EPF Registration
As per the law, organizations with 20 or more employees are required to register for the Employees’ Provident Fund (EPF) Scheme within one month of reaching the threshold of 20 employees. However, smaller organizations with fewer employees can also register voluntarily.
For employees earning a salary exceeding ₹15,000 per month, it is not mandatory to become a member of the EPF Scheme. The scheme provides benefits to employees by helping them build a retirement corpus with employer and employee contributions.
Benefits of EPF Registration
- Retirement Savings: A pre-fixed interest rate on deposits helps employees accumulate a healthy retirement corpus.
- Pension Contribution: Approximately 8.5% of the employer’s contribution is directed toward the Employee Pension Scheme.
- Emergency Withdrawal: Employees can withdraw funds during emergencies or uncertainties.
- Tax Benefits: Earnings generated through the EPF are exempted from income tax.
ESI Registration
Employees’ State Insurance (ESI) registration is mandatory for employers with 10 or more employees, particularly for workers earning ₹15,000 or less per month. Employees contribute 0.75% of their salary toward ESI, while employers contribute 3.25%. To successfully register, the employer must pay an advance contribution for six months.
Benefits of ESI Registration
- Sickness Benefits: Employees can receive 70% of their salary during certified illnesses lasting up to 91 days in a year.
- Medical Coverage: Comprehensive medical benefits are provided to employees and their families.
- Maternity Benefits: Paid leaves for women during pregnancy.
- Death Benefits: Dependents of an employee who dies while on duty receive 90% of the salary as a monthly payment.
- Disability Benefits: Similar provisions are made in case of permanent or temporary disabilities.
- Funeral Expenses: A fixed amount is provided for funeral costs.
- Old Age Medical Care: Continued medical care for retirees.
Applicability of the ESI Scheme
The ESI scheme applies to the following establishments:
- Shops
- Hotels or restaurants engaged in sales but not manufacturing activities.
- Cinemas, including preview theaters.
- Road motor transport establishments.
- Newspaper establishments not categorized as factories under Section 2(12).
- Private educational institutions, including those run by individuals, trustees, or societies.
- Medical institutions, such as hospitals, nursing homes, diagnostic centers, and pathological labs, under private, trust, or joint ownership.
Mandatory Registration
Since February 23, 2020, it has become mandatory for all new companies to obtain EPF and ESI registrations at the time of incorporation. Separate registrations through the Shram Suvidha Portal are no longer issued to new companies.
Disclaimer
The information provided here is based on applicable laws and rules at the time of writing. While efforts have been made to ensure accuracy, completeness, and reliability, the information should not be considered professional advice. Users are advised to consult the relevant provisions of applicable laws for clarification. Changes in laws and regulations may affect the accuracy of the information.