Monthly ECR, contribution challans and the employee records that make an inspection uneventful.
PF and ESI are monthly obligations with a hard deadline of the 15th and consequences that compound quietly. Late payment attracts interest and damages, and — the part that costs most — employee contributions deducted but not deposited by the due date are permanently disallowed as an income tax deduction under Section 36(1)(va), following the Supreme Court's decision in Checkmate Services. That is a real cash cost on top of the statutory one. We run the monthly cycle for Chennai employers so the deadline is never the problem.
The monthly cycle
Payroll finalised with joiners, leavers, arrears, loss of pay and any wage revision applied.
PF wages computed on basic plus dearness allowance and retaining allowance, with the statutory ceiling applied where the employee is capped, and the employer split between pension and provident fund calculated.
ECR generated and uploaded on the EPFO unified portal, the challan created and paid by the 15th.
ESI contribution computed on gross wages for covered employees, the return filed and the challan paid by the 15th.
Records updated — UAN generation for new joiners, KYC seeding, exit dates marked for leavers, and the wage register maintained.
Rates and due dates
EPF
ESI
Employee share
12% of basic plus DA
0.75% of gross wages
Employer share
12%, of which 8.33% to the pension fund subject to the wage ceiling
3.25% of gross wages
Administrative charges
0.5% of PF wages, subject to a minimum
Not applicable
Due date
15th of the following month
15th of the following month
Delay cost
Interest at 12% per annum plus damages up to 25% per annum
Interest at 12% per annum
Periodic return
Monthly ECR; annual reconciliation of member accounts
Half-yearly, April–September and October–March
Exit marking is the most neglected step. When an employee leaves and the exit date is not marked on the EPFO portal, their withdrawal or transfer claim is rejected, and they come back to you months later. It costs nothing to mark at the time and takes a rectification request afterwards. Mark the date of exit and the reason in the month the employee leaves.
What we manage beyond the challan
UAN generation and activation for new joiners, and linking of a previous UAN where the employee already has one — duplicate UANs are painful to merge later
KYC seeding of Aadhaar, PAN and bank account, with employer approval; unseeded KYC blocks every online claim
Form 11 declaration collected from each new joiner and Form 2 nomination kept on file
Transfer claims in Form 13 and support on withdrawal and advance claims in Form 31, 19 and 10C
ESI e-Pehchan cards, dispensary allocation, and support on sickness, maternity and disablement benefit claims
Accident reporting under ESI within the prescribed period, and the accident register maintained
Registers for inspection — wage register, attendance register, inspection book, and the contractor compliance file where labour is engaged through a contractor
Where employers get assessed
Enquiries under Section 7A of the EPF Act usually arise from one of four patterns, and each is avoidable:
Wage splitting — reducing basic pay by creating allowances paid universally to all employees. The Supreme Court's decision in Vivekananda Vidyamandir settled that such allowances form part of basic wages.
Contract labour — the principal employer is liable where the contractor does not remit. Take the contractor's ECR and challan every month before releasing payment, not at year end.
Excluded employees — treating an employee as excluded on the basis of wages above the ceiling when they were already a PF member in earlier employment. Membership continues once established.
Consultants who are really employees — paying on a professional fee basis with fixed hours, supervision and exclusivity does not remove the employment relationship.
We handle this alongside payroll outsourcing and TDS on salaries, so one set of payroll data drives every statutory filing rather than three teams reconciling three versions.
Frequently asked questions
Interest under Section 7Q at 12% per annum runs from the due date, and damages under Section 14B can be levied on a slab basis up to 25% per annum. Separately and more expensively, the employees' share deducted but deposited after the due date is disallowed as a deduction in computing your business income, and that disallowance is permanent.
Yes. A nil ECR should be filed for a covered establishment in a month with no wage payment, so the establishment does not show as a defaulter. An establishment that has genuinely ceased operations should apply for closure of the code rather than simply stopping filing.
Almost always one of three things: the date of exit has not been marked by the employer, the KYC is not seeded and approved, or there are two UANs for the same person. All three are fixed from the employer login, and all three are avoided by marking exits in the month the employee leaves.
Where the contractor fails to remit, the principal employer is liable under both the EPF and ESI Acts. The practical control is to collect the contractor's monthly ECR, ESI challan and employee-wise breakup before releasing their invoice, and to retain those records for inspection.