- PF: 12% of basic from the employee and 12% from the employer. Of the employer’s 12%, 8.33% (on up to ₹15,000) goes to the pension scheme (EPS) and the rest to EPF.
- ESI: 0.75% from the employee and 3.25% from the employer, for employees earning up to ₹21,000 a month.
- Both are paid by the 15th of the following month.
Who has to pay PF
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 applies to establishments with 20 or more employees, and others can join voluntarily. Once covered, PF is compulsory for employees whose basic wages (basic pay plus dearness allowance) are up to ₹15,000 a month. Employees earning more can be covered too, and many employers include everyone.
PF rates
| Contribution | Rate | On |
|---|---|---|
| Employee’s PF | 12% | Basic + DA |
| Employer: pension (EPS) | 8.33% | Basic + DA, up to ₹15,000 (so at most ₹1,250) |
| Employer: EPF | 12% minus the EPS share | Basic + DA |
| Employer: EDLI insurance | 0.50% | Basic + DA, up to ₹15,000 |
| Employer: EPF admin charges | 0.50% | Basic + DA |
The ₹15,000 wage ceiling. Many employers calculate PF on basic up to ₹15,000 only, which caps the employee’s and employer’s 12% at ₹1,800 a month each. Contributing on full basic above ₹15,000 is allowed but optional. Whichever you choose, apply it consistently.
Example 1: monthly salary ₹30,000
Basic is 50% of salary, so basic = ₹15,000. ESI does not apply because the salary is above ₹21,000.
Employee PF: 12% × ₹15,000 = ₹1,800 (deducted from salary)
Employer EPS: 8.33% × ₹15,000 = ₹1,250
Employer EPF: ₹1,800 − ₹1,250 = ₹550
Employer EDLI and admin charges: 0.5% + 0.5% of ₹15,000 = ₹150
The employee’s take-home falls by ₹1,800. The business pays ₹1,800 + ₹150 = ₹1,950 on top of salary.
Who has to pay ESI
The Employees’ State Insurance Act, 1948 covers establishments with 10 or more employees in areas where the scheme is implemented. Employees whose gross monthly wages are up to ₹21,000 (₹25,000 for persons with disability) are covered. ESI gives them medical care and cash benefits during sickness, maternity and employment injury.
ESI rates
| Contribution | Rate | On |
|---|---|---|
| Employee | 0.75% | Gross wages |
| Employer | 3.25% | Gross wages |
ESI is calculated on gross wages (not just basic), excluding items such as annual bonus and gratuity. Contributions are rounded up to the next rupee. Employees earning an average of ₹176 a day or less don’t pay the employee share, but the employer still pays its 3.25%.
Example 2: monthly salary ₹18,000
Basic is 50%, so basic = ₹9,000. The employee is covered by both PF and ESI.
Employee PF: 12% × ₹9,000 = ₹1,080
Employer EPS: 8.33% × ₹9,000 = ₹750 (₹749.70, rounded)
Employer EPF: ₹1,080 − ₹750 = ₹330
Employee ESI: 0.75% × ₹18,000 = ₹135
Employer ESI: 3.25% × ₹18,000 = ₹585
Total deducted from the employee: ₹1,080 + ₹135 = ₹1,215, so take-home is ₹16,785 before any Professional Tax.
Paid days and loss of pay
PF and ESI are calculated on wages actually earned in the month. If someone has loss-of-pay days, calculate their earned basic and gross first, then apply the rates. Our guide on calculating salary from attendance shows how.
Due dates and returns
- PF: pay and file the electronic challan cum return (ECR) on the EPFO portal by the 15th of the following month.
- ESI: pay and file monthly contributions on the ESIC portal by the 15th of the following month.
- Late payment attracts interest and damages, so pay on time even if a few figures need correcting later.
Common mistakes
- Calculating PF on gross salary instead of basic + DA.
- Forgetting that the employer’s 12% is split, and depositing it all to EPF.
- Deducting ESI from staff whose wages are above the limit, or missing staff who fall below it.
- Keeping basic artificially low. Allowances paid to everyone may be treated as part of basic wages for PF.
PF and ESI on every payslip
StaffPrime splits pay into basic, HRA and allowances, and works out PF and ESI for each person from what they earned that month.
Published 3 November 2026 by the StaffPrime team. Rates as in force for FY 2025-26. General information only, not legal or tax advice; confirm with your accountant.