All four Labour Codes now operative. EPF Act 1952 provisions and ESI schemes continue under transition rules. ESI current scheme continues till 20 November 2026. New wage definition (50% rule) applies immediately.
PF & ESI — Registration, Returns & Full Compliance
Complete Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) compliance services — registration, monthly return filing, computation, challan generation and advisory under India's Labour Codes, 2025.
Legal Framework
New Labour Codes — What Has Changed for PF & ESI?
The Government of India notified all four Labour Codes on 21 November 2025, consolidating 29 legacy labour laws into a streamlined framework. The four Codes are: the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security (SS Code), 2020; and the Occupational Safety, Health and Working Conditions Code (OSH Code), 2020.
The Code on Social Security, 2020 subsumes the EPF & MP Act, 1952 and the ESI Act, 1948 (among others) into a single unified social security framework. However, during the transition period, the EPF Act 1952 provisions and the ESI schemes continue to apply. Central and State rules under the Labour Codes are being notified in phases — existing compliance obligations remain in full force until replaced.
Transition position (as of May 2026):
• EPF & MP Act, 1952 continues — PF rates, thresholds and ECR filing remain unchanged
• ESI Act, 1948 schemes continue for one year till 20 November 2026 — existing ESI contributions, benefits and returns continue
• New Wage Definition (50% rule) under Code on Wages applies immediately — if allowances exceed 50% of gross remuneration, the excess must be added to wages for PF/ESI computation
• Central Draft Rules under SS Code published 30 December 2025 — final rules awaited
Key Changes — Labour Codes 2025
What Employers Must Know Now
- Unified wage definition — "Wages" under the Code on Wages now include basic + DA + retaining allowance. Allowances (HRA, bonus, commission, OT) are excluded but capped at 50% of total remuneration. If allowances exceed 50%, the excess is added back to wages for PF/ESI computation
- Fixed-term employees now entitled to EPF, ESI, gratuity and bonus at par with permanent employees — proportionate to tenure from day one (no 5-year minimum for gratuity)
- Gig and platform workers — social security coverage framework introduced under SS Code; specific contributions and benefits to be notified by Central Government
- Expanded ESI coverage — PAN-India extension of ESIC; establishments with even one employee engaged in hazardous processes must provide ESI benefits
- Free annual health check — mandatory for all workers aged 40 and above
- Limitation period — EPF and ESI proceedings now have a 5-year limitation period; pending inquiries must conclude within 2 years of SS Code commencement
- Compounding of offences — first-time fine-only offences compoundable at 50%; first-time offences with up to 1 year imprisonment compoundable at 75%
- Mandatory appointment letters — all workers must receive a written appointment letter stating designation, wages and social security entitlements
Provident Fund
Employees' Provident Fund — Overview
The Employees' Provident Fund and Miscellaneous Provisions (EPF & MP) Act, 1952 — continuing under the transition provisions of the Code on Social Security, 2020 — is a mandatory social security law covering establishments employing 20 or more employees. Registration with the Employees' Provident Fund Organisation (EPFO) must be obtained within one month of crossing the 20-employee threshold.
EPF provides employees with a long-term savings corpus for retirement, housing, education, medical emergencies and insurance. The scheme creates financial security for the employee and their family — with the employer's contribution adding directly to the employee's retirement corpus.
Under the new Code on Wages wage definition, the PF contribution base may be broader than before for employers maintaining high-allowance salary structures. If allowances exceed 50% of total remuneration, the excess is treated as wages and included in the PF computation base.
Voluntary coverage: An establishment with fewer than 20 employees may voluntarily obtain PF registration with the consent of a majority of employees. Once registered, PF compliance is mandatory and the registration cannot be cancelled. Employees earning basic wages above ₹15,000/month are not required to contribute but may opt to become PF members voluntarily — and the employer's contribution is then limited to 12% of ₹15,000 unless the employer agrees otherwise.
Applicability
Who Needs PF Registration?
| Parameter | Applicable Threshold / Rule |
|---|---|
| Mandatory registration | Establishments with 20 or more employees at any point in time — across all branches and departments combined |
| Registration deadline | Within one month of crossing the 20-employee threshold |
| Voluntary registration | Establishments with fewer than 20 employees may register voluntarily |
| Wage ceiling (mandatory) | Employees with basic wages up to ₹15,000/month must contribute compulsorily |
| Wage ceiling (optional) | Employees with basic wages above ₹15,000/month may opt in voluntarily |
| Exempted industries | Certain industries/establishments may apply for exemption — but a separate PF Trust must be constituted with equivalent or better benefits |
| Contract workers | Contract workers deployed by a contractor are covered — Principal Employer is ultimately responsible for compliance |
| Fixed-term employees | Now eligible from day one under Labour Codes 2025 — proportionate PF contributions mandatory |
Contribution Rates
PF Contribution Breakdown
Total monthly PF contribution = 24% of basic wages (12% employer + 12% employee). The employer's 12% is split across three schemes.
Employer's Contribution — 12%
EPS contribution (8.33%) is computed on the lower of actual basic wages or ₹15,000. The balance (12% − 8.33% = 3.67%) goes to EPF. EDLI admin charge: 0% where employer's establishment is exempted under EDLI Scheme. EPF admin charges are 0.50% with a minimum of ₹500 per month per establishment.
Employee's Contribution — 12%
The employee's entire 12% contribution goes directly to their EPF account — no split. Employees with basic wages above ₹15,000 who are voluntary members contribute 12% on their actual basic wages. Interest is credited annually by EPFO (currently 8.25% per annum for FY 2023–24).
Reduced rate of 10% applies to:
- • Establishments with fewer than 20 employees
- • Sick industrial units declared by BIFR
- • Establishments in specified industries (bidi, jute, brick, coir, etc.)
Returns & Due Dates
PF Returns — Filing Calendar
| Return / Compliance | Due Date | Details |
|---|---|---|
| Monthly ECR Electronic Challan-cum-Return |
15th of every month | Monthly return + challan for previous month's wages. Filed online on the EPFO Unified Portal. Covers EPF, EPS and EDLI contributions for all employees. |
| Annual Return (Form 3A / 6A) | 25th April | Final annual PF return for the year ended 31 March. Now largely subsumed in the monthly ECR filings but reconciliation statements may be required. |
| UAN Activation & KYC | Within 30 days of joining | Universal Account Number (UAN) must be generated and activated for each new employee. KYC (Aadhaar, PAN, Bank) linking is mandatory before contribution crediting. |
| PF Payment (Challan) | 15th of every month | Contribution for wages paid in the previous month must be deposited. Payment is online through the EPFO Unified Portal using TRRN (Temporary Return Reference Number). |
| International Worker Return | 15th of every month | Separate IW-1 return for International Workers (foreign nationals and Indian nationals working abroad in SSA countries). Higher PF ceiling (full wages) applies to international workers. |
Documents for Registration
PF Registration Documents
- Digital Signature Certificate (DSC) of Proprietor / Partner / Director — mandatory for online registration
- Aadhaar Card of Proprietor / Managing Partner / Director (linked to registered mobile number)
- PAN Card of the Proprietor / Partner / Director
- PAN Card of the Entity — firm / company / LLP / trust PAN
- Cancelled Cheque or Bank Statement of the entity's current account
- Electricity Bill of the registered office — not older than 2 months
- Address proof — rent agreement, property tax receipt or utility bill
- Shop & Establishment Certificate / GST Certificate / Factory Licence — any valid government licence for the establishment
- List of employees with joining dates, designations and basic wages
- MOA & AOA / LLP Agreement / Partnership Deed (as applicable to entity type)
Online registration: PF registration is done online at the EPFO Unified Portal (unifiedportal-emp.epfindia.gov.in). A digital signature is required. On successful verification, the establishment's PF Code / Establishment Code is issued within 3–7 working days. This 7-digit alphanumeric code (e.g. DL/DEL/12345/000) is the permanent identity for the establishment with EPFO.
Penalties & Interest
Penal Damages for Delayed PF Deposit
Delay in deposit of PF dues attracts penal damages under Para 32A of the EPF Scheme, 1952 — levied at the following flat rates on the unpaid contribution amount. Damages are in addition to interest at 12% per annum under Section 7Q.
Additional penalties under Labour Codes 2025: Non-payment of PF contributions can attract imprisonment up to 3 years and fines up to ₹3,00,000 for repeat offences under the Code on Social Security, 2020. First-time offences punishable with fine only may be compounded at 50% of the fine. Section 7Q interest at 12% per annum continues to apply on unpaid dues from the due date until actual payment — in addition to penal damages above.
PF Benefits
Benefits Under the EPF Schemes
The EPF & MP Act, 1952 provides three distinct schemes — each addressing a different life stage or need of the employee.
EPF Scheme — Retirement Corpus
The core scheme — a mandatory savings fund built through monthly employer (3.67%) and employee (12%) contributions. The accumulated corpus (with compound interest at 8.25% p.a. currently) is payable on retirement, death, disablement, or after 2 months of unemployment. Withdrawals are permitted for housing, education, marriage and medical treatment before retirement.
EPS — Employee Pension Scheme
Funded by the employer's 8.33% contribution (on wages up to ₹15,000). Provides a monthly pension to the employee on retirement (after 10 years of eligible service), to the widow on death, and to disabled employees. Minimum pension is ₹1,000/month. Early withdrawal (Form 10C) is allowed before 10 years of service as a lump-sum withdrawal benefit.
EDLI — Life Insurance Cover
The Employees' Deposit Linked Insurance Scheme, 1976 — funded entirely by the employer's 0.50% contribution — provides a life insurance cover to the family of a deceased PF member while in service. The maximum insurance benefit payable under EDLI is ₹7 Lakh (revised in 2021). Minimum assured benefit: ₹2.5 Lakh. No separate premium is paid by the employee.
PF for Medical / Housing / Education
Members may make partial withdrawals from their PF corpus for: medical treatment (self and family); purchase or construction of house (Form 31); repayment of home loan; children's education (after 7 years of membership); marriage of self, children or siblings; and equipment for physically handicapped members.
UAN — Unified Account Number
Every PF member is assigned a Universal Account Number (UAN) — a portable, permanent 12-digit number that links all PF accounts across different employers throughout a member's career. The UAN enables online transfer of PF balances, online withdrawal (Form 10C, 19, 31) through the EPFO portal/app without employer attestation (where KYC is linked), and real-time passbook access.
Tax Benefits on PF
Employee's PF contributions (up to ₹1.5 lakh) are deductible under Section 123, ITA 2025 (old Section 80C). Employer's contribution up to 12% of salary is exempt from tax in the employee's hands. PF interest is tax-free up to ₹2.5 lakh contribution per year (₹5 lakh for government employees with no employer contribution). The accumulated corpus on retirement is fully exempt if withdrawn after 5 continuous years of service.
ESI — Overview
Employees' State Insurance — Complete Coverage
The Employees' State Insurance (ESI) Act, 1948 — continuing under transition provisions of the Code on Social Security, 2020 (till 20 November 2026) — is a comprehensive health and social security scheme managed by the Employees' State Insurance Corporation (ESIC) under the Ministry of Labour and Employment.
ESI is applicable to all establishments employing 10 or more employees (in Maharashtra and Chandigarh: 20 or more). ESI coverage applies to employees whose gross wages do not exceed ₹21,000 per month (₹25,000 for persons with disability). The scheme covers employees and their dependents for medical, sickness, maternity, disablement and death benefits — at no additional cost to the covered employee beyond the monthly contribution.
Under the new Code on Wages wage definition, more employees may come within ESI coverage because the 50% allowance rule may effectively reduce the "wages" used for eligibility comparison — even without any change to the ₹21,000 ceiling. ESIC issued a circular on 28 November 2025 directing establishments to align wage computations with the revised definition.
New under Labour Codes 2025: ESI coverage is being extended PAN-India. Establishments with even one employee engaged in hazardous processes must provide ESI benefits regardless of headcount. Digital and audio-visual workers, journalists in electronic media, dubbing artists and stunt persons now receive full ESI benefits. The definition of "family" and "dependants" under the SS Code has been expanded to include widower, grandparents, and (for women employees) father-in-law and mother-in-law.
Applicability at a Glance
ESI Registration — Who, What, When
| Parameter | Rule |
|---|---|
| Employee threshold | 10 or more employees (20 or more in Maharashtra and Chandigarh) |
| Registration deadline | Within 15 days of crossing the threshold |
| Wage ceiling (insured) | Employees earning ≤ ₹21,000/month gross wages (₹25,000 for persons with disability) |
| Employee exemption | Employees earning above ₹21,000/month are not covered under ESI — but remain counted for threshold purposes |
| Contract workers | Covered — Principal Employer responsible; contractor must register separately if employing 10+ workers |
| Fixed-term workers | Covered from day one under Labour Codes 2025 |
| Seasonal establishments | Covered if employing 10+ workers during peak period |
| Geographical coverage | All implemented areas of India (ESIC implementing PAN-India under Labour Codes 2025) |
Employer's Contribution
Computed on the employee's gross wages for the wage period. Due on the 15th of the following month along with the employee contribution. Deposited online through the ESIC portal. New reduced employer rate of 3.25% (was 4.75% before 2019) continues.
Employee's Contribution
Deducted from the employee's wages each month. The combined employer + employee contribution is deposited by the employer. Employees earning ≤ ₹176/day (daily wage workers) are exempt from the employee's contribution — but the employer still contributes 3.25%.
Returns & Due Dates
ESI Returns — Filing Calendar
| Return / Filing | Due Date | Details |
|---|---|---|
| Monthly ESI Contribution & Return | 15th of every month | Monthly contribution challan for wages paid in the previous month. Filed online on the ESIC portal (esic.gov.in). Returns and challans are combined in the portal. |
| Half-Yearly Return | 11 November & 12 May | Half-yearly returns covering April–September (due 11 November) and October–March (due 12 May). Summarises employee wages, contributions and insurance numbers for the half-year. |
| Form 3 — Return of Declaration | Within 10 days of new employee joining | Employer must submit details of each new covered employee — name, address, wages and family details. Employee receives a Temporary Identity Certificate (TIC) pending permanent card issuance. |
| Annual Information System (AIS) | Ongoing — portal updated | ESIC annual information submissions are managed through the employer's online portal account. All changes in employee details, wage revision and insurance number updates must be done promptly. |
ESI Registration Documents
Documents Required for ESI Registration
- PAN Card of the Entity — firm / company / LLP / trust PAN
- Aadhaar Card of Proprietor / Partner / Director (authorised signatory)
- Address Proof — electricity bill / rent agreement / property tax receipt of registered office (not older than 3 months)
- Bank Details — cancelled cheque or bank statement of entity's current account
- MOA & AOA / LLP Agreement / Partnership Deed / Trust Deed as applicable
- Shop & Establishment Certificate / Factory Licence / GST Registration Certificate
- List of employees with name, date of joining, designation and gross wages
- Certificate of Incorporation / Registration Certificate of the entity
ESI Registration: Done online at esic.gov.in. On registration, the employer receives a unique 17-digit Employer Code. Each covered employee receives a 17-digit Insurance Number — their permanent identity for accessing all ESIC benefits across India. Employees can access benefits through the ESIC mobile app and the Umang platform.
Penalties
ESI — Penalties for Non-Compliance
| Offence | Penalty Under ESI Act | Under Labour Codes 2025 |
|---|---|---|
| Failure to register establishment | Imprisonment up to 3 years + fine up to ₹10,000; minimum 1 year for second offence | SS Code — imprisonment up to 3 years + fine up to ₹3,00,000 (repeat); first-time compoundable at 50–75% |
| Delayed deposit of ESI contributions | Simple interest at 12% per annum on unpaid dues under Section 85B of the ESI Act from the due date | Same continues under transition — SS Code interest provisions await rule notification |
| Failure to file ESI returns | Fine up to ₹2,000; up to ₹200 per day for continuing default | Enhanced under SS Code — fines up to ₹1,00,000 for continuing defaults |
| Obstruction of ESIC inspector | Imprisonment up to 2 years and/or fine | SS Code: imprisonment up to 2 years and fine up to ₹1,00,000 |
| Failure to maintain records / false records | Imprisonment up to 3 years / fine | Continues with enhanced fines |
| Non-payment of employee's share deducted | Imprisonment up to 3 years / fine up to ₹10,000 | SS Code: imprisonment up to 3 years + ₹3,00,000 fine (repeat) |
ESI Benefits
Benefits Provided Under the ESI Scheme
ESI is a self-financing social security and health insurance scheme. Insured employees and their dependants receive comprehensive benefits — fully funded from the 4% combined monthly contribution. Under the Labour Codes, benefits are being expanded.
Medical Benefit
Full medical and surgical care — including specialist consultation, hospitalisation, surgery, medicines and ambulance services — for the insured employee and all dependants without any monetary ceiling. Available at ESIC dispensaries, hospitals and through empanelled private hospitals. Under the Labour Codes, education facilities for workers' children are also included.
Sickness Benefit
Cash compensation at 70% of average daily wages for certified sickness absence — payable for a maximum of 91 days in two consecutive benefit periods (each of 6 months). Employee must have contributed for at least 78 days in the preceding contribution period to qualify. Extended sickness benefit (at 80%) available for long-duration specified diseases up to 2 years.
Maternity Benefit
Full daily wages (100%) payable as maternity benefit for up to 26 weeks (extended from 12 weeks) for normal delivery — subject to contribution for 70 days in the preceding year. For miscarriage: 6 weeks of benefit. For adoption of a child below 3 months: 12 weeks. Medical bonus of ₹5,000 payable if no free confinement facility is availed.
Disablement Benefit
Temporary Disablement: 90% of daily wages payable from day one of the injury during the period of disablement — no minimum contribution period required. Permanent Disablement: 90% of wages payable as a monthly pension for the remaining lifetime of the employee, proportionate to the degree of disablement as assessed by the ESIC Medical Board.
Dependants' Benefit
If an insured employee dies due to employment injury, dependants receive a monthly pension at 90% of daily wages. Dependants under Labour Codes now include: widow (or widower), children (up to age of marriage or 25 years if studying), disabled children (no age limit), dependent parents and — for women employees — father-in-law and mother-in-law. Funeral expenses of ₹15,000 also payable.
Unemployment Allowance (ABVKY)
Under the Atal Bimit Vyakti Kalyan Yojana (ABVKY), insured employees who lose employment involuntarily receive cash support at 50% of average daily wages for up to 90 days during the lifetime — subject to having contributed for at least 2 years. Medical care for self and family from ESIC hospitals is also provided during unemployment.
Compliance Calendar
PF & ESI — Monthly Compliance Summary
Key dates every employer must track to avoid interest, penalties and prosecution.
| Due Date | PF (EPF & MP Act, 1952) | ESI (ESI Act, 1948) |
|---|---|---|
| 15th of every month | Deposit ECR challan + submit monthly return on EPFO Unified Portal for previous month | Deposit ESI contribution challan for previous month on ESIC portal |
| 10 days of new joining | Generate and activate UAN for new employee; complete KYC linking | Submit Form 3 / register new employee on ESIC portal; issue Temporary Identity Certificate |
| 25th April (Annual) | Final annual return for year ended 31 March (Form 6A / reconciliation) | Half-yearly return for October–March period (due 12 May) |
| 11 November (Half-yearly) | No separate half-yearly PF return — monthly ECRs cover this | Half-yearly return for April–September period |
| Ongoing | Transfer PF of employees joining from another establishment (Form 13); settle exits (Form 10D, 19, 10C) | Update wage revisions and employee details on ESIC portal promptly; issue Pehchan cards |
Unified Labour Portal (Shram Suvidha): Under the Labour Codes, a unified portal for all labour compliance — PF, ESI, professional tax, and other registrations — is being operationalised. Employers can expect a single registration and compliance dashboard to replace multiple portals. Until fully deployed, existing EPFO and ESIC portals remain operative.
How We Help
PF & ESI — Our Compliance Services
End-to-end management of your PF and ESI compliance — from registration to monthly returns — so you focus on your business.
Eligibility & Setup
We verify your employee count and wage data, determine PF and ESI applicability, and manage the complete online registration process — including DSC and employer code generation.
Employee Onboarding
UAN activation, KYC linking and ESIC insurance number generation for each employee. Form 2 (PF nomination) and Form 1 (ESI declaration) completed for all employees.
Monthly Payroll Integration
We compute monthly PF and ESI contributions from your salary/wages data, apply the new 50% wage definition rule, and prepare the challan — ready for your payment by the 15th.
ECR & ESI Filing
Monthly ECR submission on the EPFO Unified Portal and ESI return filing on the ESIC portal. We maintain all records — Form 12, Form 6, digital employee registers — for inspection readiness.
Exits & Settlements
PF withdrawal / transfer forms (19, 10C, 10D, 13), UAN-linked settlements, and ESI claim assistance for departing employees — ensuring smooth, compliant offboarding.
EPFO/ESIC Notices
Handling of EPFO / ESIC inspection notices, arrear demands, coverage disputes and assessment orders — including representation before Regional PF Commissioner and ESIC authorities.
FAQs
Frequently Asked Questions
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Free Consultation
Not sure whether the new Labour Codes' 50% wage rule affects your payroll or PF/ESI liability? Book a free call with our compliance team.
Stay Compliant
PF & ESI Compliance — Let Us Handle It.
Monthly returns, challan deposits, employee registrations, exit settlements and EPFO/ESIC notices — managed end-to-end under the Labour Codes 2025. Affordable. On-time. Every month.
