Category: PF, ESIC, Gratuity

Gujarat Minimum Wages Revised (01 April 2026 to 30 September 2026): What Employers Must Do

Posted on by CA Meet Dhrangadhariya

Last updated: 15 July 2026 · Reading time: 6 min

Quick summary

  • Gujarat minimum wages hiked by Rs. 12 per day (approx. Rs. 312 per month).
  • Effective 01 April 2026 to 30 September 2026.
  • Applies to 46 scheduled employments, factories, ship-breaking work and sweeping & cleaning work.
  • Employers must revise payroll, wage registers and notice boards from the April 2026 wage cycle.

The Labour & Employment Department, Government of Gujarat has notified a revision in minimum wages applicable across the State. The revised rates are effective for the six-month cycle 01 April 2026 to 30 September 2026.

Every employer in Gujarat covered under the Minimum Wages Act, 1948 must reflect these revised rates in wages payable from the April 2026 wage cycle onwards. Non-compliance carries penal, financial and reputational risk — and is a common finding during labour inspections and internal audits.

Notification at a glance

  • Effective period: 01 April 2026 to 30 September 2026
  • Notification reference: ક્રમાંક: પ.લ.મ.૬/ટ.૩/૨૦૨૬/૧૪૨ થી ૧૬૪, dated 01-04-2026
  • Issued by: Labour & Employment Department, Government of Gujarat
  • Wage revision: +Rs. 12 per day / +Rs. 312 per month
  • Coverage: 46 scheduled employments, factories & ship-breaking work, and sweeping & cleaning work

Revised daily minimum wage rates (in Rupees)

The “Per day” figure is what an employer must pay a worker per working day. It is the sum of Basic and V.D.A.

Scheduled employment / Factory / Ship-breaking work

Category Zone Basic V.D.A. Per day Per month
Skilled Zone I 474.00 60.50 534.50 13,897
Semi-skilled Zone I 462.00 60.50 522.50 13,585
Unskilled Zone I 452.00 60.50 512.50 13,325
Skilled Zone II 462.00 60.50 522.50 13,585
Semi-skilled Zone II 452.00 60.50 512.50 13,325
Unskilled Zone II 441.00 60.50 501.50 13,039

Sweeping & cleaning work

Zone equivalent Basic V.D.A. Per day Per month
Zone I equivalent 452.00 60.50 512.50 13,325
Zone II equivalent 441.00 60.50 501.50 13,039

Zone classification

  • Zone I: All Municipal Corporations and Municipalities in Gujarat.
  • Zone II: All other areas in Gujarat not covered under Zone I.

Worker category definitions

  • Unskilled: Simple duties requiring the operation of simple tools or machines and little or no independent judgement.
  • Semi-skilled: Work of a defined routine nature; the requirement is judgement of a limited scope, not skill.
  • Skilled: Working efficiently while exercising considerable independent judgement, with thorough knowledge of the trade.
  • Highly skilled: Working efficiently and supervising the work of skilled workers.

Understanding V.D.A. (Variable Dearness Allowance)

V.D.A., also called the Special Allowance or Dearness Allowance, is a component that is revised periodically based on movement in the Consumer Price Index (CPI). For this cycle, V.D.A. is Rs. 60.50 per day uniformly across all categories and zones.

It must be paid over and above the basic minimum wage, or, at the employer’s option, merged into the basic — provided the total payable to the worker is not less than the notified minimum “Per day” rate.

Employer compliance checklist

  1. Update payroll master. Revise the daily and monthly rates against each worker in the payroll system with effect from 01 April 2026.
  2. Reclassify workers correctly. Confirm each worker is tagged to the correct Zone (I or II) and skill category. Misclassification is one of the most common findings in labour inspections.
  3. Wage register & wage slip. Ensure Form XVII (wage register) and Form XIX (wage slip) reflect the revised Basic and V.D.A. components separately.
  4. Statutory deductions. Review the downstream impact on ESIC, EPF, Professional Tax and Labour Welfare Fund contributions where these are computed on gross wages.
  5. Contract labour & outsourced staff. Cross-check that contractors and manpower agencies engaged by the establishment are also paying the revised minimum. The principal employer’s liability under the Contract Labour (Regulation & Abolition) Act, 1970 continues.
  6. Notice board. Update the notice of rates of wages displayed at the workplace, as required under Section 18 of the Act.
  7. Retain the notification. Keep a copy of the Gujarat notification on file for inspection.

Penalty for non-compliance

Under the Minimum Wages Act, 1948 (read with the Code on Wages, 2019, once fully notified), paying less than the notified minimum wage is a punishable offence. The Authority may also direct the employer to pay the shortfall to the workers along with compensation, which may extend to ten times the amount of such shortfall. In practice, the financial exposure from back-wages, compensation and interest can far exceed the statutory fine — which is why periodic internal audits of payroll compliance are worth the investment.

 

Frequently asked questions

Is the “Per day” rate gross or net?

The “Per day” rate is the gross statutory minimum payable to the worker for a working day. Statutory deductions such as EPF, ESIC and PT continue to apply on top of this, per the respective statutes.

Is V.D.A. mandatory over and above Basic?

Yes. V.D.A. must be paid in addition to the Basic wage, or merged into the Basic, so long as the total is not less than the notified “Per day” rate. Paying only the Basic component (without V.D.A.) is non-compliance.

Does this notification apply to contract workers?

Yes. Contract workers engaged through a manpower vendor or licensed contractor are entitled to the same minimum wage. The principal employer remains liable if the contractor defaults.

Is a worker in Vadodara Municipal Corporation limits in Zone I or Zone II?

Vadodara Municipal Corporation is a Municipal Corporation, so it falls under Zone I. Areas outside the Corporation limits generally fall under Zone II — refer to the notification for the specific area boundaries.

What if the worker is paid a monthly salary that already exceeds the minimum monthly figure?

Compliance is measured on the “Per day” rate. If the monthly salary divided by the number of working days in the wage period is at least equal to the notified “Per day” rate, the employer is compliant. Ensure this holds even in months with fewer working days.

Does the revision apply to apprentices and trainees?

Apprentices covered under the Apprentices Act, 1961 are governed by that Act’s stipend rates. Trainees not covered by the Apprentices Act are treated as workers and are entitled to the minimum wage.

How CSM & Co LLP can help

At CSM & Co LLP, Chartered Accountants, we work with employers across Gujarat on Internal Audit, Tax and MIS Dashboards. As part of these engagements, we regularly cover payroll and labour law compliance areas including:

  • Reviewing the payroll register for correct application of the revised Gujarat minimum wages
  • Auditing contractor and manpower vendor wage compliance for the current cycle
  • Assessing exposure under ESIC, EPF, Professional Tax and Labour Welfare Fund
  • Building a periodic MIS dashboard for tracking labour law compliance and payroll KPIs

Please reach out to our team and we will be happy to assist.

Disclaimer

The rates and provisions summarised above are based on the notification issued by the Labour & Employment Department, Government of Gujarat. While every effort has been made to ensure accuracy, employers are advised to refer to the official Gujarat Government notification (ક્રમાંક: પ.લ.મ.૬/ટ.૩/૨૦૨૬/૧૪૨ થી ૧૬૪, dated 01-04-2026) for the authoritative text before acting. This post is for general information and does not constitute legal or professional advice.

Post Views: 654

EPF vs EPS: Differences in Contribution, Withdrawal, Pension and Tax

Posted on by CA Meet Dhrangadhariya

Last updated: 09 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • EPF is your retirement savings (12% from you, 12% from the employer, with interest). EPS is a pension scheme funded only by the employer.
  • Out of the employer’s 12%, 8.33% goes to EPS (on wages up to Rs 15,000, so at most Rs 1,250 a month) and the rest, 3.67%, goes to EPF.
  • EPF pays a lump sum with interest. EPS pays a monthly pension from age 58, or a one-time withdrawal benefit if you leave before 10 years of service.
  • Since the EPFO decision of 13/10/2025, premature final settlement of EPF needs 12 months of unemployment (earlier two months) and EPS withdrawal 36 months.

Both the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS) run under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and are managed by the EPFO. They are two parts of the same deduction on your payslip, but they do different jobs: EPF is a savings pot that you take as a lump sum, EPS is a pension.

What is EPF?

Both you and your employer contribute 12% of your wages (basic salary plus dearness allowance) to your EPF account every month. The balance earns interest declared by the government each year, and you can take the whole amount at retirement. Of the employer’s 12%, only part reaches this account, as explained below.

What is EPS?

EPS pays a monthly pension to the member after retirement, and to the family on the member’s death. You do not contribute to it. It is funded from the employer’s 12%: 8.33% of wages goes to EPS and the remaining 3.67% goes to EPF.

EPF and EPS side by side

Point EPF EPS
Your contribution 12% of wages Nil
Employer contribution 3.67% of wages 8.33% of wages (wages counted up to Rs 15,000, so at most Rs 1,250 a month)
Interest Yes, declared every year No interest, it is a pension entitlement
What you receive Lump sum of contributions plus interest Monthly pension, or a withdrawal benefit if service is under 10 years
Pension age Not applicable 58 years (reduced early pension possible from 50)
Who is covered Employees of covered establishments; wages up to Rs 15,000 are compulsory, above that by joint option Members who joined before 58 and whose wages are counted up to the ceiling

Withdrawal rules after the October 2025 changes

On 13/10/2025 the EPFO Central Board of Trustees decided to simplify withdrawals. As reported at the time:

  • Partial withdrawals are merged into three heads (essential needs, housing, special circumstances), with a uniform minimum service of 12 months.
  • Premature final settlement of the EPF balance now needs 12 months of unemployment, earlier two months.
  • Final withdrawal of the pension (EPS) balance now needs 36 months, earlier two months.
  • 25% of contributions is to be kept as a minimum balance in the account.

Reports from mid-2026 say the Government has since notified the EPF Scheme, 2026 (stated to be effective from 29/06/2026) to give effect to these changes. Reports differ on the exact waiting period for the balance on leaving a job, so read the current text of the Scheme and EPFO circulars on the EPFO website before you apply. Retirement at 58 is unchanged.

Tax on EPF and EPS

  • Interest on EPF: tax free on your contributions up to Rs 2.5 lakh a year (Rs 5 lakh if there is no employer contribution). Interest on the excess is taxable every year.
  • Employer contribution: the employer’s contribution to EPF, NPS and superannuation together above Rs 7.5 lakh a year is taxed as a perquisite in your hands.
  • Withdrawal before five years of continuous service: TDS applies on the taxable part if the amount is more than Rs 50,000. Withdrawal after five years is not taxed.
  • EPS pension: taxable as salary in the year you receive it.
  • Section 80C: your EPF contribution qualifies only if you choose the old tax regime.

Which one matters to you?

If you plan to leave a job before 10 years, check your EPS service on the passbook and decide between the withdrawal benefit and carrying the service forward with a scheme certificate. For long-term savings, EPF is the bigger balance. If your wages are above Rs 15,000, ask whether your employer contributes on the actual wage or on Rs 15,000.

Frequently asked questions

Do I contribute to EPS?

No. EPS is funded by the employer’s share only (8.33% of wages, with wages counted up to Rs 15,000 a month). Your own 12% goes entirely to EPF.

How much of the employer’s 12% goes to EPS?

8.33% of wages goes to EPS and the balance 3.67% goes to EPF. For wages above Rs 15,000 the EPS part is capped at Rs 1,250 a month unless the higher pension option was exercised.

Does EPS earn interest?

No. EPS builds service and pensionable salary, not a balance. EPF earns interest declared by the government every year.

At what age does EPS pension start?

At 58. A reduced early pension is possible from age 50, as long as you have 10 years of service.

Can I withdraw the EPS amount if I leave a job early?

If you have less than 10 years of service you can take a withdrawal benefit, or get a scheme certificate to carry the service to the next employer. Final pension withdrawal now needs 36 months out of employment.

Is EPF interest taxable?

Interest on your own contributions up to Rs 2.5 lakh a year is tax free (Rs 5 lakh if there is no employer contribution). Interest on the part above the limit is taxable.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Post Views: 22

PF and ESIC Compliance for Employers under the Code on Social Security: Registration, Deduction, Interest, Damages and Penalties

Posted on by CA Meet Dhrangadhariya

Last updated: 09 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • The Code on Social Security, 2020 (in force from 21/11/2025) replaced the EPF Act, 1952 and the ESI Act, 1948. PF applies to establishments with 20 or more employees and ESI to establishments with 10 or more persons.
  • An establishment already registered under an earlier labour law need not register again; that registration is treated as registration under the Code.
  • An employer who deducts the employee share from wages and does not deposit it faces imprisonment of at least one year (up to three years) and a fine of Rs 1 lakh. Other defaults carry two months to six months and Rs 50,000.
  • Delay attracts simple interest at the notified rate and damages up to the amount of arrears, after a hearing.

Since 21/11/2025 an employer’s PF and ESI duties come from the Code on Social Security, 2020. The Code repealed the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Employees’ State Insurance Act, 1948 (and seven other laws). The schemes, rates and wage ceilings continue as notified, but the penalty and procedure rules below are now from the Code itself.

When does each scheme apply?

The First Schedule to the Code says:

Scheme Applies to
Employees’ Provident Fund (Chapter III) Every establishment in which twenty or more employees are employed
Employees’ State Insurance (Chapter IV) Every establishment in which ten or more persons are employed, other than a seasonal factory. A notified hazardous or life threatening occupation is covered even with a single employee

For the head count, employees earning above the notified wage ceiling are also counted. An employer and the majority of employees can agree to bring a smaller establishment under the PF chapter by applying to the Central Provident Fund Commissioner, and the Government can extend the Code to establishments above a notified size.

Registration

Every establishment to which the Code applies registers electronically or otherwise, within the time and in the manner prescribed (section 3). An establishment already registered under any other Central labour law does not have to register again, and that registration is treated as registration under the Code. An establishment that is closing down can apply to cancel the registration.

Wages: what the contribution is calculated on

The Code defines “wages” in section 2(88) as basic pay, dearness allowance and retaining allowance, with listed exclusions (statutory bonus, house rent allowance, conveyance allowance, overtime, commission, the employer’s PF contribution, gratuity and retirement payments). If the exclusions add up to more than one-half of total remuneration (or the percentage notified), the excess is added back to wages. Check your pay structure against this cap, because it can raise both PF and ESI contributions.

Who pays what

  • The employer pays both the employer’s and the employee’s contribution for every employee, whether employed directly or through a contractor.
  • The employer may recover the employee’s contribution only by deduction from wages, only for the period it relates to and not more than the employee’s share.
  • The employer’s contribution cannot be deducted from wages or recovered from the employee in any way.
  • Sums deducted from wages are deemed to be entrusted to the employer for the purpose of paying the contribution.
  • For contract workers, the principal employer pays and recovers the amount from the contractor, who in turn may recover only the employee’s share from the worker’s wages.
  • Employees must establish identity through Aadhaar for registration and for claiming benefits or withdrawing funds (section 142).

If you pay late or do not pay

Consequence What the Code says
Interest (section 127) Simple interest at the rate notified by the Central Government, from the date the amount became due till actual payment
Damages (section 128) Up to the amount of arrears, levied by the PF Commissioner or ESIC Director General (or authorised officer), after giving the employer an opportunity of being heard
Failure to pay employee share that was deducted (section 133(i)(a)) Imprisonment of at least one year, up to three years, and a fine of Rs 1 lakh
Failure to pay any other contribution (section 133(i)(b)) Imprisonment of at least two months, up to six months, and a fine of Rs 50,000
Deducting the employer’s share from wages, or failing to file a return Fine up to Rs 50,000
Obstructing an inspector, or failing to produce records Imprisonment up to six months or fine up to Rs 50,000, or both
Repeat offence (section 134) Imprisonment up to two years and fine of Rs 2 lakh; for repeat non-payment of contributions, at least two years, up to three, and fine of Rs 3 lakh

In the case of a company, every person directly in charge of the conduct of its business, as well as the company, is deemed guilty (section 135). The court can impose a lesser jail term for adequate and special reasons recorded in the judgment, and offences can be compounded as the Code provides.

A practical checklist

  1. Count employees, including those above the wage ceiling, to see whether PF (20) and ESI (10) apply.
  2. Keep the registration number from the old law in your records; it carries over.
  3. Recalculate wages under the Code definition and check the one-half rule.
  4. Deposit both shares on time, every month, for contract workers too.
  5. File returns and keep registers ready for the inspector.

Points to check

  • This post follows the Code as published on India Code. Rates, the wage ceiling, interest rate and filing dates are fixed by rules, regulations and notifications issued under the Code, so check those before relying on a figure.
  • Penalty amounts and imprisonment terms are the maximums and minimums written in the Code; the actual order depends on the court.

Frequently asked questions

When does PF apply to an establishment?

Chapter III (Employees’ Provident Fund) applies to every establishment in which twenty or more employees are employed. Employees earning above the wage ceiling are counted for this head count.

When does ESI apply?

Chapter IV applies to every establishment in which ten or more persons are employed, other than a seasonal factory, and to a notified hazardous establishment even with one employee.

Do I have to register again under the Code?

An establishment already registered under any other Central labour law is not required to register again; its registration is deemed to be registration under the Code. A new establishment registers electronically as prescribed.

Can I deduct the employer share from wages?

No. The employer can recover only the employee’s contribution, by deduction from wages for the period it relates to, and the employer’s contribution cannot be recovered from the employee in any way.

What if the deducted employee contribution is not deposited?

The sum deducted is treated as entrusted to the employer. Failure to pay it is punishable with imprisonment of at least one year, up to three years, and a fine of Rs 1 lakh.

What are the interest and damages for late payment?

Simple interest at the rate notified by the Central Government from the due date to the date of payment, and damages up to the amount of arrears, levied after the employer has been heard.

Can the employer use a contractor to pay PF and ESI?

The principal employer pays the employer’s and employee’s share for contract workers and then recovers the amount from the contractor.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Post Views: 24

Maternity Leave in India: 26 Weeks Paid Leave, Eligibility and Rules under the Code on Social Security

Posted on by CA Meet Dhrangadhariya

Last updated: 09 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • A woman who has worked at least 80 days in the 12 months before her expected delivery date is entitled to paid maternity leave at the average daily wage of the three calendar months before she goes on leave.
  • Leave is 26 weeks (not more than 8 weeks before delivery) and 12 weeks for a woman who already has two or more surviving children.
  • Adoptive and commissioning mothers get 12 weeks from the day the child is handed over (child below three months).
  • The Maternity Benefit Act, 1961 stands repealed and its rules now sit in sections 59 to 72 of the Code on Social Security, 2020 (Chapter VI), in force from 21/11/2025.

For decades maternity leave was governed by the Maternity Benefit Act, 1961. From 21/11/2025 the Code on Social Security, 2020 came into force and its Chapter VI now carries the maternity benefit provisions. The headline entitlements did not change: 26 weeks of paid leave, job protection, a crèche and the option of working from home.

Who is eligible?

A woman who has worked for at least 80 days in the 12 months immediately before her expected date of delivery (section 60(2)). Days of lay-off and holidays with wages declared by law count towards the 80 days.

How much leave?

Situation Paid leave
First or second child 26 weeks (not more than 8 weeks before the expected delivery)
Woman with two or more surviving children 12 weeks (not more than 6 weeks before the expected delivery)
Tubectomy operation 2 weeks from the day of the operation (section 65(2))
Adoptive mother (child below three months) 12 weeks from the date the child is handed over
Commissioning mother 12 weeks from the date the child is handed over
Miscarriage or medical termination of pregnancy 6 weeks from the day of the miscarriage or termination

An employer cannot make a woman work during the six weeks immediately after delivery, miscarriage or termination.

What is paid?

Leave is paid at the average daily wage for the period of actual absence: the average of her wages for the days worked in the three calendar months before she goes on leave, subject to the minimum wage (section 60(1)). Every woman entitled to maternity benefit also gets a medical bonus of Rs 3,500, or the amount the Central Government notifies, if the employer does not provide pre-natal confinement and post-natal care free of charge (section 64).

Other rights

  • Job protection: it is unlawful to dismiss her, or to change her conditions of service to her disadvantage, because of absence under this Chapter. Dismissal during pregnancy does not take away the benefit, except for gross misconduct as prescribed. She can appeal within 60 days (section 68).
  • Extra leave for illness: up to one month more on proof of illness arising out of pregnancy, delivery, premature birth, miscarriage or termination (section 65(3)).
  • Nursing breaks: two breaks a day, in addition to the rest interval, until the child is 15 months old (section 66).
  • Work from home: where the nature of work allows, the employer may let her work from home after the leave, on terms agreed with her.
  • Crèche: an establishment with 50 or more employees (or the number prescribed) must provide a crèche within the prescribed distance, which may be shared with other establishments. The mother may make four visits a day, including her rest interval (section 67).
  • Light work: on her request, a pregnant woman cannot be given arduous work or work needing long hours of standing in the month before the last six weeks before delivery, nor during any part of those six weeks she does not take as leave (section 59).
  • Notice and payment: she gives written notice stating the date from which she will be absent. Failure to give notice does not take away the benefit. The amount for the period before delivery is paid in advance on proof of pregnancy, and the balance within 48 hours of proof of delivery (section 62).

Does it apply to every employer?

Under the First Schedule to the Code, Chapter VI applies to every factory, mine and plantation (including those of Government), to every shop or establishment in which ten or more employees are employed, or were employed on any day of the preceding twelve months, and to other shops or establishments notified by the appropriate Government.

What employers should do

  • Display an abstract of Chapter VI and the rules, in the local language, where women are employed (section 71).
  • Tell every woman in writing and electronically, when she is first appointed, about every benefit under the Chapter (section 67(2)).
  • Keep a record of days worked, lay-off and paid holidays for the 80 day test.
  • Make no deduction from wages for nursing breaks or because a pregnant woman is given lighter work (section 69).

Frequently asked questions

How many weeks of maternity leave is a woman entitled to?

26 weeks for the first two children, of which not more than 8 weeks can be taken before the expected delivery. For a third or later child it is 12 weeks.

Who is eligible?

A woman who has actually worked for at least 80 days in the 12 months immediately before her expected date of delivery.

How much is paid during maternity leave?

The average daily wage for the period of absence, which is worked out on the wages of the period before the leave begins.

What is the maternity leave for adoption?

12 weeks from the date the child is handed over, for a woman who lawfully adopts a child below three months and for a commissioning mother.

What leave is given for a miscarriage?

Six weeks of paid leave from the day of the miscarriage or medical termination of pregnancy, on proof.

Is a crèche compulsory?

An establishment with 50 or more employees must provide a crèche within the prescribed distance, and the mother may visit it four times a day, including the rest interval.

Does the Act apply to small establishments?

The maternity benefit chapter applies to establishments with 10 or more employees on any day of the previous 12 months, and to factories, mines and plantations as listed in the Code.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Post Views: 27

ESIC Applicability, Wage Limit and Contribution Rates (3.25% + 0.75%)

Posted on by CA Meet Dhrangadhariya

Last updated: 09 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • ESI is a social security scheme giving medical care and cash benefits to employees earning up to Rs 21,000 a month (Rs 25,000 for a person with disability).
  • Contribution is 4% of wages in total: 3.25% by the employer and 0.75% by the employee.
  • Under the Code on Social Security it applies to every establishment with 10 or more persons (other than a seasonal factory), and to hazardous establishments even with one employee.
  • Contribution is due by the 15th of the next month. Employees earning up to Rs 176 a day pay no employee share.

The Employees’ State Insurance Corporation (ESIC) runs the ESI scheme, a self-financed social security scheme for employees against sickness, maternity, disablement and death caused by employment injury. It was set up under the Employees’ State Insurance Act, 1948. Since 21/11/2025 the Code on Social Security, 2020 has replaced that Act, but the scheme, the rates and the wage limit continue to be applied by ESIC in the same way.

Who is covered?

  • Establishments: every establishment in which ten or more persons are employed, other than a seasonal factory (First Schedule to the Code). Establishments doing notified hazardous or life threatening work are covered even with one employee. Employees earning above the wage ceiling are still counted for the head count.
  • Employees: those whose gross monthly wages are Rs 21,000 or less. For a person with disability the limit is Rs 25,000.
  • Once covered, always covered: an employee who crosses the wage limit mid-way through a contribution period stays covered until the end of that period.

Contribution rates

Particulars Rate on gross wages
Employer share 3.25%
Employee share 0.75%
Total 4%

These rates have applied since 01/07/2019, when they were reduced from 4.75% and 1.75%.

Employees whose average daily wage is up to Rs 176 pay no employee share; the employer pays only its own 3.25%.

Example

An employee earns Rs 20,000 a month. The employee share is Rs 150 and the employer share is Rs 650, so Rs 800 is deposited with ESIC. At Rs 22,000 a month the employee is outside the scheme.

Benefits

  • Medical care for the insured person and family, including hospital and specialist care.
  • Cash benefits: sickness, maternity, temporary and permanent disablement, dependants’ benefit, funeral expenses.

Due date and filing

The employer deducts the employee share from wages and deposits both shares by the 15th of the following month. Late payment attracts interest and damages. Payment and the monthly contribution details are filed through the ESIC portal.

Wages for ESI under the Code (section 2(88))

“Wages” means basic pay, dearness allowance and retaining allowance, and all other remuneration, but the Code leaves out items such as statutory bonus, house rent allowance, conveyance allowance, overtime, commission, the employer’s PF contribution and gratuity. There is a cap: if these exclusions together exceed one-half (or the percentage the Central Government notifies) of total remuneration, the excess is added back to wages.

Example 1: total remuneration Rs 30,000 a month: basic Rs 12,000, HRA Rs 10,000, conveyance Rs 4,000 and a special allowance of Rs 4,000 that is not an excluded item. Exclusions come to Rs 14,000, below half (Rs 15,000), so wages are Rs 16,000.

Example 2: same Rs 30,000 with basic Rs 8,000, HRA Rs 12,000 and conveyance Rs 10,000. Exclusions are Rs 22,000, which is Rs 7,000 over half. That Rs 7,000 is added back, so wages are Rs 8,000 plus Rs 7,000 = Rs 15,000.

The wages figure decides both whether the employee is within the ceiling and the contribution payable.

Points to check

  • The Code says contributions are paid at the rates prescribed by the Central Government and ordinarily fall due on the last day of the wage period, with exact days set in regulations. ESIC’s present practice is payment by the 15th of the next month; check current ESIC instructions.
  • The Rs 21,000 ceiling and the rates are set by notification, not by the Code, so verify them on the ESIC site when paying.

Frequently asked questions

What is the ESIC contribution rate?

4% of gross wages: 3.25% paid by the employer and 0.75% deducted from the employee.

What is the ESI wage limit?

Employees whose gross monthly wages are Rs 21,000 or less are covered. The limit is Rs 25,000 for a person with disability.

Which establishments must register?

Under the First Schedule to the Code on Social Security, 2020, every establishment in which ten or more persons are employed, other than a seasonal factory. An establishment doing notified hazardous or life threatening work is covered even with a single employee.

When is ESI contribution due?

By the 15th day of the month following the month for which wages are paid.

Does an employee earning Rs 150 a day pay ESI?

No employee share is deducted if the average daily wage is up to Rs 176, but the employer still pays 3.25%.

What changed with the new Labour Codes?

The Code on Social Security, 2020 came into force on 21/11/2025 and repealed the ESI Act, 1948. The Code leaves the rates and the wage ceiling to be prescribed by the Central Government. The Rs 21,000 ceiling and the 3.25% and 0.75% rates are the existing notified figures; we found no new notification changing them.

Official sources

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Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Provident Fund (PF) Registration in India: A Complete Guide

Posted on by CA Meet Dhrangadhariya

Provident Fund (PF) Registration in India: A Complete Guide

The Employees’ Provident Fund (EPF) is a crucial social security scheme managed by the Employees’ Provident Fund Organisation (EPFO) in India. It ensures financial stability for employees post-retirement. If you are an employer, understanding PF registration is essential to comply with labor laws and offer benefits to your employees.

Who Needs to Register for PF?

PF registration is mandatory for:

✅ Companies with 20 or more employees

✅ Organizations covered under the EPF Act, 1952

✅ Voluntary registration for companies with less than 20 employees

Benefits of PF Registration

✔️ Retirement Savings – Employees and employers contribute to long-term savings

✔️ Tax Benefits – Contributions are eligible for deductions under Section 80C

✔️ Insurance Coverage – Linked to the Employee Deposit Linked Insurance (EDLI) Scheme

✔️ Pension Benefits – A portion of the employer’s contribution goes towards pension

Steps for PF Registration

1. Prepare Required Documents

📌 PAN card of the company

📌 Certificate of Incorporation (for Pvt Ltd, LLP, or OPC)

📌 Address proof (Utility bills, rental agreement)

📌 Aadhaar and PAN of the employer

📌 Canceled cheque of the business account

📌 Digital Signature of the employer

2. Register on the EPFO Portal

1️⃣ Go to the EPFO Unified Employer Portal https://unifiedportal-emp.epfindia.gov.in

2️⃣ Click on Establishment Registration

3️⃣ Read the User Manual and proceed to Sign Up

3. Submit the Employer’s Details

✔️ Enter Business Name, Type, Address, and Contact Details

✔️ Provide details of employees

✔️ Upload the required documents

4. Receive PF Registration Certificate

🔹 Once submitted, the EPFO will verify the details

🔹 On approval, you will receive a Universal Account Number (UAN) for employees

🔹 Your PF registration number will be generated

PF Contribution Rate

Contribution Employee Employer
PF Contribution 12% of Basic Salary 3.67% of Basic Salary
Pension Fund 8.33% (up to ₹15,000 salary)

How to Check PF Status?

Employees can check their PF balance using:

📲 UMANG App

📲 EPFO Website (via UAN)

📲 SMS Service (Type EPFOHO UAN and send to 7738299899)

Conclusion

PF registration is a legal requirement and a financial security net for employees. Employers must ensure timely registration and compliance to avoid penalties. If you haven’t registered yet, start the process today to safeguard your employees’ future!

Need help with PF Registration? Drop your queries in the comments! 👇

Disclaimer:

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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