Confused About PF and ESI Exemptions at My New Startup – Can Anyone Clarify?

Hi Team,

I joined a new company, and it's startup. My previous HR messed up PF and ESI deductions for some employees. She deducted PF and ESI for some but not for others. When I asked her, she mentioned they are exempt. Could someone please explain the reason to me? I want to streamline everything. Can anyone help me with this? It's urgent.

Regards,
Nandini

Dear Nandini,

ESIC Slab: 21000

EPFO Slab: 15000

Regards,
Dinesh
7401116633

Hi Dinesh,

If basic salary + DA is less than 6500, will they also come under PF?

Please help me.

Regards,
Nandini

Dear Nandini,

If you really want to streamline everything, first, you have to go through applicable laws i.e., PF & ESI in detail.

Dear Nandini, if the basic salary plus DA of any employee is less than 15,000, then you have to deduct PF for that employee. PF deduction is 12% from the employee's salary, and 12% will be paid by the employer.

For ESIC, if any employee's gross salary is below 21,000, then you have to deduct ESIC. ESIC deduction is 1.75% from the employee's salary and 4.75% from the employer's contribution.

PT slab will vary according to the state, so please check the slabs for your state. These are the basic statutory compliances that need to be deducted every month. Apart from this, you also have to take care of TDS deduction if any employee comes under the tax bracket.

Thanks,
Manish

Dear Manish,

Thank you for the information. Is PF optional for employees to opt for, or is it mandatory to deduct? Here, they are showing that an employee who resigned is withdrawing PF but still working. How can I correct this? As per my knowledge, it's wrong. Please advise me.

Regards,
Nandini

Dear Nandini,

An employee of the company to whom both the following two conditions apply at the time of joining the services of the company:

1. He/she does not have any current PF balance at the time of joining a new employer.
2. His/her salary (Basic + DA) is more than Rs. 15,000/- in his/her new employment.

Falls under the purview of Excluded Employee under the EPF & MP Act.

P. S. Lakshmanan

Dear Lakshman,

You mean to say, if an employee's (basic + DA) is less than 15000/- per month, there is no need to deduct PF, and they are exempt from PF, right?

Regards,
Nandini

Dear Nandini,

NO. If the employee (Basic + DA) earns less than Rs. 15,000 per month, you are liable to deduct PF, and they are not exempt from PF. If the employee's (Basic + DA) salary is more than Rs. 15,000 and they do not have any PF balance at the time of joining your company, they are exempt from PF.

Regards,

P.S. Lakshmanan

S.G Management Services

Kolkata

(M) 9831877248

Dear Lakshman,

If an employee has Basic+DA less than 6500/-, is there no need to deduct PF?

Regards,
Nandini

Dear Lakshman,

If his basic+DA is more than 15000 at the time of joining, does it mean he will not be eligible for a pension, but he is eligible for PF?

Regards,
Nandini

Hi, is it mandatory to deduct PF for all employees? Can we do it this way that deduct PF for some and not for others (voluntarily)?

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Hi, is it mandatory to deduct PF for all employees?

Can we deduct PF for some employees and not for others voluntarily?