Understanding PF and ESIC: Who Handles It and What's the Process?

What is the process of PF and ESIC formality? Is ESI the same as ESIC? What is the process? Whose work is it - Accounts Dept or HR Dept?

Regards,
Jaya Ramprakash

Hi Jaya,

The formalities for ESI are that you must have a staff of at least 20 employees, regardless of whether they earn a salary exceeding 10000/- or less. The maximum ceiling for ESI contribution is up to 10000/- gross per month only. Individuals earning 10001/- or more will be exempt from ESI.

Yes, ESI and ESIC are the same. ESIC stands for Employee State Insurance Corporation.

Employers should register their factory or establishment with the ESI Corporation within 15 days of the ESI Act becoming applicable. The registration declaration should be completed in Form 01, along with a separate sheet containing the establishment's name and address, number of employees, nature of duties, and the name, designation, and address of the controlling manager for offices located outside. Once the ESI regional office is satisfied with the application, they will assign a code number to the employer.

Only after this process can employers register their employees with the ESI. Employees must complete a declaration form (FORM 1) clearly stating their gender. All declaration forms must be countersigned by the employer.

Next, prepare a return of declaration in Form 3 separately for male and female employees within 10 days of submitting the declaration form.

Subsequently, each employee will be assigned a temporary identification number.

For PF formalities, the company must be at least 3 years old before it can register with the PF department. Similarly, for this Act, the minimum number of employees required is 20.

Every employer of an establishment covered by the Employee Provident Fund Act must submit Form 5A (in duplicate) to the commissioner, detailing all branches, departments, owners, directors, partners, or any other individuals controlling its affairs within 15 days of the scheme's applicability.

Upon receiving Form 5A, the commissioner will verify the information provided and, once satisfied, will assign an Establishment Code No.

I hope this clarifies things for you. Feel free to reach out if you encounter any issues understanding the process.

Regards,

Amit Seth

Hi Amit,

You have explained things very nicely. Could you please let me know the benefits one can get after receiving TIC? Also, how much time will it take to get PIC? Could you shed some light on the cash benefits under ESIC, including eligibility and other details?

Thanks in anticipation.

Regards,
Chaitali
Surat, Gujarat

Hi Chaitali,

Thanks for such wonderful compliments.

After getting TIC, one may receive benefits at the ESI dispensaries, but before that, he has to collect a medical card from the ESI office only.

The PIC is allotted within 1 month of getting the TIC, but the employee can receive it only after completing 3 months of service with the organization.

The amount of benefit is calculated with respect to the contributions paid during the corresponding "contribution period," which are as follows:

1. If the contribution period is from 1st April to 30th September, then you may avail the benefits from 1st January to 30th June of the following year.
2. If the contribution period is from 1st October to 31st March of the following year, then one may avail benefits from 1st July to 31st December.

The ESI department has a standard benefit rate, which is linked to the average daily wages of the employee.

Standard Benefit Rate:

1. If the average daily wages are less than 28, then 14 or full average daily wage.
2. If the average daily wages are greater than or equal to 28 but less than 32, then 16 or ____________.

You may say that it is almost half of the average daily wages of the employee. But for those who are getting 280 and above, they will receive 145 only, which is the ceiling. I hope now it must be increased after raising the ceiling of gross salary from 7500/- to 10,000/-.

Hope it is clear now.

Keep in touch and feel free to ask if you have any queries.

Regards,

Amit Seth.

Amit,

Contribution period and Standard Benefit Rate.... Calculation is confusing.

Rgds,
Chaitali

Hi Amit,

Would be grateful if you could explain how PF from the employer and employee are filed under what Form? Using what forms and procedure is it done every month? Same with gratuity. Statutory compliances are something that every interviewer asks. Please shed some light on it.

Thanks,
Jenna

You can also reply back to me at my email address tom.jenna@gmail.com.

Dear Amit Seth,

I have read all the replies. Thank you; you have explained everything very nicely. Just one query: if an organization starts with 39 employees from the very first day of its registration, in this case, do they need to apply for PF registration or not? Please confirm.

With warm regards,

Vikas Seth

Dear Amit,

Thanks for all the knowledge you have shared with everyone. I am sure you can clarify my doubts on certain points.

Is the labor element in Repairs & Maintenance covered under ESI? Does the act cover expenses for labor elements, if any, in accounts such as office maintenance, office expenses, and staff welfare expenses?

How will a small company employing 20 people cope with keeping all the records? Is it possible to quote the sections?

T S A Padmanabhan

Hi Jenna,

Thanks for your comments.

After getting an Establishment code number, the employer is required to give the list of all employees entitled to become members of the scheme on the date of its applicability, in Form 9 within 15 days of such date. This return of membership is to be accompanied by the nomination of each such employee in Form 2.

The employer is required to submit a monthly return in Form 5, giving the names and other particulars of the new members. This form is to be submitted within 15 days of the close of every month along with the nomination form of each member. If no new members join the fund in a month, then a "NIL" return should be sent.

Besides, the employer is required to submit a copy of the wage payment register of members of the fund who have left the service within 15 days of the close of every month.

A monthly return of contributions in the prescribed form within 25 days of the close of every month, along with triplicate copies of challans for the amount of contributions and Administrative charges deposited.

If no contribution has been recovered, then a "NIL" return should be furnished by the employer.

Lastly, the employer has to submit the annual return of contribution in FORM 6-A.

I hope it is clear to you regarding the obligations of employers.

Regards,

Amit Seth

Dear Vikas,

After an amendment in section 16 in the year 1998, effective September 1997, the Act does not apply to a newly set-up establishment for an initial period of 3 years from the date on which such establishment has been set up.

So, in your case, the same applies; there is no need to apply for PF registration. If you still have any queries, you may confirm the same with your nearby PF office.

Regards,

Amit Seth.

Dear Amit,

Thank you for sharing your valuable knowledge on the subject. However, your explanation to Mr. Vikas's query needs correction. By the Amendment Act of 1998, the infancy benefit for the first three years to a newly set-up factory or establishment regarding the applicability of the Act stands withdrawn effective from 23.9.97. The Act is now applicable to a newly set-up factory or establishment.

SK Hota

Hi Amit,

Thank you so much for the reply. Could you also let me know the procedure followed every month with regard to PF? As an HR person, once the PF is deducted, what would the next step be?

Thanks,
Jenna

Dear All,

Should an establishment deduct from a contractor's bill for repairs, 6.5% of the labor charge as ESI contribution? If it is correct, is it only for high-value repairs or for all repairs?

T S A Padmanabhan

Dear Padmanabhan,

If your contractor has his ESIC number, then you can quote the number; otherwise, you need to deduct 6.5% of the repair bill.

Thank you.

Dear Jenna,

After deduction of PF, that amount has to be deposited at any of the S.B.I Banks with a challan, and keep one copy of the challan with you. Moreover, as stated above, you have to file a return with the PF department regarding the new entrants, and that has to be done every month without failure. Even if no new joining has been done, then a NIL return should be submitted.

Hope it is very clear to you now.

Regards,
Amit Seth

Hi Jaya Ramprakash,

ESI stands for Employee State Insurance, while ESIC stands for Employee State Insurance Corporation. This is absolutely an HR job and is very sensitive.

Regards,
Antony

Hi,

Basically, it is the HR department's job. Some companies also take the services of their legal advisor. ESI and ESIC are one and the same thing. If you want to know the procedure, I'll email you again.

Hi Mr. Amit,

As per the ITC policy 2005-2010 of the Government of Andhra Pradesh and as per GO.Ms.No.11 dated 21-03-05, IT industries are exempted from certain acts such as the Shops & Establishments Act, Minimum Wages Act, ESI Act, etc. If this is the case, there is no need for an IT company to get registered with ESIC. Is it true? Please clarify.

Giri

Hi Jaya,

The formalities for ESI are that you must have a minimum of 20 employees, regardless of whether they receive a salary of more than 10000/- or less. The maximum ceiling for ESI contribution is up to 10000/- gross per month only. Individuals earning 10001/- or more will be exempted from ESI.

Yes, ESI and ESIC are the same. ESIC stands for Employee State Insurance Corporation.

The employer should register the factory or establishment with the ESI Corporation within 15 days of the applicability of the ESI Act. The declaration of registration should be filled out in Form 01, along with a separate sheet containing the name and address of the establishment, number of employees, nature of duty, and the name, designation, and address of the manager controlling such persons, in the case of an office located outside. Once the ESI regional office is satisfied with the application, they will assign a code number to the employer.

Only after this can you register your employees with ESI. They must fill out a declaration form (Form 1), clearly indicating gender. All declaration forms should be countersigned by the employer.

Next, prepare a return of declaration in Form 3 separately for male and female employees within 10 days of filling out the declaration form.

Each employee will be allocated a temporary identification number.

For PF formalities, the company must be at least 3 years old before it can register with the PF department. Similarly, for this Act, the minimum number of employees required is 20.

Every employer of an establishment covered by the Employee Provident Fund Act should submit Form 5A (in duplicate) to the commissioner, providing details of all branches, departments, owners, directors, partners, or any other person controlling its affairs within 15 days of the scheme's applicability.

Upon receiving Form 5A, the commissioner will verify the details submitted and, upon satisfaction, allocate an Establishment Code Number.

I hope this clarifies things for you. Feel free to reach out if you have any further questions.

Regards,
Amit Seth

Hi,

What's the procedure required to withdraw ESIC? Within what time does the company need to reimburse the same to the employee who has left the organization?

Regards,
Amit.

Hi Jaya,

Yes, is ESI the same as ESIC? The process of registering with ESI and PF is very wide, and you need to appoint a professional consultant who makes it very easy. For PF, you need to fill a questionnaire form, and for ESIC, form No. 01 along with various requirements and licenses of the company.

Hi Mr. A.P. Singh,

The process of registering with ESI and PF is quite extensive, and you need to appoint a professional consultant to make it easier. For PF registration, you need to fill out a questionnaire form, and for ESIC, you need to submit Form No. 01 along with various company requirements, licenses, and documents.

Hi Guys,

Subject: Suggestion Regarding ESIC Rules

I need a suggestion. If I offer a Gross Salary of Rs. 10,500 to an employee and deduct Rs. 2500 for Transport from it, the net take-home amount comes to Rs. 8,000. According to the current ESIC slab, the employee is out of ESIC liability.

Please advise if this is correct or not.

Thanks,
Vikas

Dear All,

We have employees on a contract basis (an agreement with us only, no subcontract), who work on an hourly basis. Around 50 contract employees work around 3-5 hours per day.

1. Is ESI and PF applicable to them?
2. Apart from these, are any other compliance measures applicable to them?

Regards,
Manish P

Dear Sir,

I have a small doubt regarding ESI & Pf. If a company has just started and only two employees are working with a salary of ₹14500 per month, are they both eligible for PF & ESI? Please assist me with this.

Regards,
Jyothi.M