What Records Should Small Companies Keep for EPF and ESI Inspections?

hekarthik
Please let me know that our association is very small, with only 25 employees working. We are covered under the EPF and ESI Act.

Records to Maintain for EPF and ESI Inspection

My question is: what records should be maintained when authorities inspect the organization under the EPF and ESI Act?

Thanks,
HEKARTHICK
Mahavir Dahiya
Specific records for ESIC purposes are Wages Register (ESIC-32), Inspection Book, and Accident Register. However, the inspection process includes the examination of Accounts Books such as Balance Sheet, P&L A/C, Trial Balance, Ledgers, Cash book, Journals, Vouchers, Invoices, Gate Pass registers, Attendance Records, etc.

Thank you.

Regards
hekarthik
We are only operating small units. We don’t have any balance sheet, cash book, vouchers, gate pass, etc. We have only maintained the below-mentioned records:

1. Wages register
2. Inspection book
3. Accident register

Now, my query is: Is this enough to handle the ESI and EPF inspection?

Regards,
hekartick
Harsh Kumar Mehta
A unit employing about 25 employees is not a "very small" unit.

As a normal practice, even in proprietorship concerns, the account books, namely ledgers, cash books, vouchers/bills, etc., are maintained by the employers. Without maintaining account books, it is unclear how assessments under the Income Tax Act, Sales Tax, Excise, etc., if applicable, are being done in respect of your establishment. Without the production of such account books, including cash books, trial balance, and vouchers, etc. (as mentioned by Sh. Dahiya ji in his remarks above), concerning expenses of the unit, no inspecting authority will certify that the contribution under respective laws has been paid correctly.

It is a common practice that the names and wages/salaries paid to employees are not generally reflected in the Wages Registers as maintained and produced. In the majority of cases, the amounts paid to contractors, casual employees, temporary employees, etc., are booked directly in the account books of the unit.

The ESI Social Security Officer as well as the Inspecting Officer of EPFO will issue letters/show cause notice for the production/non-production of account books, and it will be for the management of such a "very small" unit to justify non-maintenance of such records.

Non-production of records, including Account Books, is an offense punishable under the above Acts and rules/regulations framed thereunder.
Mahavir Dahiya
I have informed you about the requirements of the ESIC Act. Additionally, I would like to mention that any entity engaged in commercial transactions must maintain records for sales tax, income tax, etc., which should be compiled into annual accounts. It is essential to comply with the laws of the land. Failure to maintain proper books of accounts could lead to issues in the future. The information provided in my previous response was concise and valuable, applicable to businesses of all sizes.

Thank you.
Regards.
janardan_raccha
Please find enclosed a checklist for attending PF Inspection, just for your further reference.

Regards,
Janardan
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