Employee Provident Fund (EPF) and Employees State Insurance (ESI) [CS Hera Siddiqui]



Provident Fund (PF) Due Date

Provident Fund (PF) is a periodic contribution by both the employer and the employee towards a common fund, to ensure that the employee is financially secure during the course of his retirement. Provident Fund is applicable for all employers in India having more than 20 employees. In this article, we look at some of the important Provident Fund due date applicable for an employer in India.

Provident Fund Payment Due Date

Provident Fund (PF) payments are due on the 15th of each month. The employer must deposit a total of 12% or 10% of the employee wages towards PF on or before this date every month. For most entities, the PF rate of 12% would be applicable. The 10% PF rate is applicable for:

  • Any establishment in which less than 20 employees are employed.

  • Any sick industrial company and which has been declared as such by the Board for Industrial and Financial Reconstruction

  • Any establishment which has at the end of any financial year, accumulated losses equal to or exceeding its entire net worth and

  • Any establishment in following industries:-

    • Jute

    • Beedi

    • Brick

    • Coir

    • Guar gum Factories.

The contributions are payable on maximum wage ceiling of Rs 15000/- by employee and employer. However, an employee can pay at a higher rate and in such case employer is not under any obligation to pay at such higher rate.

Provident Fund Return Due Date

Provident fund return must be filed by all entities having PF registration every month. PF return is due on the 25th of each month. Further, a final PF return is due on the 25th of April for the year ended on 31st March.

Withdrawal of Grace Period for PF Deposit

Earlier, a grace period of five days was allowed to the employers to remit the PF deposit, thereby affording the employer a 20 period window in a given month. This can be attributed to the manual calculation of remuneration and dues, which was time-consuming. Such a delay is now being avoided, thanks to the electronic computation of wages and EPF liabilities. Moreover, the contributions are now deposited through internet banking. Taking this into perspective, the EPFO decided to withdraw the grace period that was previously afforded to the employers. Hence, the employers must deposit their contributions by the 15th of every month.

PF Due Date Falling on Public Holiday/Sunday

Previously, when grace period was allowed, employers were levied with penal damages for payments deposited by them after the due date, even if the particular due date was a public/bank holiday. After EPFO’s recent update on due date, remittances made under such circumstances will be treated as a normal payment, and will not incur penal damages.

Penalty for Delayed Payment

Delayed remittance of PF deposit will incur penal damages. The penal charges, as specified by the EPFO, are as follows:

S.No

Time-Period of Delay

Rate of Penalty

1

Delay for up to 2 months

5% per annum

2

Delay ranging from 2 months to 4 months

10% per annum

3

Delay ranging from 4 months to 6 months

15% per annum

4

Delay exceeding 6 months

25% per annum (It may correspondingly

go up to 100%)


Damages cannot be levied at a lesser rate than what is specified. However, exceptions in terms of reductions or waiver of damages can be extended to sick industrial companies having rehabilitation scheme sanctioned by the Board for Industrial and Financial Reconstruction (BIFR).

The date of debit from the employers account may be considered as the date of payment of penal damages. Occurance of delay due to delayed credit in EPFO’s accounts or delayed transacting by the banks will be dealt with in accordance with the banking agreement with the various banks.

ESI DUE DATE

ESI PAYMENT DUE DATE:

ESI contribution has to be deducted every month from the employee and it has to be contributed to the department. So ESI payment due date is monthly, on or before 15th of next month.

ESI RETURN DUE DATE:

ESI return is done on a half yearly basis and the due dates are fixed as 11th November and 11th May.

ESI INTEREST:

An employer who does not pay the contribution within the time limit shall be liable to pay simple interest @ 12 % per annum for each day of the default or delay in payment of the contributions.

Wages as per the ESI Act

The contributions (employee and employer) are made basis on the wages paid to the employees. Some of the inclusions and exclusions from the wage component are as follows:

Inclusions

Exclusions

 

Basic Pay

Entertainment Allowance

 

Dearness Allowance

Retrenchment Compensation

 

City Compensatory Allowance

Encashment of leave and gratuity

 

House Rent Allowance

Deduction of health insurance

 

Incentives (including sales commission)

Tax Deductions

 

Medical Allowance

Meal allowance

Any other special allowances

Attendance and Overtime Payments


Computation of ESI

The rates of the ESI contribution are calculated on the wages paid. Currently, the employee contribution is 0.75% of wages paid/payable, and employer contribution is 3.25% of wages paid/payable.

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