Understanding PF and ESI Calculations: How Do They Work for a 3000 Salary?

Hi all,

Good morning, I am from Coimbatore, Tamil Nadu. Can anyone tell me about the PF and ESI calculation for both employees and employers? If the employee's gross salary is 3000, what will be the ESI & PF calculation? Is it employee PF = basic * 12/100?

Please send me the reply as soon as possible.

"Our greatest glory is not in never failing but in rising up every time we fail."

Thanks,
Riya

Hi Riya,

How are you?

Please note the following:

1. The ESI has to be deducted from the gross salary.
2. The rate of ESI contribution is 1.75% from the employee's gross salary, and 4.75% of the gross amount is to be deposited by the employer.
3. Washing allowance is not covered by ESI.
4. Contributions should be rounded up to the nearest rupee.
5. Regarding your question:
- Employee share of contribution: 3000 * 1.75/100 = 52.50, rounded to Rs. 53.00
- Employer share of contribution: 3000 * 4.75/100 = 142.50, rounded to Rs. 143.00
Total ESI contribution: Rs. 196.00

Regarding PF:
1. PF contributions should be deposited as follows:
- Employee share of contribution: 12% of Basic, DA, and Retaining Allowances
- Employer share of contribution: 12% of Basic, DA, and Retaining Allowances (8.33% up to Rs. 541 for pension and the balance for EPF)
- Other charges paid by the employer: 1.10% for admin charges, 0.50% for insurance charges, and 0.01% for EDLI.
2. PF is to be calculated based on Basic + DA + Retaining Allowances.
3. Basic should be around 50% to 60% of the gross salary.
4. Basic should not be less than the minimum wages of the concerned state.
5. Contributions should be rounded.
6. The coverage slab for PF is Rs. 6500.00.
7. In pension, 8.33% of Basic + DA + RA or Rs. 541.00, whichever is lower, is to be deposited. The rest is to be deposited in EPF.

Please revert back for any queries.

Regards,

U.C. Kaushik

Hi, thanks for the informative post. I would like you to clarify if the admin charges and insurance charges are payable on the gross salary of 6500 or (BASIS+ DA+RA).

AMARDEEP

Hi Riya, how are you,

Please note that:
1. The ESI has to be deducted from the gross salary.
2. The rate of ESI contribution is 1.75% of the employee's gross salary and 4.75% of the gross amount is to be deposited by the employer.
3. Washing allowance is not covered by ESI.
4. Contributions should be rounded up to the nearest rupee.
5. Employee share of contribution - 3000 * 1.75/100 = 52.50, approximately Rs. 53.00
Employer share of contribution - 3000 * 4.75/100 = 142.50, approximately Rs. 143.00
Total ESI contribution Rs. 196.00

PF:
1. PF contributions are as follows:
Employee share of contribution: 12% of Basic, DA, and Retaining Allowances
Employer share of contribution: 12% of Basic, DA, and Retaining Allowances
(8.33% up to Rs. 541 for pension and the balance for EPF)
Other charges paid by the employer: 1.10% for Admin Charges, 0.50% for Insurance Charges, and 0.01% for EDLI
The challan should be prepared as follows:
EPF A/c - 1 Employee's Share = 12%
EPF A/c - 1 Employer's Share = 12% - 8.33% = 3.67%
EPS A/c - 10 Employer's Share = 8.33% up to Rs. 541.00
A/c - 2 Admin Charges = 1.1%
A/c - 21 Insurance charges = 0.50%
A/c - 22 EDLI Charges = 0.01%
2. PF is to be paid based on Basic + DA + Retaining Allowances.
3. Basic should be around 50% to 60% of the gross salary.
4. Basic should not be less than the minimum wages of the concerned state.
5. Contributions should be rounded off.
6. The slab for coverage in PF is Rs. 6500.00
7. In pension, 8.33% of Basic + DA + RA or Rs. 541.00, whichever is lower, is to be deposited. The rest is to be deposited in EPF.

Please revert back for any queries.

Regards,

U.C. Kaushik

Hi,

Thank you for your information. If the employee receives Rs. 3000, what will be the PF amount? My calculation is Employee - Basic salary * 12/100. Is this correct, and is this individual eligible for PF? Please let me know.

Thanks,
Riya

Dear Kaushik,

Thank you for your valuable information that the basic should not be below the minimum wages of the state. But, Kaushik, does the basic component include the DA, or should the basic alone not be below the minimum wages? I have seen companies where the basic is below minimum wages, but they have DA which, when added, crosses the minimum wages.

Thanks & Regards,
Subramanian

Dear Riya,

Your calculation is correct. If the company has other components such as DA, then you have to add DA along with Basic for the calculation: (Basic + DA) * 12%.

Regards,
Subramanian

Dear Kaushik,

Thanks for sharing such nice information with everyone.

A small correction on ESI - Contribution is to be taken in roundup of one Rupee. It is always the higher rounding off, i.e., even if it is 52.01, it should be 53.00 and cannot be rounded off to 52.00 as in many cases.

Murali.

Dear Friends,

Thank you for your valuable suggestions on the topic of PF & ESIC. I would like to seek an opinion on the ESIC issue: whether seasonal industries are covered under the ESIC Act and what the basic requirements are to comply with the ESIC provisions. Are there any specific limitations on the number of employees or their salaries? Also, please confirm the penal provisions defined if we do not comply with the ESIC rules. Kindly advise me.

Thank you.