Is My Company Required to Implement PF and ESI with Our Current Employee Salaries?

Dear Seniors, please clarify my query. My present employer is in "Project Management Consultancy," where the manpower is 40 as of today.

PF Applicability in Organizations

Regarding PF applicability in an organization, when the manpower exceeds 20, could you please confirm whether the company is required to implement the PF scheme, considering all employees' salaries are above 10K (Gross) with a minimum salary of 7K (Gross)? There are only 5 employees whose 'Basic salary' is 6500/-. The rest of the employees have a basic salary above 6500/-.

Potential Future Problems or Penalties

Could you also inform me if the company might face any future problems or penalties with the above situation? The same scenario applies to ESI as well. The same 5 employees have gross salaries up to 15K.

Thank you,

Jyothi

Dear Jyothi, your company is definitely under the PF coverage; it doesn't matter that the wages payment exceeds the ceiling of Rs 6500.00. There may be a return of NIL PF to the department.

Definitely, your company falls under the PF coverage; it doesn't matter if the wages payment exceeds the ceiling of Rs 6500.00. There may be a return of NIL PF to the department.

Definitely, your company is covered under the PF Act. It doesn't matter if the gross salary exceeds ₹15,000; PF is calculated on the basic salary only. If an employee's basic salary exceeds ₹6,500, then you shall submit a NIL return to the PF office.

With regards,
Jignesh Sisodiya

In case the employee concerned is willing to continue PF membership even after reaching ₹6,500, the contribution has to be on ₹6,500 only, and no PF contribution on the rest amount of wages is required to be deposited.

The answer you are all sharing directly addresses the question with doubt. Once your employment strength crosses 20+, your company will be liable to cover the PF for employees.

In case some employees are receiving a basic salary of more than 6500, you can consider the employee as an exempted employee after they have submitted Form 11. For employees with a basic salary below 6500/-, you must provide coverage from the day the 20th employee is crossed.

If your covered employee's basic salary exceeds 6500, then you cannot consider that employee as exempted. You must continue to pay up to 6500/-.

Regards,
Ganesh
HR & Legal Consultants Pvt Ltd
[Phone Number Removed For Privacy Reasons]

First, go through Section 16 of the Provident Fund Act. It states that there is an exemption for establishments that have not completed three years from the date of establishment. Please read it carefully.

Go through it once and read carefully.

Thank you.

Regards

PF Registration and Contribution Requirements

First thing: Can you provide the PF Registration No.?

If it is the case, you should deduct PF from your employees at 12% and then pay PF to the PF department at 13.61% from the employer's side. The total PF amount to be paid to the PF department is 25.61%. It is compulsory for you to do this.

Thank you. If you have any queries, please contact me or email me at [Email Removed For Privacy Reasons].

With Regards,

JAY - [Phone Number Removed For Privacy Reasons]