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    ESI & PF Filings

    In today’s changing regulatory environment, as a business maintaining compliance with labour laws is not just a legal obligation but an essential factor for ethical business operations. Important parts of social security systems that protect workers’ financial and health security are the Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC)

    If these regulatory standards are not met, your business may face financial penalties, legal repercussions, and reputational harm. And this makes it important for businesses to stay vigilant in filing returns and maintaining thorough records.

    A clear understanding of the rules, diligent documentation, and precise submission within the prescribed deadlines are essential to filing PF and ESIC returns. In addition to protecting your business from regulatory scrutiny, ensuring compliance in this area builds trust among your workforce and stakeholders.

    Provident Fund (PF)

    The Provident Fund is a mandatory retirement savings scheme for employees, governed by the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.

     

    Under this scheme:

    • Employer Contribution: 12% of the employee’s basic salary and dearness allowance (DA).
    • Employee Contribution: 12% of basic salary and DA.
      Applicability: Mandatory for organisations with 20 or more employees. Employees earning less than ₹15,000 per month are required to be enrolled.
    • Voluntary PF: Employees earning above the wage ceiling can voluntarily contribute to the PF.
    • Return Filing: Employers must file monthly returns via the Electronic Challan-cum-Return (ECR) and reconcile it with Form 3A, 6A, and 12A annually.

    Employees’ State Insurance Corporation (ESIC)

    The ESIC provides employees with a variety of social security benefits, including medical care, maternity leave, disability benefits, and coverage for work-related injuries under the Employees’ State Insurance Act, of 1948.

    • Employer Contribution: 4% of gross salary.
    • Employee Contribution: 0.75% of gross salary.
    • Applicability: Required for establishments with 10 or more employees where the salary is up to ₹21,000 per month.
    • Return Filing: Employers must file returns using Form 5 and Form 6, ensuring all contributions are reconciled with the company’s payroll records.

    Maintaining compliance requires a systematic and organised approach to filing returns. Below is a detailed step-by-step guide for filing PF and ESIC

    Provident Fund (PF) Filing Process

    Step 1: Registration with EPFO

    Register the business with the Employees’ Provident Fund Organisation (EPFO) by submitting the necessary establishment details.

    Step 2: Employee Data Submission

    Gather and update employee details, including UAN (Universal Account Number), salary data, and contribution rates.

    Step 3: Generate ECR

    Use the EPFO portal to generate the monthly ECR for contributions. This includes both employer and employee contributions (12% each).

    Step 4: Payment of PF Dues

    Make the payment via the online payment gateway on the EPFO portal before the due date, typically the 15th of each month.

    Step 5: Submission of Returns

    File the returns monthly and annually using Form 3A, Form 6A, and Form 12A. Ensure that the returns are reconciled with payroll data for accuracy.

    Step 6: Annual Filing and Reconciliation

    Annually, reconcile the returns with Form 3A and Form 6A, ensuring all data matches your internal records.

    Employees’ State Insurance Corporation (ESIC) Filing Process

    Step 1: Registration with ESIC

    Register your establishment with the Employees’ State Insurance Corporation through their official portal, providing necessary business and employee details.

    Step 2: Employee Registration and ESIC Numbers

    Ensure all eligible employees (earning up to ₹21,000/month) are registered and issued their unique ESIC numbers.

    Step 3: Monthly Contribution Calculation

    Calculate contributions for both employer (4%) and employee (0.75%) based on gross salary. Maintain accurate payroll records.

    Step 4: Generate Contribution Challan

    Generate the contribution challan through the ESIC portal for monthly payments.

    Step 5: Payment of Contributions

    Pay the contributions before the 15th of the following month via the online portal.

    Step 6: File ESIC Returns

    File the returns using Form 5 (monthly) and Form 6 (half-yearly). Regular reconciliation with payroll data is critical to ensure correct filings.

    Non-Compliance Consequences

    If your business fails to comply with the PF, ESIC, and Professional Tax regulations then your business will have to face significant consequences. Now let’s look at a few risks associated with non-compliance.

    • Non-compliance with PF, ESIC, or PT return filings can result in fines, late fees, and interest charges.
    • Have to face legal proceedings initiated by government authorities.
    • A company’s failure to meet its social security obligations can severely damage its reputation among employees, clients, and stakeholders.
    • When government authorities intervene due to non-compliance, businesses may face operational disruptions.

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