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ESI & PF Compliance

EPFO registrations, monthly ECR filings, ESIC challans, default notice handling, and coverage under the Code on Social Security 2020. Run by a dedicated CA, every month, on time.

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The Recurring Rhythm.

Tight monthly cycle. Wage data finalised by month-end, ECR generated and ESI challan filed, payments deposited via EPFO and ESIC portals by the 15th of the next month.

Day 25–30
Wage data finalised
Employee-wise basic wages and gross wages finalised. New joiners (UAN allocation), exits (PF settlement claims), and any salary revisions captured. Cut-off communicated upfront.
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Day 1–5
Contributions computed
PF: 12% employee + 12% employer of basic wages, per employee. ESI: 0.75% + 3.25% of gross wages for employees up to ₹21K/month. Working reviewed and shared with you for approval.
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By Day 10
ECR + ESI challan filed
Electronic Challan-cum-Return (ECR) generated and uploaded on the EPFO portal. ESI challan filed on the ESIC portal. TRRN and challan numbers archived. You receive both for review.
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By Day 15
Contributions deposited
PF payment made via SBI/PSU bank net banking linked to the ECR. ESI payment made via the ESIC portal. Both due by the 15th of the following month. Receipts archived per statutory record retention.
↺ Repeats every month. PF annual return (Form 3A / 6A) and ESI annual returns also handled. Default notices addressed within 48 hours.

What Is ESI & PF Compliance?

Provident Fund (PF) and Employees' State Insurance (ESI) are the two major statutory social security contributions every Indian employer with eligible employees must manage. PF is administered by the Employees' Provident Fund Organisation (EPFO) under the Employees' Provident Funds and Miscellaneous Provisions Act 1952. ESI is administered by the Employees' State Insurance Corporation (ESIC) under the Employees' State Insurance Act 1948. Both are now governed by the Code on Social Security 2020, effective from November 2025.

PF applies when an establishment employs 20 or more persons; once registered, it covers every employee earning basic + DA up to ₹15,000/month mandatorily (above is optional). ESI applies when an establishment employs 10 or more persons (20 in some states); once registered, it covers every employee earning gross wages up to ₹21,000/month (₹25,000 for persons with disabilities). Both schemes carry monthly contributions, monthly returns, and a strict 15th-of-next-month payment deadline.

What ESI & PF compliance involves each month

Four jobs every month: compute (basic wages, gross wages, eligibility per employee); file (PF ECR with employee-wise contribution detail, ESI challan); pay (PF via SBI/PSU net banking, ESI via ESIC portal, both by the 15th); record (UAN allocations for new joiners, ESI insurance numbers, exit PF settlement claims, monthly registers). Annual returns (PF Form 3A and 6A; ESI half-yearly returns) close the cycle each year.

Why get professional help vs do it in-house

PF and ESI defaults are among the most common compliance failures for early-stage companies, not from negligence but from the multi-portal, multi-deadline nature of the work. Common in-house failures: late ECR upload triggering 12% interest, missed UAN allocations for new joiners, ESI eligibility errors when employees cross the ₹21K threshold mid-year, and unresolved default notices compounding into Section 14B damages of 5-25%. Crucially, late-deposited employee contributions are permanently disallowed in the income tax return under Section 36(1)(va), making the financial cost of delay larger than just the EPFO penalty. A compliance firm running the cycle with deadline buffers prevents all of this.

Parameter
PF (EPFO)
ESI (ESIC)
Mandatory threshold
20+ employees
10+ employees (20 in some states)
Wage base for coverage
Basic + DA ≤ ₹15,000/mo (mandatory)
Gross ≤ ₹21,000/mo (₹25K for PwD)
Employee contribution
12% of basic + DA
0.75% of gross
Employer contribution
12.67% of basic + DA (incl EDLI + admin)
3.25% of gross
Monthly filing
ECR via EPFO Unified Portal
Challan via ESIC Portal
Payment deadline
15th of next month
15th of next month
Governing Act
EPF & Misc Provisions Act 1952
ESI Act 1948
Unified framework (from Nov 2025)
Code on Social Security 2020
Code on Social Security 2020
Side-by-side comparison of the two schemes. Most early-stage businesses cross the ESI threshold (10) before the PF threshold (20), so ESI compliance typically starts first.

What Gets Done Each Cycle.

Six recurring activities. EPFO and ESIC each have their own portal, deadlines, and forms. We handle both with a single monthly handoff.

PF eligibility & computation
Monthly
Each employee assessed for PF eligibility. 12% employee + 12% employer of basic wages (up to ₹15,000 mandatory). Employer share split: 8.33% to EPS, 3.67% to EPF.
ECR filing (PF)
Monthly
Electronic Challan-cum-Return prepared employee-wise. Uploaded on the EPFO Unified Portal. Payment generated via linked bank account. TRRN archived. All by the 15th.
ESI eligibility & computation
Monthly
Each employee assessed against the ₹21,000/month gross wage threshold (₹25,000 for persons with disabilities). 3.25% employer + 0.75% employee on gross wages. Threshold crossings during the year tracked.
ESI challan + payment
Monthly
ESI challan generated on the ESIC portal. Payment made by the 15th. Insurance numbers allocated for new joiners. Family declarations and dispensary nominations tracked.
Registrations & modifications
As needed
Fresh PF and ESI registrations when thresholds are crossed. Branch additions, employee strength updates, signatory changes. Surrender or cancellation when scheme no longer applicable.
Default notices & annual returns
As needed
Section 14B damages notices and 7A inquiries addressed within 48 hours. PF annual returns (Form 3A and 6A). ESI half-yearly returns. Reconciliation with payroll records.

When You Need Us to Handle This.

Getting professional help on ESI and PF is a service decision, not a legal one. Here's when it makes sense and when it doesn't.

Get help if
  • You've crossed the PF (20 emp) or ESI (10 emp) threshold. Registration is mandatory within statutory windows. Late registration triggers retroactive contribution demands plus interest and damages.
  • You've received a Section 14B damages or 7A inquiry notice. EPFO inquiries come with tight response windows. Professional handling at the first notice usually keeps damages under 5%; ignored notices escalate to 25%.
  • Your employee mix is changing rapidly. New joiners need UAN allocation. Exits need PF settlement claim handling. ESI threshold crossings require monthly tracking. Manual handling breaks at 5+ joiners/exits per month.
  • You operate across multiple states or branches. Separate ESI dispensary mappings and branch-wise PF establishment codes complicate filings. We track each branch separately under one engagement.
  • You have late deposits or pending defaults from past months. Late employee PF/ESI deposits are permanently disallowed under IT Act Section 36(1)(va). Regularisation and disclosure need careful handling to limit the damage.
Skip if
  • You're below both thresholds (under 10 employees). ESI and PF don't apply. Voluntary PF registration is possible but rarely justified at this scale.
  • You only have contractors / freelancers, no employees. PF and ESI apply to employer-employee relationships, not vendor / contractor engagements. Pure contractor payments trigger TDS, not PF or ESI.
  • You have an in-house HR / payroll team running this already. Established teams with HRMS software typically handle ESI / PF in-house. Outsourcing returns above 100 employees as an audit / advisory layer.
  • You're in an exempt establishment with internal trust. Some large employers run their own PF trust under EPFO exemption. Specialist trust compliance is outside general CA-firm scope.

How We Work.

Six commitments. Same dedicated CA, every month, with response times you can plan around.

Dedicated CA on your account
Not a ticket queue. The same chartered accountant handles your filings every month. Personal accountability, not a hand-off chain.
WhatsApp & email access
Business-hours response. Urgent issues escalated within 2 hours. No more chasing emails into a void.
Filed and paid by the 13th
PF ECR uploaded and paid by the 13th; ESI challan filed and paid by the 13th. Two-day buffer before the 15th deadline for portal slowdowns or banking issues.
Document upload via portal or Drive
Pick your tool. We adapt to your workflow, not the other way around. CSV, Tally exports, Excel, all supported.
EPFO / ESIC notice response within 48 hrs
Section 14B damages notices, 7A inquiries, ESIC compliance notices addressed within 48 hours of receipt. First-response handling typically keeps damages under 5%.
Monthly compliance dashboard
PF and ESI register, contributions paid, new joiners, exits, threshold crossings, default status, and upcoming actions. Read in 2 minutes, signed off in 1.

ESI & PF Penalties at a Glance.

Reference table for every ESI and PF default scenario. Current as per EPF Act 1952, ESI Act 1948, and Code on Social Security 2020.

Default scenario
Damages / Penalty
Interest
Downstream impact
PF: late deposit (0–2 months)
5% damages
12% per annum
Sec 36(1)(va) IT Act disallowance
PF: late deposit (2–4 months)
10% damages
12% per annum
Compounding penalty exposure
PF: late deposit (4–6 months)
15% damages
12% per annum
EPFO inquiry triggered
PF: late deposit (6+ months)
25% damages (max)
12% per annum
Sec 7A inquiry, prosecution risk
ESI: late deposit
5–25% damages
12% per annum
Sec 36(1)(va) IT Act disallowance
Non-registration after threshold
Retroactive contributions due
Compounding from threshold date
Possible prosecution under EPF / ESI Acts
Wilful evasion / suppression
Imprisonment up to 3 years
12% per annum + damages
Director-level prosecution exposure
Annual return non-filing
Penalty under Sec 14B
N/A
Compliance rating downgrade
Damages graded by length of delay under the Para 32A scheme of the EPF Scheme. ESI damages mirror PF structure. Section 36(1)(va) disallowance is the largest single financial impact of delay.

Frequently Asked Questions.

PF applies when an establishment employs 20 or more persons at any time during the year. Once that threshold is crossed even once, registration with EPFO is mandatory within 30 days, and PF compliance continues even if headcount later drops below 20. Coverage extends to every employee earning basic + DA up to ₹15,000/month mandatorily; above ₹15,000 the employee can opt in voluntarily with mutual consent. Some industries are notified for PF at lower thresholds.
ESI applies when an establishment employs 10 or more persons (20 or more in some states like Maharashtra and Chandigarh). Once registered, it covers every employee earning gross wages up to ₹21,000/month (₹25,000 for persons with disabilities). Under the new Code on Social Security, ESI coverage has been expanded to all geographic areas, prior area-based exemptions have been largely phased out. Verify location-specific notifications before assuming exemption.
PF: Employee 12% + Employer 12% of basic wages. Employer's 12% is split: 8.33% to the Employees' Pension Scheme (EPS, capped at ₹15,000 basic) and 3.67% to the EPF account. Plus 0.5% EDLI and 0.5% admin charges paid by employer. ESI: Employee 0.75% + Employer 3.25% of gross wages, applicable only for employees earning up to ₹21,000/month gross. Above the threshold, ESI doesn't apply for that employee.
Both PF and ESI contributions must be deposited by the 15th of the month following the wage month. So April's contributions are due by 15 May. The deadline applies to the actual deposit (cleared in EPFO/ESIC), not the ECR upload date. Banking holidays and portal slowdowns are not extensions. We file and pay by the 13th to maintain a 2-day buffer.
Two costs. First, 12% per annum interest from the due date until actual payment. Second, damages under Section 14B of the EPF Act (and equivalent ESI provisions), graded by delay: 5% for 0-2 months, 10% for 2-4 months, 15% for 4-6 months, 25% for 6+ months. Most critically, under Section 36(1)(va) of the IT Act, late-deposited employee contributions are permanently disallowed as an expense in your income tax return, often the largest financial hit.
The Electronic Challan-cum-Return (ECR) is the monthly return EPFO requires from every registered employer. It lists every covered employee with their UAN, wages, employer contribution, and employee contribution. The ECR file is uploaded on the EPFO Unified Portal, which generates a Temporary Return Reference Number (TRRN). Payment is then made via SBI / linked PSU bank net banking. The entire process is online; physical challans no longer exist. We handle the ECR file preparation, validation, upload, and payment.
For new joiners with a fresh PF account: we generate the UAN at the first ECR upload. For new joiners with prior PF (most common): we link the existing UAN to your establishment, transferring KYC and previous service. For exits: we update the exit date in EPFO records, after which the employee can submit Form 19 (withdrawal) or Form 31 (advance) or transfer claim to the next employer. We also handle nomination updates (Form 2) for existing employees.
Yes. Fresh PF registration: online application via Shram Suvidha portal with PAN, GST, incorporation documents, bank details, and employee details. Establishment code allocated within 5-7 days. Fresh ESI registration: online application via the ESIC portal with similar documents plus factory/establishment licence. Registration number allocated within 7-10 days. Once registered, compliance starts from the next wage month. Late registration after threshold is crossed triggers retroactive contributions.
Section 14B of the EPF Act allows EPFO to impose damages on late PF deposits, with the rate graded by delay duration. The notice typically arrives weeks after a default, citing specific months and proposed damages. We address every notice within 48 hours of receipt: file a reply with reasons (banking issues, portal downtime, etc.), present supporting evidence, and argue for the lowest damages slab applicable. First-response handling usually keeps damages at 5%. Ignored notices escalate to 25% and can trigger Section 7A inquiry.
Each state location typically needs its own PF establishment code (Form 5A) and ESI sub-code. We map each branch to its respective code, file monthly ECRs and ESI challans per branch, and reconcile contributions at the master level. Branch additions and surrenders are filed as event-based modifications. For multi-state operations, this prevents the common error of consolidating contributions under one code when separate filings are required.
Pricing depends on employee count (number of UANs in ECR), number of states / branches (separate establishment codes), and whether ongoing default-resolution support is needed. Reach out and we'll give an exact quote. Most early-stage clients are in a predictable per-month range. The cost typically pays for itself by avoiding one or two Section 14B damages notices over a year.
The Code on Social Security, effective from November 2025, consolidates the EPF Act 1952 and ESI Act 1948 (along with seven other social security laws) into a unified framework. Key changes for employers: expanded ESI geographic coverage (most area-based exemptions removed), aggregator and gig worker coverage (separate provisions for platform-based workers), and fixed-term employee gratuity from day one. The day-to-day PF and ESI compliance mechanics, rates, deadlines, ECR process, are largely unchanged. We track every state-specific rule notification as it rolls out.

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