This document describes the rules for ESI and PF Deduction where ESI is Employee State Insurance (ESI) and PF is Provident Fund (PF). These are two social security schemes available to employees working in India.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.There is significant information available on the web and even on the government websites, but that is often contradictory, confusing, poorly written or sometimes even wrong or misleading.This blog explains both schemes and describes the Rules of ESI and PF Deduction in detail, is updated whenever there are changes, and helps you implement Best Practices of Payroll Processing in your Organization.
ESICis 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.The scheme is managed by Employees’ State Insurance Corporation, a government entity, that is a self-financing, social security, and labor welfare organization.
The ESI Scheme aims to provide hassle free services to both employers and employees through its information portal and services portal. As part of this effort, all compliance and payments are covered through internet. Employers can remit monthly contributions through portal. Presently, the online payment is enabled for SBI account holders having net banking facility.
There is a receipt that is generated when the payments are made by an employee. It is important to know about the different aspects of the challan as this helps give clarity to you about your payments. It is best to know what the data represents.
If you have seen the PF challan, you may have some questions about what those fields actually stand for and how they are to be filled. What follows is an explanation of these fields and the data they represent.
Particulars are the table where all the various amounts are mentioned in front of the appropriate heading.
As you know, the Employee Provident Fund (EPF) is a scheme that has been put in place to help employees create some savings throughout the duration of their service years. This scheme requires that employees and employers contribute a specific sum towards PF. For the employee it is not a matter of concern since the employers are tasked with deducting and depositing said amounts in EPF accounts but if you are an employer then you will need to know how to understand the receipt that is generated when the payments are made. It may look rather confusing at first glance but it is actually very easy to understand it.