PF contributions at a glance
Provident Fund (PF) is run by the Employees' Provident Fund Organisation (EPFO). Both the employee and the employer contribute 12% of the employee's PF wages each month. The employee's 12% goes entirely to the employee's EPF account. The employer's 12% is split: 8.33% goes to the Employees' Pension Scheme (EPS), on wages up to the statutory ceiling, and the remainder goes to EPF.
| Contribution | Rate | Wage it is worked out on | Paid by |
|---|---|---|---|
| Employee's share (EPF) | 12% | PF wages | Employee, deducted from salary |
| Employer's share to EPS (pension) | 8.33% | PF wages up to the statutory ceiling | Employer |
| Employer's share to EPF | 12% less the EPS share | PF wages | Employer |
| EDLI (insurance) | 0.50% | PF wages up to the statutory ceiling | Employer |
| EPF administration charges | 0.50%, at least ₹500 a month per establishment | PF wages contributions are paid on | Employer |
The PF wage ceiling: ₹25,000 from 17 September 2026
The statutory wage ceiling for PF, EPS and EDLI was raised from ₹15,000 to ₹25,000 a month with effect from 17 September 2026, by notification S.O. 5109(E) under the Code on Social Security, 2020. It was the first change since September 2014. The 12% contribution rates did not change.
- Coverage: employees whose PF wages are up to ₹25,000 a month must be members, so employees earning between ₹15,000 and ₹25,000 who were outside PF now come in.
- Contributions above the ceiling: an employer and employee can jointly choose to contribute on wages above the ceiling. EPS still stays on wages up to the ceiling; the extra employer contribution goes to EPF.
- Wages under the Labour Codes: since 21 November 2025, "wages" under the Labour Codes means basic pay, dearness allowance and retaining allowance, and where the other allowances exceed 50% of total pay, the excess is added back. Check your salary structure against this with your chartered accountant.
ESI contributions at a glance
Employees' State Insurance (ESI) is run by the Employees' State Insurance Corporation (ESIC) and gives medical cover and cash payments during sickness, maternity and employment injury. It applies to establishments with 10 or more employees in areas where the scheme has been notified.
| Item | Rule |
|---|---|
| Employee's share | 0.75% of wages |
| Employer's share | 3.25% of wages |
| Wage ceiling for coverage | ₹21,000 a month (₹25,000 for persons with disability) |
| Low-wage employees | An average daily wage up to ₹176 pays no employee share; the employer's share is still due |
| When it is due | Within 15 days of the end of the month the contributions are for |
ESI contribution periods
ESI runs in two six-month contribution periods: 1 April to 30 September and 1 October to 31 March. An employee covered at the start of a period stays covered until it ends, even if a raise takes their wages above ₹21,000 during it. ESI continues to be deducted on the actual wages until the period closes.
- At the start of each period (April and October), check which employees' wages are at or below the ceiling.
- Keep ESI running for everyone covered at the start of the period, whatever their raises during it.
- At the next period, drop employees whose wages are now above the ceiling, and add anyone who has come within it.
Monthly returns: the PF ECR and the ESIC return
Each month the employer files the PF Electronic Challan-cum-Return (ECR) on the EPFO portal and pays the challan, and files the monthly ESI contributions with ESIC. Both are due by the 15th of the following month. The ECR lists each member by UAN with their wages for EPF, EPS and EDLI and the contributions on them; the ESIC return lists each insured person by IP number with wages and days worked.
- Collect each new joiner's UAN or ESI number before the first payroll, or have one generated, so they appear in that month's return.
- Report leavers with their date of exit so their accounts are closed correctly.
- Late payment attracts interest and damages under both schemes, so treat the 15th as a hard date.
How Verdeshell handles PF and ESI
In Verdeshell HRMS, your company decides its PF and ESI settings: the rates, the wage ceiling it contributes on, and which employees are covered. A new India PF setting suggests the statutory ceiling in force on its start date, and the product warns where a setting looks unusual — but the choice stays with you, and settings you have already saved are never changed for you.
- EPS and EDLI are always worked out on wages up to the statutory ceiling for the month, whatever ceiling your company contributes PF on.
- PF and ESI are calculated on the wages actually earned in the month, after loss of pay.
- An employee covered by ESI stays covered until the end of the contribution period.
- Each payroll month produces the PF ECR file and the ESIC return file to upload, plus the challan totals.