Payroll

The Employees' State Insurance (ESI) scheme is a comprehensive social security initiative in India designed to provide financial protection to employees in case of sickness, maternity, disability, or work-related injuries. Managed by the Employees' State Insurance Corporation (ESIC) under the Ministry of Labour and Employment, ESI covers employees earning up to ₹21,000 per month (₹25,000 for persons with disabilities) and offers medical care, cash benefits, and other support for insured workers and their families.

The Employees' State Insurance (ESI) contribution rates are set by the Employees' State Insurance Corporation (ESIC). As of now, the employer contributes 3.25% of the employee's wages, while the employee contributes 0.75%. These contributions are calculated on the employee’s gross salary, capped at ₹21,000 per month (₹25,000 for persons with disabilities). The collected funds provide medical care, cash benefits, and other social security benefits to insured employees and their families.

Employees' State Insurance (ESI) calculations involve computing contributions based on the employee's gross wages. The employer contributes 3.25% and the employee contributes 0.75%, calculated monthly. For accounting entries, the employer records their share as an expense and the employee’s share as a deduction from wages. The total contribution is credited to the ESI Payable account and paid to the ESIC within the due date to ensure compliance and avoid penalties. Accurate calculations and timely entries are crucial for statutory adherence. .

ESI payment and filing are essential compliance processes under the Employees' State Insurance Act. Employers must calculate the total ESI contribution (both employer and employee shares) and remit it by the 15th of the following month through the ESIC portal. Along with payment, employers must file a monthly Return of Contribution (RC) detailing employee-wise wages and contributions. Timely payment and accurate filing are crucial to avoid penalties, ensure employee benefits, and maintain statutory compliance.

The Employees' Provident Fund (EPF) is a social security scheme managed by the Employees' Provident Fund Organisation (EPFO), designed to provide financial stability to employees after retirement. Under this scheme, both the employer and employee contribute 12% of the employee's basic salary and dearness allowance each month. EPF helps employees accumulate savings with interest, ensuring long-term financial security. The scheme also offers benefits like withdrawals for emergencies, housing, education, and retirement planning.

Provident Fund (PF) contributions are mandatory for organizations covered under the EPF Act. Both employer and employee contribute 12% of the employee's basic salary and dearness allowance. Out of the employer's 12%, 8.33% goes to the Employees' Pension Scheme (EPS) (up to ₹1,250 per month), and the remaining 3.67% is credited to the EPF. Additionally, the employer pays 0.5% for EDLI, 0.5% for EPF Admin Charges, ensuring social security benefits for employees. .

Provident Fund (PF) calculations involve computing 12% of the employee's basic salary and dearness allowance for both employee and employer contributions. The employer’s share is split into 8.33% for EPS (up to ₹1,250) and 3.67% for EPF. Accounting entries include debiting Salaries and PF Expense accounts while crediting PF Payable, EPS Payable, and EDLI Payable. Timely payment to the EPFO ensures compliance and provides employees with retirement benefits, insurance, and pension security.

PF payment and filing are crucial compliance processes under the EPF Act. Employers must remit the total PF contribution (both employer and employee shares) by the 15th of the following month through the EPFO portal. Additionally, employers must file an Electronic Challan cum Return (ECR), detailing employee-wise contributions. This filing ensures proper crediting of funds to employee accounts. Timely payment and accurate filing are essential to avoid penalties and ensure employees receive their entitled benefits.

Professional Tax (PT) is a state-level tax levied on individuals earning an income through employment, profession, or trade. It is applicable in specific Indian states and is deducted monthly by the employer based on salary slabs set by the respective state government. Employers are responsible for collecting and remitting this tax to the state's tax department. The maximum annual professional tax liability is ₹2,500. Timely deduction and payment are essential for legal compliance and to avoid penalties.

Professional Tax (PT) rates vary across Indian states and are determined by the respective state governments. The tax is calculated based on salary slabs, with higher income brackets attracting higher tax amounts. The maximum PT payable is ₹2,500 per year. For example, in Maharashtra, PT ranges from ₹200 to ₹300 per month, while in Karnataka, it's ₹200 for those earning above ₹15,000 per month. Employers must deduct and remit PT monthly or as per state regulations.

Professional Tax (PT) calculations are based on salary slabs defined by individual state governments. The tax amount varies across states, with a maximum annual limit of ₹2,500. For instance, in Maharashtra, PT ranges from ₹200 to ₹300 per month based on income, while in Karnataka, employees earning above ₹15,000 per month pay ₹200. Employers are responsible for deducting PT from employee salaries and remitting it to the state tax department within the specified due date.

Professional Tax (PT) payment and filing are mandatory for employers registered under the respective state’s PT Act. Employers must deduct PT from employees' salaries and remit it to the state government by the specified due date, usually monthly or quarterly, depending on state regulations. Additionally, periodic returns must be filed, detailing employee-wise PT deductions. The maximum PT payable is ₹2,500 annually. Timely payment and accurate filing are essential to avoid penalties and ensure compliance.