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ESI Return

Overview

The employee provident fund is administered by the Employees Provident Fund Organization (EPFO), a statutory body developed by the government of India under the Ministry of Labor and Employment. It is formed to administer the mandatory contribution towards the EPF scheme by both the employees and employers.

Coverage

  • As per the provision of section 1(3) of The EPF &MP Act, 1952 it applies (Mandatory provision)-
    • To every establishment which is a factory engaged in any industry specified in Schedule I and in which Twenty or more persons are employed, and
    • To any other establishment employing twenty or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf, Provident that the Central Government may, after giving not less than two months’ notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification.
  • As per the provision of section 1(4) of The EPF &MP Act, 1952 where it appears to the Central Provident Fund Commissioner, whether on an application made to him in this behalf or otherwise, that the employer and the majority of employees in relation to any establishment have agreed that the provisions of this Act should be made applicable to the establishment, he may, by notification in the Official Gazette, apply the provisions of this Act to that establishment on and from the date of such agreement or from any subsequent date specified in such agreement.
  • As per the provision of section 1(5) of The EPF &MP Act, 1952 an establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below twenty.
  • AS per the provision of 16(1) of the EPF &MP Act, 1952 this Act shall not apply-
    • To any establishment registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State relating to cooperative societies employing less than fifty persons and working without the aid of power; or
    • To any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefit of contributory provident fund or old age pension in accordance with any Scheme or rule framed by the Central Government or the State Government governing such benefits; or
    • To any other establishment set up under any Central, Provincial or State Act and whose employees are entitled to the benefits of contributory provident fund or old age pension in accordance.
  • An employee earning more than 15,000/- as basic salary may be excluded from the preview of the scheme on joint declaration of employer and employee.

Return

As per the provisions of EPF Scheme, 1952, EDLI Scheme, 1976 and EP Scheme, 1995, it is duty of every employer that:

  • Every employer shall send to the Commissioner, within fifteen days of the commencement of this Scheme, a consolidated return in such form as the Commissioner may specify of the employees required or entitled to become members of the Fund showing the [basic wage, retaining allowance (if any) and dearness allowance including the cash value of any food concession] paid to each of such employees provided that if there is no employee who is required or entitled to become a member of the Fund, the employer shall send a ‘NiL’ return.
  • Every employer shall send to the Commissioner within fifteen days of the close of each month a return-
    • In Form 5, of the employees qualifying to become members of the Fund for the first time during the preceding month together with the declarations in Form 2 furnished by such qualifying employees, and
    • In such form as the Commissioner may specify, of the employees leaving service of the employer during the preceding month, provided that if there is no employee qualifying to become a member of the Fund for the first time or there is no employee leaving service of the employer during the preceding month, the employer shall send a ‘NIL’ return.
  • Every employer shall maintain an inspection note book in such form as the Commissioner may specify, for an Inspector to record his observation on his visit to the establishment.
  • Every employer shall maintain such accounts in relation to the amounts contributed to the Fund by him and by his employees as the Central Board from time to time, direct, and it shall be the duty of every employer to assist the Central Board in making such payments from the Fund to his employees as are sanctioned by or under the authority of the Central Board.

A Recent amendment in Companies (Incorporation) Rules, 2014 makes EPF & ESI registration mandatory for every company irrespective of its applicability as per the provision of respective Act. Therefore, all new companies incorporated on or after 23rd of Feb, 2020 shall have automatic EPF & ESI registration. However, no corresponding amendments has made in made in EPF & MP Act, 1952 and ESI Act, 1948 with regards to threshold for registration, contribution and return filing requirements.  A advisory has been issued by MCA and Ministry of Labour & Employment that these newly registered company will have to comply with the provisions of EPF & MP Act, 1952 and ESI Act, 1948 when they cross the threshold limit of employment under the respective Acts. As per the provision of Rule 36 of The EPF Scheme, 1952, Rule 10 of The EDIL Scheme,1976 and Rule 20 of EP Scheme, 1995, Every employer shall send to the Commissioner within fifteen days of the close of each month a return in respect of the employees leaving service of the employer during the preceding month provided that if there is no employee leaving service of the employer during the preceding month the employer shall send a “NIL” return. This advisory is seeming to be contradictory with the provisions of above referred provisions of the schemes.

Contribution

As per the provisions of section 6 of EPF Act, 1952, and Schemes made thereunder:

  • The contribution which shall be paid by the employer to the fund shall be 12% of the basic wages, dearness allowance and retaining allowance (if any) for the time being payable to each of the employees and the employee’s contribution shall be equal to the contribution payable by the employer in respect of him. However, if any employee so desires may contribute an amount exceeding 12% of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above 12%;
  • In following case rate of contribution may be 10% instead of 12%:
    • Any establishment in which less than 20 employees are employed.
    • Any sick industrial company and which has been declared as such by the Board for Industrial and Financial Reconstruction
    • Any establishment which has at the end of any financial year, accumulated losses equal to or exceeding its entire net worth and
    • Any establishment in following industries: –
      • Jute
      • Beedi
      • Brick
      • Coir and
      • Guar gum Factories.
  • In addition to above mentioned contribution, Employer shall also bear administration charges which is 1% of PF salary or 500 whichever is higher.
  • Each contribution shall be calculated to the nearest rupee, 50 paise or more to be counted as the next higher rupee and fraction of a rupee less than 50 paise to be ignored.

Damage & Interest

S.No.Period of defaultRates of Damages (percentage of arrears per annum)  
1Less than two months5
2Two months and above but less than four months10
3Four months and above but less than six months15
4Six months and above25

Payment of contributions

An employer is liable to pay his contribution in respect of every employee and deduct employees’ contribution from wages and shall pay contribution fund within 15 days of the last day of the Calendar month in which the contributions fall due.

Doc Required for Return filing & Challan Generation

  • Salary sheet of the Company
  • KYC of newly Joined Employees

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