Provident fund is a benefit given to the employees of the firm. While the employee is working in the firm, he along with the employer contributes a part of his salary to the PF fund which provides security after his retirement for his old age.
Key Elements of Provident Fund
- It is mandatory for companies or Firms which has 20 or more employees to get registered with PF Department
- The gross salary of those employees should be INR 20,000 or more
- The employee along with the employer contributes 12% of the basic salary to the PF fund
- The Tax is exempted for the employees of the company
- Who do not have 20 employees but are willing to register can do it voluntarily with the Regional Provident Fund Office to give benefit of PF to their employees.
- Voluntary Registration can only be done if the number of employee is more than 6 and needs a consent letter from all the employees
Employee’s State Insurance
Employee’s State Insurance (ESI) is a social security and health insurance for the employees of a firm. During his course of work he along with his employer contributes towards ESI which provides him with security by protecting the employee during sickness, accidents, injury or disability.
Key Elements of Employee’s State Insurance
- It is mandatory for companies or Firms to register for ESI when they have 10 or more employees
- The salary of the employees who needs to be registered for ESI should be INR 15,000 or less
- The employer contributes 4.75% of the salary while the employee contributes 1.75% for ESI
- No Voluntary Registration happens for Employee’s State Insurance
- ESI provides medical insurance and security for the person insured as well as for the members of his family
- ESI provides insurance cover up to INR 80 lakhs