Confused About ESI and PF Calculations? Let's Clarify Together!

Hi friends,

I work in the HR field and I have a doubt regarding ESI and PF calculations. Can anybody clarify this doubt?

Thank you.
Have a good day.

Regards,
Mohamed

Hi Mohammad,

ESI is contributed from both sides, by the Employee as well as the Employer. It is calculated based on the Gross salary per month, with a maximum ceiling of 10,000 Rs. per month. The contributions from both sides are as follows:

On the Employee's side - 1.75% of gross per month. So, if the gross salary of an employee is 8,000 per month, the ESI contribution would be 8,000 * 1.75% = 140 Rupees.

On the Employer's side - 4.75% of gross per month. The ESI contribution would be 8,000 * 4.75% = 380 Rupees.

The same contribution structure applies to PF, which is also contributed by both the Employee and the Employer. Both contribute 12% of the Basic salary. The ceiling for the basic salary is 6,500 Rs. This means that those receiving more than 6,500 Rs. as basic salary can be part of PF, but the deduction would be only 12% of their basic salary.

During payroll processing, the employer deducts the sum of ESI contribution and PF contribution from the gross total.

I hope this explanation clarifies things for you.

Regards,
Amit Seth.

Hi,

Regarding PF, you have to calculate as mentioned below:

Employee: 12% (maximum 6500) - compulsory (Account No.1)
Employer: 8.33% (Maximum 541) - Family Pension Scheme (Account No.10)
3.67% (maximum 239) - Employees Provident Fund (Account No.1)
Administrative charges: 1.1% on total wages (Account No.2)
EDLI (Employees Deposit Linked Insurance) - 0.5% on total wages (Account No.21)
EDLI (Administrative Charges) - 0.01% on total wages (Account No.22)

I hope you got clarified. If you have any queries, you can email me at vaithi2005@gmail.com.

Regards,
Vaitheeswaran S

EPF is payable over Basic + DA only.

ESIC is payable over gross salary excluding washing allowance. Also, all allowances given once in 3 months do not attract ESIC, as they are not considered as part of Salary.

ESIC declaration forms are to be submitted within 2 weeks of appointment, and the returns are filed twice in a year.