PF and ESI are core social security compliances for employers in India. They affect take home salary, statutory cost, and employee benefits such as medical coverage and retirement savings. Non compliance can lead to interest, damages, inspections, and retrospective contribution demands.

A strong PF and ESI process starts with correct applicability evaluation, clean wage definitions, accurate employee master data, and disciplined monthly filing.

PF Compliance Overview

Provident Fund compliance is governed by EPF laws and administered through the EPFO portal.

When PF applies

PF generally applies based on establishment coverage and employee thresholds as applicable. Once covered, ongoing compliance continues even if headcount fluctuates.

Practical control: Maintain coverage documentation and registration details and track employee wise eligibility.

Contribution and wage definition

PF is typically computed on basic wages and certain allowances as applicable.

Practical control: Maintain a wage structure policy and document which components are included or excluded for PF.

Key PF monthly compliances

  • UAN generation and KYC for new joiners
  • Monthly ECR preparation and upload
  • PF challan payment
  • Reconciliation of wages and contributions with payroll

ESI Compliance Overview

ESI provides medical and cash benefits and is administered through ESIC.

When ESI applies

ESI applies to eligible establishments and employees within wage thresholds.

Practical control: Track wage ceiling changes and ensure employees are mapped correctly each month.

Contribution and wage definition

ESI is computed on wages as defined under ESI rules.

Practical control: Ensure all wage components are evaluated for inclusion and maintain consistent payroll configuration.

Key ESI monthly compliances

  • Employee registration and insurance number generation
  • Monthly contribution calculation
  • ESIC payment and return filing
  • Reconciliation with payroll and attendance records

Registration and Onboarding Controls

A practical onboarding flow:

1 Confirm PF and ESI applicability for the entity and locations 2 Complete EPFO and ESIC registration and obtain codes 3 Configure payroll system for wage definitions and ceilings 4 Collect employee KYC and nomination details 5 Generate UAN and ESIC insurance number and communicate to employees

Common Errors That Trigger Notices and Inspections

  • Incorrect wage definitions leading to short payment
  • Excluding allowances without proper basis
  • Not enrolling eligible employees on time
  • Duplicate UAN or incorrect KYC mapping
  • Mismatch between attendance and wage records
  • Contractor employees not evaluated for principal employer liability
  • Delayed payment leading to interest and damages

Practical Monthly PF and ESI Checklist

1 Finalise attendance and payroll inputs 2 Validate PF and ESI eligibility and wage ceilings 3 Compute contributions and reconcile with payroll registers 4 Generate ECR and upload on EPFO portal 5 Pay PF challan and download payment proof 6 Upload ESIC contribution details and pay dues 7 Maintain employee wise contribution register 8 Track exits and ensure timely updates 9 Maintain inspection ready documentation file

How Perfect Accounting Can Help

Perfect Accounting and Shared Services supports payroll statutory compliance:

  • PF and ESI registration and setup support
  • Monthly compliance processing and reconciliations
  • Wage structure review and risk assessment
  • Notice and inspection handling support
  • Contractor compliance and principal employer advisory