Annual EPF And ESIC Compliances – Semantic Taxgen Pvt Ltd
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Annual EPF And ESIC Compliances

Annual EPF and ESIC Compliances

To give after-retirement/emergency financial security and health protection for the working people who depend on their salary/wages to fulfil their necessities, EPF and ESIC are the two compulsory options that should be incorporated in the commercial units having employees more than a threshold limit, who are working for them. Once such employers enrol under these schemes, they are to comply certain mandatory reporting liabilities per FY to stay legally protected. To be more clear, let us first say the primary criteria that should be fulfilled by the Employers in order to get EPF and ESIC registration and come under their annual compliances.

EPF:

  • This scheme is applicable under the guidelines of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 as prescribed by Employees’ Provident Fund Organization (EPFO).
  • Mandatory registration for all the companies/organizations that is 3 years old having employee strength more than 20. Voluntary registration is accepted for the units having less number of employees.
  • Both employer and employee contribute in equal amount in this scheme.
  • In case, the employee number is more than 20, the contribution amount is 12% of Basic + DA. In case, employee number is less the contribution amount is 10% of Basic + DA.

ESIC:

  • This scheme is applicable under ESI Act, 1948, as prescribed by Employees’ State Insurance Corporation (ESIC) under Ministry of Labour and Employment.
  • Mandatory registration for the establishments/units/factories having 10 employees receiving INR 15,000 p.m. income within 15 days
  • 75% of the salary contribution from the employee and 4.75% from the employer should be made under this scheme (Except those employees earning INR 100 per day)

So, any commercial unit fulfilling such conditions is eligible of EPF and ESIC annual compliances per FY as discussed in this article.

EPF and ESIC Compliances After Registration

Once a commercial unit obtains EPF/ESIC registration, the employer should complete these responsibilities and keep the records updated through the official web portal of the respective schemes, as required:

Enrol the employees eligible in the scheme with their details:

  • For EPF, employer should enlist new eligible employees providing their KYC. Employee should fill Form 2 (Declaration and Nomination) under PF Scheme by 25th of the close of the month.
  • For ESIC, any eligible employee should be enrolled within 10 days of appointment and bear ESIC card to avail the benefit (the same card is applicable in any other employer enlisted under ESIC Scheme)
  • Records to keep all necessary updates
  • Attendance and Wages Register of employees
  • Form 6 Register (Details of Employer contribution in the respective Schemes)
  • Inspection Books with details of inspection done and reports by the authorities
  • Accident Register of employees
  • Record of monthly Challans and Returns
  • The Account Books and Registers for general compliances, such as, P&L Account, Cash Book, Balance Sheet, etc.

Complete the Monthly Payment through specific Challan

Annual PF and ESIC Compliances per FY

For EPF:

  • Eligible employer should clear the Provident Fund payment in Provident Fund Account through Challan as opened during registration on 15th of each month.
  • Provide details of new joiners (Form 5) and terminated employees (Form 10). Employer should also provide information on last month employees, new and resigned employees within 15 days
  • Consolidated monthly Statement (Form 12 A)
  • Annual Return by 30th April of every year, with consolidated annual contribution statement (Form 3A and 6A)
  • Conduct PF Audit, as applicable under the guidelines of this Scheme

For ESIC:

  • Eligible employer should clear the Monthly contribution in the ESIC Account through Challan as opened during registration on 15th of each month
  • Provide details of new joiners and terminated employees. Employer should also provide information on last month employees, new and resigned employees within 15 days
  • Bi-Annual Returns (Form 5) as,
    1. April to September: 11th November
    2. October to March: 11th May

Note: Submission dates are subject to change.

  • Immediately report about accident/Death case (Form 16), wherever applicable
  • Conduct ESIC Audit, as applicable under the guidelines of this Scheme

Note: Employees are to file and submit certain forms, such as, withdrawal, declaration, termination, transfer, etc. based on specific circumstances. They should be given proper assistance from the employer/concerned zonal office.

Benefits of Annual PF and ESIC Compliances for Eligible Businesses

  • Gathers employees’ loyalty and satisfaction
  • Creates reputation and good Cost to Company
  • Gets competitive advantage
  • Supports better employment
  • Guarantees stable company financial condition
  • Secures employees’ social and personal lifestyle

Penalties on Failing the EPF and ESIC Compliances

For EPF:

  • Penalty of 12% per year interest for each day of delay in payment of contribution
  • Penalty on late payment as mentioned:
    • Delay up to 2 months: 5% interest p.a.
    • Delay of 2-4 months: 10% interest p.a.
    • Delay of 4-6 months: 15% interest p.a.
    • Delay of more than 6 months: 25% interest p.a. not exceeding 100% at a time

For ESIC:

  • Penalty of 12% per year interest for each day of delay in payment of contribution

Restrictions under IT Act: If the violation of non-payment of EPF/ESIC contribution comes under the offense under Income Tax Act, the concerned unit may by disallowed from any more deposit in PF/ESI Account and thus cannot get the deduction benefits of the corresponding schemes.

Frequently Asked Questions

What is the ESI code number?

An ESI code number is a 17-digit unique number issued to all the beneficiaries of ESI. This number is generated by the ESIC portal during the submission of documents or registration.

What is the ESI percentage in salary?

The ESI salary is calculated based on the wages. As per the ESI, an employee’s contribution is 0.75% of the net earning, and an employer’s contribution is 3.24% of the gross earned income.

Is PF mandatory for salaries below 15000?

If an individual’s salary is up to Rs.15,000 per month then It is mandatory for him or her to have an EPF (Employee’s Provident Fund) account.

Is PF compulsory for all employees?

If any organization has a minimum of 20 employees, is liable to open EPF accounts for its employees.

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