part of their salary to it every month during their employment tenure.

Companies with more than 20 employees compulsorily have to register under EPFS. but an establishment with less than 20 employees can voluntarily opt for PF registration to protect employee’s benefits.

Due Date for PF Filing with EPFO
The employer before paying the employees salary must deduct the employee’s contribution from his wages. Then the employee portion and employer portion are payable to the EPFO, within 15 days of the close of every month

Who is Eligible for PF?
It is obligatory that employees’ drawing less than Rs 15,000 per month, to become members of the EPF. As per the guidelines in EPF, employee, whose ‘basic pay’ is more than Rs. 15,000 per month, at the time of joining, is not requried to make PF contributions. Nevertheless, an employee who is drawing a pay of more than Rs 15,000 can still become a member and make PF contributions, with the consent of the Employer and Assistant PF Commissioner.

Amount of PF Contribution
The PF contribution paid by the employer is 12% of sum of basic salary,dearness allowance,retaining allowance. An equal contribution is payable by the employee. In case of establishments which engage less than 20 employees or meet certain other conditions, as per the EPFO rules, the contribution rate for both employee and the employer is restricted to 10%. For most employees working in the private sector, it’s the basic salary on which the contribution is calculated.

Employees Pension Scheme
Out of employers’ contribution, 8.33% will be transfered to Employees’ Pension Scheme, which is calculated at Rs 15,000. The amount trasfered to EPS would be Rs. 1250 for employees whose basic pay amounts to Rs 15,000 or more. However, if the basic pay is less than Rs 15000, then 8.33% of such amount would be trasnfered to EPS, the balance will be retained in the EPF scheme. On superannuation, the employee would receive the full share plus the balance of employer’s share reserved for his credit in EPF account.

Breakup of PF Contribution
Employee:

12% into EPF (This comes out of the employees’ salary)

EPF Contribution of Employee and Employer – Rate Break Up

PF contribution rate of employee and employer was defined as per EPF Act and mandatory to follow. Any company over 20 employees is required by law to register with EPFO. This is a retirement benefit scheme that is available to the salaried individuals. This is maintained by the Employees’ Provident Fund Organization of India. In this post you will learn all about Employee Provident Fund (Epf) contribution rate of employee and employer.

Where Does Your EPF Contributions Goes Into:
Pf contributions are made on a monthly basis by both employee and employer.

Currently, the following three schemes are in operation under the EPF Act of 1952.

Your monthly pf contributions are break down into 3 portions and shared among these schemes.

Employees’ Provident Fund Scheme (EPF) (1952)
Employees’ Pension Scheme (EPS) (1995)
Employees’ Deposit Linked Insurance Scheme (EDLI) (1976)
EPF, EPS and EDLIS are calculated on the basis of your Basic + Dearness Allowance (DA). Don’t get confused between epf and eps.

What is Pension Contribution in EPF:
This is most common doubt among employees who contribute to epf scheme. The part of employer contribution to pf account goes in Employees Pension Scheme (EPS) fund. This part of epf contribution is the pension contribution in EPF. So, whenever we talk about eps, it is the pension contribution in pf.

EPF Contribution Breakup of the Employee and Employer:
The breakup of the epf contribution is different for the employee and employer.

An employee’s contribution goes directly into the provident fund account, while the employer’s contribution goes into the provident fund and pension scheme. Here is how it divided:

Related Post:  Epf UAN Activation/ Registration Process: Learn How to Activate UAN Number
epf contribution of employee and employer

Contribution Rate (%)    Employee’s Contribution Rate (%)    Employer’s Contribution Rate (%)
A/c No. 1: PF Contribution Account*           12.00             3.67
A/c No. 2: PF Admin Charges Account                 –             0.50
A/c No. 10: EPS Contribution Account                 –             8.33
A/c No. 21: EDLIS Contribution Account                 –             0.50
Total Contribution           12.00           13.00

Monthly payable amount under EPF Administrative charges is rounded to the nearest rupee and a minimum of Rs 500/- is payable.

Note:- If the establishment has no contributory member in the month, the minimum administrative charge will be Rs 75/-

1. The contributions are payable on maximum wage ceiling of Rs. 15000/-

2. The employee can pay at a higher rate and in such case employer is not under any obligation to pay at such higher rate.

3. To pay contribution on higher wages, a joint request from Employee and employer is required [Para 26(6) of EPF    Scheme]. In such case employer has to pay administrative charges on the higher wages (wages above 15000/-).

4. For an International Worker, wage ceiling of 15000/- is not applicable.