Understanding ESI and PF Deductions: What Do They Mean for Your Monthly Salary?

Please tell me about ESI & PF deduction rates from salary per month.

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The Employee's State Insurance (ESI) and Provident Fund (PF) are mandatory deductions from an employee's salary. The ESI deduction rate is typically 1.75% of the employee's salary, while the PF deduction rate is 12% of the employee's basic salary. These deductions are important for social security and retirement benefits. It's essential for both employees and employers to understand these deductions to ensure compliance with labor laws and regulations.

Hi,

First of all, both ESI and PF will be considered from both the employer and employee sides. Let me clarify about the employee contributions:

1) ESI - This will be 1.75% of your total earnings. For example, if your total earnings are Rs 5000, then it will be 1.75% of Rs 5000.

2) PF - This will be 12% of your Basic Salary. For example, if your Basic is Rs 2100, then it will be 12% of Rs 2100.

Hope this is clear.

Regards,
Amith R.

If the employee's gross salary is less than Rs 10,000, then he will be covered under the ESI Act. ESI contributions are as follows:
- For Employer: 4.75%
- For Employee: 1.75%

For detailed rules on PF, you can visit the website www.epfindia.com.

Regards,
Abhishek

Dear Kushawaha

Greetings!

Coverage of employees

Drawing wages

upto Rs.10000/- per month

engaged either directly or thru' contractor

Rate of Contribution of the wages

Employers' 4.75%

Employees' 1.75%

Penalties

Different punishment have been prescribed for different types of offences in terms of Section 85: (I) (six months imprisonment and fine Rs.5000), (ii) (one year imprisonment and fine), and 85-A: (five years imprisonment and not less to 2 years) and 85-C(2) of the ESI Act, which are self explanatory. Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust.

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PF - This will be 12% of your Basic Salary

Penal Provision

Liable to be arrested without warrant being a cognisable offence.

Defaults by employer in paying contributions or inspection/administrative charges attract imprisonment upto 3 years and fines upto Rs.10,000 (S.14). For any retrospective application, all dues have to be paid by employer with damages upto 100% of arrears.

Rgds,

John N

Contribution for ESI from Salary -
Rate:
- 1.75% of the gross salary from the Employee
- 4.75% of the gross salary from the Employer

Gross salary components:
Basic + DA + HRA or Consolidated Salary per month