PF & ESI Contribution of Employer and Employees (Provident Fund Rates)

PF & ESI Rates for Employees and Employer Contribution

In this blog, we have mentioned all the rates or percentages of employee and employer contribution to Provident Fund & Employee State Insurance.

The end of college life begins in real life. College or University Placement and walk-in interviews get us a job in the organized sector with different salary packages which begin our career.

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Here everyone doesn’t understand their salary breakup and all the ‘cuttings’ from the monthly salary. Well, salary is all based on basic pay, dearness allowance, house rent allowance and other allowances. So, the ‘cutting’ includes PF, ESI, TDS, and Professional Tax.

We have already discussed on TDS so now let’s discuss on PF and ESI. (Can link once TDS Blog is published).

Here’s The PF and ESI Contribution by Employers & Employees To Understand Salary Deductions:

PF (Provident Fund)

The abbreviation of PF is Provident Fund which is commonly called but it is actually EPF Employee’s Provident Fund which is handled by the Employee’s Provident Fund Organization. The EPFO is under the Administrative Control of Ministry of Labour and Employment, Government of India.

So, PF is a scheme by the Government to secure life after retirement. It promotes saving money every month of your whole working career. This money will be given when a person retires, in lump-sum and monthly.

Related Link: Documents required filing ITR.

PF Rates for the Employee and the Employer

In this scheme, not only the employee but the employer also contributes. Yes, the employee contributes 12% and employer contribution is also 12% of Basic Pay +DA. The employee can contribute only 10% if the number of employees in the company is less than 20.

The Employer’s contribution is divided into 2 PF’s – Employee Provident Fund and Family Provident Fund. 8.33% will be contributed to EPF and the rest 3.67% to FPF.

Here is a link to official EPF Rates.

A 12 digital number will be allotted to the employee by EPFO which is called Universal Account Number. Even if the employee changes his/her job which will lead to the change in employer but this UAN is for the lifetime. No Multiple Accounts are opened but multiple ids will be allotted to the employee by different companies.

ESI – Employee’s State Insurance

ESC abbreviation is Employee’s State Insurance. This is similar to regular health insurance. The ESI Scheme is handled by Employee’s State Insurance Corporation and its Administrative Ministry is again the Ministry of Labour and Employment, Government of India.

Eligibility for ESI

ESI is specifically for Employees earning under ₹21,000 per month. They are only eligible for this scheme and employees earning exceeding the limit cannot have this benefit.

PR Rates for the employee and employer

Similar to PF, in ESI also both employee and employer will contribute but the rates are very different. The Employee will contribute only 0.75% whereas the Employer’s contribution is 3.35% making a total of 4% of Gross Salary.

Consult us for more information on PF & ESI or Book an appointment for any Financial Assistance. For any queries just comment down below and we will get back to you.

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