Understanding PF Procedures and Salary Structure for Small IT Companies: Any Advice?

I am working in a software company as an HR Executive. Currently, we have 20+ members. Since we are eligible for PF criteria, I need to know all the details of the PF procedures for the company and staff. I also need to understand the salary structure for an IT company.

Dear Sid,

Discuss with your Higher Management people/Directors and first take an opinion from them. Inquire about their thoughts on available resources and their readiness to take on the challenge of such coverage. Many times, Directors raise another concern that all the employees (IT professionals) have surpassed the threshold salary limit of $15,000/CTC, and thus we are not covered by PF. They suggest that this issue should be addressed at the upper level.

Please provide an update on the further actions to be taken.

Thank you.

Sir, I have discussed with upper management. They want to follow all government laws. So, I need proper guidelines and also need to know about the ESI criteria and the maximum salary limit.

ESIC Eligibility
Organizations employing not less than 20 employees are required to be registered under the ESIC Act.

EPF Eligibility
Organizations employing not less than 20 employees are required to be registered under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952. The registration procedure is available online at Employer e-Sewa.

Registration under the Local Shops & Establishments Act is required. In the case of a partnership firm, the firm should be registered under the Partnership Act 1932.

Regards,
Akash

Hi,

Thank you, sir, for your valuable reply. I have some other questions related to PF PROCEDURE.

1) Can you give me information about PF criteria?

2) How to apply for PF procedure and what documents are required for registration?

3) In the salary slip, can medical allowance and ESI both be considered, or only one?

4) What are the criteria for medical allowance and ESI?

I am very confused about medical allowance and ESI deduction. Please clear my confusion soon.

Solution for PF and ESI Compliance

1. Applicability
In establishments where 20 or more workers are employed, any establishment employing even fewer than 20 persons can be covered voluntarily under section 1(4) of the Act.

2. Documents Required for New PF No. Code
- List of employees
- Memorandum of articles
- Balance Sheet
- Copy of Sale Bill
- Copy of Partnership Deed
- Copy of Excise Registration Certificate
- Copy of Sales Tax Registration Certificate

3. Advice on Payment Slip
We should deduct ESI, and the medical allowance must be disbursed on a six-monthly or annual basis through voucher payments.

4. ESI Contribution
Employee's contribution is 1.75% and employer's contribution is 4.75%, totaling 6.5%. ESI is a statutory compliance that is mandatory for the employer to adhere to if they employ 10 or more workers, whether operating with power or without. The wage ceiling is Rs. (Basic+DA) 15,000/- per month.

Usually, the medical allowance is paid to employees not covered under the ESI Act. It is a reimbursement allowance covering expenses on medical treatment. It can be paid up to a maximum of Rs. 15,000/- per annum through vouchers on a monthly, six-monthly, or annual basis.

Regards,
Sid

Thank you, sir. It is very helpful for me.

I have another question. Is there any criteria that only government employees are eligible for DA, or do proprietorship firms also provide DA?

Hello,

I want to know about the procedure of PF & ESI for a proprietorship firm in Gujarat. Are there any other options instead of ESIC?