Curious About PF and ESIC Calculations in Private Companies? Let's Discuss!

Respected Seniors, I just want to know how a private organization calculates the PF and ESIC. Can anybody help me out with this?

Thanks and Regards,
Binita

Hi,

For PF, it is calculated on Basic + DA. For example, if Basic + DA is 6500, then PF is calculated as 12% of that amount, which equals 6500 * 12 / 100 = 780 that can be deducted from employees.

For monthly challan preparation, if the total number of employees' Basic + DA wages is 6500, then:
Employee contribution Employer contribution
A/c 1- 12% i.e. 6500 * 12 / 100 = 780 3.67% i.e. 6500 * 3.67 / 100 = 238.55
A/c 2- - 1.1% i.e. 6500 * 1.1 / 100 = 71.5
A/10- - 8.33% i.e. 6500 * 8.33 / 100 = 541.45
A/C- 21 - 0.5% i.e. 6500 * 0.5 / 100 = 32.5
A/C- 22 - 0.01% i.e. 6500 * 0.01 / 100 = 0.65

Shrikant Talwar

Hi friends,

Can anybody help me with how to calculate salary, PF, ESI, and how to maintain attendance forms along with the related form numbers and procedures for PF, ESI, EPF? Which forms are useful and what should be attached, like Form 1, 2, etc.? I need full details with calculations on Deposit Linked Insurance and PF calculations in detail. Please help me.

-Srivani

Please help me with how to calculate PF, ESI, and salary calculations with detailed formulas.

Well, if you just want to know about the calculation method for PF & ESIC, then it's done in the following manner...

ESIC
1. ESIC is deducted for those employees whose gross salary is not more than 15,000.00 per month.
2. Both the Employee and Employer have to contribute to it.
3. The Employee Contribution percentage is 1.75%, and the Employer Contribution percentage is 4.75% of the gross salary.
4. It should be calculated using the next higher rupee method.

For example, if my gross salary is 15,000.00 and I worked 28 days in January, then my gross for that month would be 13,548.00. So, for the Employee Contribution of 1.75%, 13,548 * 1.75% = 237.09. However, as mentioned earlier, it should be calculated to the next higher rupee, so it will be 238.00. For the Employer Contribution of 4.75%, 13,548 * 4.75% = 643.53, but for ESIC it will be 644.00. Simply add them together, make a challan of it, and deposit it.

PF
PF is calculated based on Basic + Dearness Allowance. PF is calculated as 12% of that amount by both the employee and employer. The employee contribution is EPF (12%), while the employer contribution is divided into two parts: EPF (3.67%) and 8.33% (FPF).

For example, if one's gross is 13,000, then the basic would be 6,500.00 (50% of Gross and it varies). Employee Contribution - 6,500 * 12% = 780.00. Employer Contribution - 6,500 * 3.67% = 239.00. Employee Contribution - 6,500 * 8.33% = 541.00, but this contribution should not exceed 541.00 Rs. This is the calculation for an individual person.

If you need guidance on how to make a challan, feel free to reach out.

Hope this information helps you.

Thank you so much for providing me with the PF & ESIC calculations. I will get back to you if I come across any queries.

Regards,
Binita

Dear All,

I am in a huge confusion regarding the pay structure. Please let me know about the following terms:

1. CTC
2. GROSS
3. NET

As per my understanding:
NET + (EMPLOYEE'S CONTRIBUTION OF PF + EMPLOYEE'S CONTRIBUTION OF ESIC) = GROSS
GROSS + (EMPLOYER'S CONTRIBUTION OF PF + EMPLOYER'S CONTRIBUTION OF ESIC + PTAX) = CTC

If this is correct, then the salary breakup of Employee "A" would be:
Basic 9600
HRA 2880
City Compensation Allowance 2880
Conveyance Allowance 1920
Education Allowance 1920
PF (EMPLOYEE) 1152
PF (EMPLOYER) 1152
PTAX 130
Gross 19200
CTC 21634
Take Home 19070

However, the company is offering:
Basic 9600
HRA 2880
City Compensation Allowance 2880
Conveyance Allowance 1920
Education Allowance 1920
PF 1152
Gross 19200
CTC 20352
Take Home 18048

Could you please confirm which one is correct? This is urgent, and I would appreciate your help.

Somdatta Neogi
9903068598
Kolkata (W.B.)

I know how to calculate PF, but in the case where an employee is receiving a basic salary of more than ₹6,500 per month, how should his PF, EPF, EDLIS, etc., be calculated?

Example Calculation

For example:
- Basic: ₹12,000
- D.A: ₹1,615

Can anybody tell me the amount of contribution for the following accounts:
- A/c - 1
- A/c - 2
- A/c - 10
- A/c - 21
- A/c - 22

Well, if anyone is earning more than 6500, there are two conditions to consider:
1. If the employee is receiving PF and their basic salary exceeds 6500, they must contribute.
2. If the basic salary has been above 6500 from the beginning, the company, if willing to deduct their PF, can do so under the following conditions:
A. Deduct based on the actual basic salary, regardless of whether it is above or below 6500.
B. If the employee's basic salary is above 6500, deductions should be limited to 6500.

Both conditions are correct.

Hi all,

How to calculate PF?

For example, if one person's gross pay is 7000/-, then the basic + DA will be around 4200/-. We calculate PF (12%) on (basic + DA) from both the employee and employer, which equals 4200 * 12% = 480/-.

ESI: Calculation is done on the gross salary. For instance, if the gross salary is 7000, we calculate ESI at 1.75% from the employee and 4.75% from the employer. This results in ESI being 123/- from the employee and 333/- from the employer.

Professional tax: According to Form-5, specific details can be obtained. For a gross salary of 7000/-, professional tax will be 80/-. These amounts are deducted from the gross salary, and the remaining deductions are referred to as take-home pay or net salary.

Including employer contributions is termed CTC (Cost to Company).

If there are any mistakes, please point them out.

Thanks & regards,
Ratnakar

Well, if anyone's gross salary is greater than 15,000.00, the condition for ESIC does not apply. If the basic salary is greater than 6,500.00, there are two conditions to consider:

- **A. Deduct based on the actual basic salary.**
- **B. Restrict the calculation up to 6,500.00.**

Regards,

I have one doubt. If the basic salary is 15,000, then what would be the employee's contribution at 12%, i.e., 15,000 * 12% = 1,800? The employer's contributions for EPF are 8.33% and for EPS are 3.67%, i.e., 15,000 * 8.33% = 1,250 and 15,000 * 3.67% = 550. Is the above calculation correct or incorrect?

Please let me know if you need any further assistance.

My question is: my basic salary is 6500, but my gross salary is 10374 (26 days), and my PF deduction is Rs 1244. Is it correct or not? What is the process of converting basic salary to gross salary?

Dear Mr. Nitesh Barman,

You have explained the same in a very useful manner. I would like to make some corrections in the below-mentioned point. Instead of "employee," it should be "employer contribution," and the revised limit for the pension is 1250.00 instead of 541.00.

Employer Contribution - 6500*8.33% = 541.00, but this contribution should not be more than 1250.00 Rs.

Provident Fund (PF) Calculation

PF is deducted on the basic salary, i.e., Basic + DA is Rs. 15,000/- or less. Above that, PF is not deducted/optional effective from 1st January 2015.

1) Employee – 12% (of Basic + DA & Food concession allowance & retaining allowance, if any)
2) Employer – 13.36% (of Basic + DA & Food concession allowance & retaining allowance, if any) [13.36% = 3.67% PF + 8.33% Pension Scheme + 0.85% Admin. Charges of PF + 0.5% EDLI + 0.01% Admin Charges of EDLI]

Employee Deposit Linked Insurance (EDLI)

A. The maximum ceiling limit of PF is Rs. 15,000/- from 01/09/2014. If the Basic + DA exceeds Rs. 15,000/-, then the contributions are optional. Some companies may have their own policies.
B. Provident fund is calculated towards the employers at 13.61%.
1. Employers Contribution
2. EPF A/c No.1 - 3.67%
3. EPF - Admin Charges - 1.1%
4. Pension Fund A/c No.10 - 8.33%
5. EDLI A/c No.21 - 0.5%
6. EDLI - Admin Charges - 0.01%

ESIC Calculation

A. In this ESIC, it includes the medical benefit for both the employee and employer.
B. It is calculated on the basis of gross pay per month, with a maximum limit of Rs. 21,000/- p.m.
C. Employee side - 1.75% and Employer side - 4.75%.
D. If the gross of an employee is Rs. 8,000/- p.m., their contribution would be 8000 * 1.75% = Rs. 140/-. Employer: 8000 * 4.75% = Rs. 380/-
E. Therefore, Net pay = Gross pay - Total deductions.
1. Those who are getting Rs. 21,000/- gross per month will not be applicable under the ESIC act.
2. 10 eligible employees are required to get registered in ESIC.
3. Eligible employees are those who are getting gross pay up to Rs. 21,000/- or less per month. Apart from that, there is a tax deduction, which includes Income & professional tax.

Cost to Company (CTC)

A. CTC means the cost to the company, i.e., all the expenses incurred by the company for any of its employees for a particular period (monthly/yearly).
B. Gross pay + employer's PF + employer's ESI + bonus = CTC.
C. The salary payable and other statutory benefits payable by the company.
D. CTC is Cost to Company, and the components are below:
E. Basic Salary
F. + House Rent Allowances
G. + Conveyance Allowance
H. + Children Education Allowances
I. + Mobile Reimbursement
J. + Medical Allowances
K. + Additional Allowances
L. + LTA
M. + Employer contribution of PF
N. + Employer contribution towards ESI
O. + Total variable incentives
P. + Insurance Premium (in case of Group insurance)

Gratuity Calculation

It's deposited at 4.81% of Basic per month. After completing 5 years of service, one may claim Gratuity at the time of separation from the organization, and it is paid at 15 days of salary for each year of service. For example, for 6 years of experience, one's gratuity will be calculated with this formula.

EPFO Administrative Fee Changes

EPFO has cut the administrative fee charged from employers effective from 1st January 2015.

A. EPF Admin Charges
B. Existing Rate - 1.10% of Total EPF Salary
C. New Rate - 0.85% of Total EPF Salary
D. Minimum Rs. 5 in case of Non-Contributory Member
E. Minimum Rs. 75 Per Month in case of non-functional establishment having no Contributory member
F. Minimum Rs. 500 for Contributory Members

EDLI Admin Charges

A. Existing Rate – 0.01% of Total EDLI Salary
B. New Rate – 0.01% of Total EDLI Salary
C. Minimum Rs. 2 in case of Non-Contributory Member
D. Minimum Rs. 25 Per Month in case of non-functional establishment having no Contributory member
E. Minimum Rs. 200 for Contributory Members

Thanks and Best Regards,

Vijay Tiwari

[Phone Number Removed For Privacy-Reasons]

Dear Mr. Nitesh, how did it come to -13,548? Please justify in detail.

ESIC:

1. ESIC is deducted for those employees whose gross salary is not more than 15,000.00 per month.
2. Both the employee and employer have to contribute to it.
3. The employee contribution percentage is 1.75%, and the employer contribution percentage is 4.75% of the gross salary.
4. It should be calculated using the next higher rupee method.

For example, if my gross salary is 15,000.00 and I worked 28 days in January, my gross for that month would be 13,548.00. Therefore, the calculation would be as follows:
- Employee Contribution: 1.75% of 13,548 = 238.00
- Employer Contribution: 4.75% of 13,548 = 644.00

Total the contributions, create a challan, and deposit the amount.

Thank you.

Respected Nitesh Sir,

Can you tell me how to make PF and ESI challans?