PF & ESIC Registration and Filing – Full Details & Advisory (India)

1. Overview

Provident Fund (PF) and Employees’ State Insurance (ESIC) are statutory social security schemes governed by the Government of India to protect employees’ financial and medical welfare.

Scheme	Governing Act
Provident Fund (PF)	Employees’ Provident Funds & Miscellaneous Provisions Act, 1952
ESIC	Employees’ State Insurance Act, 1948

 

2. Applicability

A. Provident Fund (PF)

Mandatory if:

• Establishment employs 20 or more employees

• Applies to factories and notified establishments

• Once applicable, continues even if employee count falls below 20

Employee Coverage:

• All employees drawing Basic + DA ≤ ₹15,000/month

• Employees above ₹15,000 can be covered voluntarily

 

B. ESIC

Mandatory if:

• Establishment employs 10 or more employees
  (20 in some states)

Employee Coverage:

• Employees earning Gross Salary ≤ ₹21,000/month

• ₹25,000/month for persons with disability

 

3. Registration Process

A. PF Registration

Authority: EPFO
Timeline: Within 30 days of applicability

Documents Required:

• PAN of establishment

• Certificate of Incorporation / Partnership Deed

• Address proof of establishment

• Bank details (cancelled cheque)

• Digital Signature (DSC)

• Details of Directors/Partners

Output:

• PF Establishment Code

• Online PF login credentials

 

B. ESIC Registration

Authority: ESIC
Timeline: Within 15 days of applicability

Documents Required:

• PAN of establishment

• Address proof

• Bank details

• Employee details

• Digital Signature

Output:

• 17-digit ESIC Registration Number

 

4. Monthly Contributions

A. PF Contribution Structure

Contributor	Rate
Employer	12% of Basic + DA
Employee	12% of Basic + DA

Employer’s 12% split:

• EPF: 3.67%

• EPS: 8.33%

 

B. ESIC Contribution Structure

Contributor	Rate
Employer	3.25% of Gross Salary
Employee	0.75% of Gross Salary

 

5. Monthly Filing & Payment

A. PF Filing

Due Date:

• 15th of the following month

Compliance Steps:

1. Prepare monthly salary data

2. Generate ECR (Electronic Challan-cum-Return)

3. Upload ECR on EPFO portal

4. Pay challan online

5. Distribute UAN to employees

 

B. ESIC Filing

Due Date:

• 15th of the following month

Compliance Steps:

1. Upload monthly contribution details

2. Generate challan

3. Make online payment

4. Ensure employee IP numbers are active

 

6. Returns & Records

Scheme	Return Type	Frequency
PF	ECR	Monthly
ESIC	Contribution	Monthly
ESIC	Half-yearly return	Apr–Sep / Oct–Mar

Records to Maintain:

• Attendance registers

• Wage registers

• Employee joining & exit records

 

7. Employee Benefits

PF Benefits

• Retirement corpus

• Pension (EPS)

• Partial withdrawals (housing, medical, education)

• Tax benefits under Income Tax Act

ESIC Benefits

• Medical care for employee & family

• Sickness benefit

• Maternity benefit

• Disablement benefit

• Dependents’ benefit

 

8. Penalties for Non-Compliance

PF Penalties

• Interest: 12% p.a.

• Damages: 5%–25%

• Prosecution in severe cases

ESIC Penalties

• Interest: 12% p.a.

• Penalty up to ₹5,000 per day

• Imprisonment for serious violations

 

9. Advisory & Best Practices

✔ Register immediately once applicable
✔ Ensure accurate salary structuring
✔ Reconcile payroll vs statutory filings monthly
✔ Track employee salary thresholds
✔ Conduct periodic compliance audits
✔ Maintain proper documentation for inspections

 

10. Who Should Handle Compliance

• Small organizations: CA / Payroll Consultant

• Medium to large organizations: In-house HR & Payroll team

• Outsourced payroll service providers

 

Conclusion

PF & ESIC compliance is mandatory, continuous, and closely monitored by authorities. Timely registration, correct wage calculation, and on-time filing are essential to avoid penalties and ensure employee welfare.

Additional Important Information – PF & ESIC

 

1. Voluntary Coverage & Special Cases

PF

• Employees earning above ₹15,000 can be covered only with joint consent (employer + employee).

• Once covered, PF cannot be withdrawn just because salary increases.

• International Workers (expatriates) have no salary ceiling for PF unless exempted by SSA countries.

ESIC

• Once an employee is covered, they continue to be covered till the end of the contribution period, even if salary exceeds ₹21,000 later.

• Employees joining mid-period are covered immediately if salary ≤ threshold.

 

2. Contribution Period vs Benefit Period (ESIC)

Contribution Period	Benefit Period
Apr – Sep	Jan – Jun (next year)
Oct – Mar	Jul – Dec (next year)

👉 This is important for eligibility of medical & cash benefits.

 

3. Wage Components – What to Include

PF – Included Wages

✔ Basic Salary
✔ Dearness Allowance
✔ Retaining Allowance

❌ HRA
❌ Bonus
❌ Overtime
❌ Leave Encashment

⚠️ Important Supreme Court rulings say:

• Allowances that are fixed, universal, and not performance-linked may attract PF.

 

ESIC – Included Wages

✔ Basic
✔ DA
✔ HRA
✔ Overtime
✔ Incentives

❌ Washing allowance
❌ Annual bonus
❌ Gratuity
❌ Retrenchment compensation

 

4. Inspection & Audit Readiness

Authorities can inspect for:

• Correct employee coverage

• Proper wage breakup

• Salary registers vs challans

• Contractor compliance

Best Practice:

• Keep 6–8 years of records ready

• Ensure contractor PF & ESIC challans are collected monthly

 

5. Contract Labour Compliance

If contractors are engaged:

• Principal Employer is ultimately responsible

• PF & ESIC must be deducted even if contractor defaults

• Agreement should clearly mention statutory compliance

 

6. Common Mistakes to Avoid

❌ Artificially splitting salary to reduce PF
❌ Missing joining / exit dates in portals
❌ Wrong UAN linking
❌ Delayed challan payment
❌ Not covering eligible employees from Day 1

 

7. Interest, Damages & Relief

PF Damages (Sec 14B)

Delay Period	Damages
< 2 months	5%
2–4 months	10%
4–6 months	15%
> 6 months	25%

👉 Waiver possible under rehabilitation or BIFR cases.

 

8. Exit & Settlement

PF

• Exit must be updated by employer

• Online claim through UAN

• Auto-settlement available for limited amounts

ESIC

• Benefits continue during benefit period

• IP number remains valid lifelong

 

9. Digital Compliance Tips

✔ Regularly check EPFO / ESIC notices
✔ Keep DSC active
✔ Reconcile payroll vs challan amount
✔ Track UAN seeding with Aadhaar & PAN

 

10. Future-Proofing Compliance

• PF wage definition becoming stricter

• Higher inspection focus on allowances

• Unified labour codes may change thresholds & rates

 

Professional Advisory Note

PF & ESIC should be treated as risk-based compliances, not routine filings. One inspection can create multi-year liability if wage structuring or coverage is incorrect.

PF & ESIC – Advanced Add-On Pack

 

1️⃣ Advanced FAQ (Client / Management Ready)

Q1. Can PF be restricted to ₹15,000?
✔ Yes, if employee joins at or below ₹15,000 and policy is consistent.
⚠ Cannot reduce later if already on higher wages.

Q2. Is PF mandatory on all allowances?
✔ If allowance is fixed, paid monthly, and common to all, PF may apply.

Q3. Can ESIC be avoided by salary restructuring?
❌ No. ESIC is calculated on gross wages, not just basic.

Q4. What if PF/ESIC was missed in earlier months?
✔ Registration + back payment + interest & damages apply.

Q5. Is consent required for PF deduction?
❌ No consent required once employee is eligible.

 

2️⃣ Inspection Handling Guide (Very Important)

When Inspector Visits

Authorities may check:

• Muster roll & attendance

• Salary register

• PF / ESIC challans

• Appointment letters

• Contractor records

Do’s

✔ Cooperate politely
✔ Provide records in writing
✔ Take acknowledgement of submissions
✔ Involve CA / Consultant immediately

Don’ts

❌ Do not give verbal commitments
❌ Do not submit incorrect data
❌ Do not ignore notice deadlines

📌 Tip: Inspections often lead to 5–7 years of retrospective demand.

 

3️⃣ Sample Salary Structure (Compliance Friendly)

PF-Optimized Structure (Example – ₹30,000 CTC)

Component	Amount
Basic	15,000
HRA	7,500
Special Allowance	6,200
Employer PF	1,800
Total	30,000

✔ PF limited
✔ ESIC not applicable if salary > ₹21,000

 

ESIC Applicable Structure (₹18,000 Gross)

Component	Amount
Basic	8,000
HRA	4,000
Conveyance	2,000
Other Allowance	4,000
Gross	18,000

✔ ESIC mandatory
✔ PF mandatory

 

4️⃣ Impact of New Labour Codes (Future Readiness)

📌 Expected Changes

• Wider wage definition

• Fewer allowances excluded

• Higher PF contribution base

• Unified registration portals

📌 Risk Areas

• Companies with low basic salary

• High allowance structures

• Contractor-heavy payrolls

📌 Action Plan
✔ Review salary structures now
✔ Maintain allowance justification
✔ Align appointment letters with payroll

 

5️⃣ Quick Compliance Checklist (Monthly)

✔ New joinees added
✔ Exit dates updated
✔ PF ECR uploaded
✔ ESIC challan paid
✔ Contractor challans collected
✔ Payroll vs challan reconciled

 

6️⃣ Professional Advisory Disclaimer (Use in Reports)

PF & ESIC liabilities are statutory and may arise retrospectively based on inspections, judicial rulings, or wage reinterpretation. Management must treat compliance as a risk-control function, not a routine filing.