PF & ESI Registration and Returns

What is PF and ESI compliance?

The Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) are India's two main social security schemes for employees. EPF provides retirement savings, pension and insurance; ESI provides medical care and cash benefits during sickness, maternity and injury.

Employers that meet the thresholds must register, deduct employee contributions, add employer contributions, deposit them monthly, and file returns. Both schemes are now covered by the Code on Social Security, 2020, which consolidates the earlier laws.

The key terms

What employers need to know:

EPF applicability

Generally applies to establishments with 20 or more employees; voluntary coverage is possible below that.

PF wage ceiling

Contributions are mandatory on wages up to ₹15,000 a month; employers can contribute on higher wages.

Contribution rates

Generally 12% from the employee and 12% from the employer, with part of the employer's share going to the pension scheme.

UAN

The Universal Account Number that follows an employee across jobs.

ECR

The electronic challan-cum-return filed monthly on the EPFO portal.

ESI applicability

Generally applies to establishments with 10 or more employees in notified areas, for employees earning up to ₹21,000 a month.

ESI rates

0.75% from the employee and 3.25% from the employer, on gross wages.

Why it matters

PF and ESI defaults are expensive:

Interest and damages

Late deposits attract interest and damages that can add up to a large share of the amount due.

Inspections

EPFO and ESIC can inspect records and assess dues for past periods.

Employee benefits

Employees lose insurance and pension benefits if contributions aren't made.

Principal employer liability

You can be liable for contractors who don't pay for their workers.

Tax disallowance

Employee contributions deposited late can be disallowed as a business expense.

Prosecution

Deducting contributions and not depositing them is a serious offence.

Due diligence

Investors and buyers check PF and ESI compliance closely.

Who is this for?

Thresholds, wage ceilings and rates can change under the Code on Social Security; we apply current rules.

PF and ESI compared

The two schemes side by side:

What we'll need from you

Entity documents

Incorporation certificate, PAN and address proof.

Authorised signatory

DSC and KYC details of the signatory.

Employee details

Names, dates of joining, wages, Aadhaar and bank details.

Existing UANs

For employees who had PF with earlier employers.

Contractor details

For businesses using contract labour.

Past records

For regularisation of missed periods.

Registration is quoted as a one-time fee, and monthly returns per employee.

How we handle PF and ESI

From registration to monthly filing:

1. 1

   Check applicability

   We confirm when PF and ESI apply, and whether back-periods are due.

2. 2

   Register

   Establishment registrations are completed on the EPFO and ESIC portals.

3. 3

   Enrol employees

   UANs and ESI numbers are generated or linked, and KYC completed.

4. 4

   Calculate

   Monthly contributions are calculated from payroll.

5. 5

   Deposit and file

   ECRs and ESI returns are filed, and challans paid by the 15th.

6. 6

   Support

   We help with transfers, withdrawals, and inspection queries.

Ongoing compliance

What to keep on top of:

Monthly deadlines

Deposit and file by the 15th, every month.

KYC

Keep employees' Aadhaar, PAN and bank KYC updated.

Exits

Mark dates of exit promptly so employees can withdraw or transfer.

Contractors

Collect proof of contractors' PF and ESI deposits monthly.

Records

Maintain registers and records for inspections.

Rule changes

Track changes under the Code on Social Security.

Benefits and responsibilities