EPF and ESIC are the two social-security pillars most Indian employers deal with every month, and they are also the two most frequently confused. They are governed by different Acts, administered by different bodies, apply at different thresholds and are computed on different wage bases. Getting either wrong invites interest, damages and inspection notices. This guide sets them side by side.
Two different laws, two different administrators
The Employees’ Provident Fund is governed by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and administered by the EPFO. It is a retirement-savings scheme. The Employees’ State Insurance is governed by the Employees’ State Insurance Act, 1948 and administered by the ESIC. It is a medical and cash-benefit scheme for sickness, maternity, disablement and dependants.
Who is covered
EPF generally applies to establishments employing 20 or more persons (and to certain notified classes at a lower headcount). ESI generally applies to non-seasonal establishments employing 10 or more persons (20 in a few states for certain categories). Once an establishment is covered, it remains covered even if numbers later fall.
- EPF wage ceiling: mandatory coverage applies to employees drawing up to ₹15,000 per month (basic + DA). Above this, coverage is at the employer’s option, subject to the scheme rules.
- ESI wage ceiling: employees drawing up to ₹21,000 gross per month are covered (₹25,000 for employees with disability).
Contribution rates
The wage base and the split differ materially:
| EPF | ESI | |
|---|---|---|
| Employee share | 12% of basic + DA | 0.75% of gross wages |
| Employer share | 12% of basic + DA | 3.25% of gross wages |
| Of employer’s 12% (EPF) | 8.33% to EPS (pension, capped on ₹15,000), 3.67% to EPF | — |
EPF also carries EDLI (life-insurance) and administrative charges on the employer. ESI is computed on gross wages, while EPF is computed on basic + dearness allowance. This single difference — gross vs basic — is where most calculation errors originate.
Filing and due dates
For EPF, the monthly Electronic Challan-cum-Return (ECR) is filed and contributions paid by the 15th of the following month. For ESI, contributions are likewise paid monthly by the 15th, with two defined contribution periods (April–September and October–March) that map to benefit periods. Every covered employee should have a UAN for EPF and an IP number for ESI.
The 50% wages point worth planning for
Under the Code on Wages, the statutory definition of “wages” requires that excluded allowances not exceed 50% of total remuneration. As this takes operational effect, the wage base for PF, gratuity and similar computations rises for salary structures that are heavily allowance-loaded. Employers with such structures should model the impact now rather than discover it at the first inspection.
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