Hi i am working in an IT Company and we are deducting PF and ESI of our employees from last nine months.Now My employer wants not to deduct the pf and esi of employees any more.Now my question is----
1) Is deduction of PF and ESI necessary for an ISO standardised company?
2) If not then is there any way of getting out of PF and ESI?
3) Is there any benefit to an employer of paying PF and ESI to employees.
4) we are 25 employees in our company, so if we will make it less than 20, can we come out of pf and esi as we are already paying it.
waiting for kind and positive reply?
thks & regards

From India, Delhi

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Hi seniors Plz reply, it is very urgent matter. waiting for your positive reply regards meenu
From India, Delhi
1. Yes,Definetly u should be deduct pf of there employee if they getting basic salary less than 6500/- pm.
2.For PF No.and for ESIC if the employee getting salary more than 15000/-pm than not nessary to duduct ESIC But in half yearly returns should be deposit if its started.
3. if the employee deposit there pf & ESIC Contribution than they will getting insurance,Futher security,etc.
3. You cann,t stopped their contribution in pf.but in ESIC IF you started you half yearly returns than you continu till completion of returns.
Awdesh Goyal

From India, Gurgaon
Dear Meenakshi,
Please find my response to your queries.
1. Is deduction of PF and ESI necessary for an ISO standardised company?
Deduction of PF and ESIC has nothing to do with company having ISO certification.
PF and ESIC are mandatory statutory requirements.
2) If not then is there any way of getting out of PF and ESI?
In case of PF - If all your employees are drawing more than 6500/-, the employer is not liable to pay PF.
In case of ESIC - If all your employees are drawing more than 15000/-, the employer is not liable to pay ESIC.
3) Is there any benefit to an employer of paying PF and ESIC to employees.
Employer definately gets benefited as he can show the contribution made towards PF and ESIC as his "Expenses" which is 100% tax exempted.
4) we are 25 employees in our company, so if we will make it less than 20, can we come out of pf and esi as we are already paying it.
Ethical practices should be adhered.
Best Regards,
Hema Phaley

From India, Nagpur
In addition to the views expressed by others, I am adding the following additional information for the information of one and all connected with ESI.

1. Benefits to the employer: In addition to 100% tax benefit on the employer's contribution, the employer is exempted from the provisions of Workmen compensation Act and the State Maternity Benefit Act.Besides, the employer is getting a fully protected worker, who can concentrate on his work and produce more.

2. Avoiding coverage by reducing the no. of employees: According to section 1(6) of the ESI Act, "a factory or an establishment to which this Act applies, continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified under this Act or the manufacturing process therein ceased to be carried on with the aid of power" Thus reducing the number of employees or stopping the usage of power for manufacturing process does not absolve your liability to continue under the coverage of ESI.

Further 'Soft ware development' in an I.T. company is considered as a manufacturing process with the aid of power for which 10 or more persons employed for wages (coverable employees with in the wage ceiling limits)is suffice for coverage under ESI and not 20 as assumed by you. For this purpose employees engaged through out-sourcing or on contract basis for security, house-keeping, casual or temporary work are also counted.

K.V.Ramana Murty, Deputy Director(Rtd.), ESIC, Hyderabad

From India, Hyderabad
Dear Meenakshi,
Your query is genuine in reply it is mandatory to be deducted as per EPF and MP Act, and ESI Act
if your company hired a member under 15,000/- salary for ESI and for PF 6500/-
if they get increment and crossed the line you have to be deducted PF for ceiling limit - 6500/-
for ESI contribution, not necessary if they crossed 15000/- if increment comes under contribution period you have continue for up to end of contribution period.
manish thaker

From United States
Dear Seniors, My Question is If we are not registered with PF & ESIC due to small structure, can we show PF & ESIC in the CTC calculation.
From India, Delhi
Dear Murthy Sir

With due respect to you and to your chair.

Need help in the matter of Obtaining Code number under ESIC. our establishment is based in Mumbai Bandra East Maharashtra, dealing in Realty Business.

On the basis of submission made by our PF / ESIC Consultant our establishment has not obtained the Code number since 2003 on formation of the establishment as ESIC is not applicable to Construction Site, ( Circular Attached ) infact coverable employee was there, At Office 12 and at Construction Site 9 - Our site supervisor , billing clerk, Eng. ETC.

If the submission of our PF / ESIC consultant be treated as gospel truth as per attached circular taking into consideration the Definition of Employee under Sec 2(9) & Employee of Contractors under ESIC Act Section 2 (13) immediate employer.

As our third party auditor M/s PWC is insisting to obtained ESIC Code number

Under above scenario does we have to apply for ESIC Code Number.

Further as per New ESIC Inspection Policy the SSO can not go beyond 5 years, Hence, ESIC Authority while allotting the Code number to us will give Coverage effect as on 2003 the year in which our organisation came into existence or from 2009 - 10. if we apply for the number as on today.

Need your views on the matter

A line in reply is appreciated.


Azim Charania.

From India, Mumbai

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