Rules Of Calculation of EPF & ESIC of Employees & Employers Contribution

 Rules Of Calculation of EPF & ESIC of Employees & Employers Contribution

What is Mean by EPF?

Employees’ Provident Fund is a small saving scheme that is offered to Indian workers as well as international workers through the EPFO of India. The scheme allows the accumulation of funds as well as an accrual of interest on the accumulated funds. The funds thus collected are made of contributions partly from employees and partly from their employers.

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. 

This document describes the rules for ESI and PF Deduction where ESI is Employee State Insurance (ESI) and PF is the Provident Fund (PF).

We have often found that Payroll administrators face challenges in identifying the most updated standards in these 2 areas – leading to wrong deductions and deposits, queries from government departments, the dreaded scrutiny, and even fines.

ESI Scheme :

  

ESI is full form is Employees’ State Insurance ESI is a contributory fund that enables Indian employees to participate in a self-financed, healthcare insurance fund with contributions from both the employee and their employer.

ESI is one of the most popular integrated need-based social insurance schemes among employees. The scheme protects employee interest in uncertain events such as temporary or permanent physical disability, sickness, maternity, injury during employment, and more.

Eligibility for ESI:

ESI is Eligibility for all Types of Establishment, all Corporate Industry, offices, and Medical, etc 

 Such units are called Covered Units.

How to Recognized the eligibility of  Employees?

All employees of a covered unit, whose monthly incomes does not exceed Rs. 21,000 per month, are eligible to avail benefits under the Scheme.

Collection of ESI Contribution:

It is the employer's responsibility to contribute to the ESI fund by deducting the employees’ contribution from wages and combining it with their own contribution.

An employer is expected to deposit the combined contributions within 15 days of the last day of the Calendar month.

Rules related to Employee Provident Fund (EPF):

Just like the ESI scheme, the Employees Provident Fund (EPF) is a Contributory fund with contributions from both the employee and their employers.

While the focus of the ESI scheme is healthcare, Provident Fund is focused on post Retirement Income and Benefits.

EPF is a compulsory and contributory fund for Indian organizations under “The Employees’ Provident Fund and Miscellaneous Provisions Act 1952”.