Applicability of the ESI scheme

 The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries’ monthly wage does not exceed Rs 21,000 are covered under the scheme. Whether the employer has employed 10 or more employees, all employees employed by the employer, agnostic of the salary are reckoned.

The applicability of the scheme is explained through a flow chart below:

Applicability of the ESI scheme

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%

ESIC Return Due Date.

ESIC Return filling and payment can be both done at the same time. Hence, the ESI return due date is the same as that of payment. I.e., on or before 15th of every month.

 Penalty for Delayed Payment

Delayed remittance of ESIC /PF deposit will incur penal damages. The penal charges, as specified by the EPFO, ESIC are as follows:

S. No Time-Period of Delay Rate of Penalty
1 Delay for up to 2 months 5% per annum
2 Delay ranging from 2 months to 4 months 10% per annum
3 Delay ranging from 4 months to 6 months 15% per annum
4 Delay exceeding 6 months 25% per annum (It may correspondingly go up to 100%)

Applicability of EPF Registration for Employers

EPF registration is mandatory for all establishments-

  • Which is a factory engaged in any industry having 20 or more persons, and
  • To any other establishment employing 20 or more persons or class of such establishments which the Central Government may, by notification specify in this behalf.

Central Government may apply any establishment employing less than 20 employees after giving not less than two months’ notice for compulsory registration

Where the employer and majority of employees have agreed that the provisions of this act should be made applicable to the establishment, they may themselves apply to the Central PF Commissioner. The Central PF Commissioner may apply the provisions of this Act to that establishment after passing the notification in the Official Gazette from the date of such agreement or from any subsequent date specified in the agreement.

Some establishments having less than 20 employees would also be required to obtain PF registration but that is voluntary registration. All the employees will be eligible for a PF from the commencement of their employment and the responsibility of deduction & payment of PF lies with the 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.

Documents Required for ESI and PF Registration.

1. Name of the company. (Incorporation Certificate)

2. Company’s PAN (Proprietor’s, in case of proprietorship concern) and Incorporation Certificate.

3. Copy of the licenses available in the name of the company/Firm. (like GST/MSME).

4. Address of the company with address proof.

5. ID, Pan and Address proof of Proprietor / Director / Partner of the company.

6. Email address, Mobile number of Proprietor / Director / Partner of the company.

7. Specimen Signature as per attached format

8. Digital Signature

9. Details of 10 & 20 Employees (10 for ESIC & 20 for EPF) (as per Sheet attached)

10. Consent Letter as per attached format (In case EPF Voluntary Registration)

You may contact the author for further information at 7503206951 or taxwizersconsultant@gmail.com

Disclaimer: The above article is only for information purpose and is on based on the author’s interpretation of the relevant provision. The same should not be considered as professional advice.

Author Bio

Qualification: Graduate
Company: TAXWIZERS CONSULTANT PVT LTD
Location: DELHI, New Delhi, IN
Member Since: 06 May 2019 | Total Posts: 8
FOUNDER- TAXWIZERS CONSULTANT PRIVATE LIMITED View Full Profile

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23 Comments

  1. John Asir says:

    My total Salary is Rs. 18000/-
    Basic+ DA is Rs. 10800/-
    HRA is Rs. 3600/-
    Conveyence is Rs. 3600/-

    Can you explain how much amount company can deduct for PF and ESI?

    1. Raunak Gupta says:

      As your total salary is Rs18000 (i.e. below Rs21000/-, so ESI will not be applicable to you). PF is deducted by employer @12% on your Basic+DA. So, 10800&12%=Rs 1296 PF shall be deducted from your salary (note. Had your Basic + DA above Rs 15000, then a maximum of Rs1800 shall be deducted at the option of employee)

      1. Neeraj Panwar says:

        Mr. Raunak Gupta, for your kind information, if a person earned salary below Rs 21,000, then ESIC will be applicable on it as per ESIC Act.

        Mr.John Asir, as you said that your Basic Salary+DA is 10800, HRA is 3600 and Conveyance Allowance is 3600.
        Now, ESIC is calculated on your Basic Salary+DA+HRA+Conveyance Allowance i.e. 18000. So, your ESIC Contribution is 18000*0.75%(Current Employee’s Contibution Rate) i.e.Rs 135

  2. A.K. VERMA says:

    if an employee get the basic salary 17500 per month. Then EPF will be calculate on which amt. which % or Rs. paid by employer’s give to employee.

    1. Neeraj Panwar says:

      1. EPF is calculated on Basic Salary+DA. As per your question, EPF is calculated on 17500
      2. EPF is calculated on Basic Salary+DA at the rate of 12%(Max. Upto 1800 per month). As per your Question, EPF is calculated on 17500 at the rate of 12% i.e.2100 but you can only contribute upto 1800 per month.

  3. Zankhana Shah says:

    Sir, I have Submission of Authorized Signatory information with respect to the company for claim/returns related matters in EPFOregarding.
    I am logging in to our portal and i have shawn the below message:
    Due to upgrades in eSign services, existing registered eSign signatories have been deactivated. To enable digital signature using design, eSign signatories have to be re-registered. Navigate to Menu >> Establishment >> DSC/ eSign to re-register signatory.
    I am following below process but still not re-register signatory.
    so kindly sugges for the same.

  4. Yadav G says:

    As to receive PF and ESI license, it is required to be 10 or more employees. I wish to know that for how many minimum days the employees are to be employed by the employer.

    As the rule for requiring the labour licence is that if the employer have 10 or more employees for A SINGLE DAY.

    Is there any provision for minimum days to be employment of employees for getting PF and ESI license.

  5. MAHANANDA says:

    R/sir, an establishment has less than 10 employees, but wants to get registered under both ESI & EPF, can it be done.
    I shall be grateful to you, for your help

  6. Shahbaz Mahmood says:

    Dear Sir,

    Kindly help and guide me. I haven’t paid July 2015 monthly contribution and I Got the show notice from ESI Cooperation Asst director.
    After meeting with Asst Director he said to me pay Miscelleonous challan but unable to know how to calculate damages and penalty for that, appreciate if you could help me.

  7. chandan kumar says:

    Dear sir,
    Plz. help me that my co. is registered both ESi and PF. Problem that i want not alloted PF only alloted ESI some employee so possible or not.

  8. GURPREET SINGH says:

    On another website, it is mentioned that Employer’s contribution towards (ESI+PF), including administrative charges comes to 13.61% of the wages. It also mentions that the calculation is to be done on a maximum amount (wages) of Rs. 6,500/-.
    You are requested to kindly confirm whether it is correct. Please also elaborate on why a ceiling of Rs. 6,500/- is provided.

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