Salary related basic deduction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 February 2013 HOW MUCH % IS REQUIRED TO DEDUCT PF and esic ON Basic salary?
To whom esic is applicable?
How PROVIDENT FUND IS CALCULATED?
Pl provide the site name to get the update s?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
Follow

29 July 2013 Purpose & Object
The Employees' Provident Funds & Miscellaneous Provisions Act, 1952 has been enacted with the main objective of protecting the interest of the employees after their retirement and their dependents after death of the employee. The Act provides insurance to workers and their dependents against risks of old age, retirement, discharge, retrenchment or death.
EPF Applicability
The Employees' Provident Funds & Miscellaneous Provisions Act, 1952 extends to whole of India except the state of Jammu & Kashmir.

It applies on every establishment employing 20 or more persons & engaged in industry specified in Schedule I of the Act or any other activity notified by the Central Government.

It applies to all departments / branches of an establishment wherever situated.
Any establishment employing even less than 20 persons can be covered voluntarily under section 1(4) of the Act.

EPF Eligibility
Employees drawing salary / wages at the time of joining up-to Rs. 6,500/- per month are governed by the provisions of the Act;
Employees drawing salary / wages more than Rs. 6,500/- per month may also be brought under the purview of the Act at the discretion of the management and by furnishing a joint undertaking to the Provident Fund Commissioner;
Employees engaged through the Contractor in or in connection with the work of an establishment are also covered under the purview of the Act.

Rate of EPF Contribution
Monthly Contribution
Employeesâ€™ Provident Fund Employees' Deposit Linked Insurance Scheme
Employees' Pension Scheme By Employer
12% of Basic Wages, Dearness Allowance, Cash Value of Food Concession & Retaining Allowance

plus
Administrative Charges 0.50% of Basic Wages, Dearness Allowance, Cash Value of Food Concession & Retaining Allowance (subject maximum wage limit of Rs. 6,500/-)

plus
Administrative Charge 8.33% (out of 12% contribution payable under EPF) subject to maximum of Rs. 541/- By Employee 12% of Basic Wages, Dearness Allowance, Cash Value of Food Concession & Retaining Allowance
NIL NIL By Central Government NIL NIL
1.16%

Employee Section 2(9) of ESI Act

The term 'Employee' is defined under Section 2(9) as follows:
Any person employed for wages in or in connection with work of a factory or establishment to which the Act applies.

In order to qualify to be an employee, under ESI Act, a person should belong to any of the categories:

Those who are directly employed for wages by the Principal Employer within the premises or outside in connection with work of the factory or establishment.
Those employed for wages by or through an immediate employer in the premises of the factory or establishment in connection with the work thereof.

Those employed for wages by or through an immediate employer in connection with the factory or establishment outside the premises of such factory or establishment under the supervision and control of the Principal Employer or his agent.
Employees whose services are temporarily lent or let on hire to the Principal Employer by an immediate employer under a contract of service (employees of Security Contractors, Labour Contractors, House keeping contractors etc., come under this category).
Employees employed directly by the Principal Employer in any part, department, branch situated in the same station or else where, in connection with administration of the factory or establishment for purchase of raw materials, sale or distribution of the products of the factory etc.
Exclusions are

An apprentice engaged under the Apprentice Act, 1961 or under the Standing Orders of Establishment.
Any members of Navy, Army or Air Force and
Any person whose wages (excluding overtime wages) exceed Rs.7,500/- a month.

ESI Scheme
Broadly, all categories of employees, Regular, Casual, Badli, Temporary Contract etc., comes under the covered category. Employees engaged on loading, unloading, movement of raw-material, Gardening, Guest House Maintenance, watch and ward, House Keeping, cleaning, civil construction, repairs of building etc., erection, repairs and maintenance of machinery, plant, equipment furniture, fixtures etc., either engaged directly by the principal employer or through a contractor stand covered.

If the contractors' employees are engaged on any work of the factory or establishments out-side its premises, the factor of supervision of the Principal Employer or his agent is considered necessary for the purpose of such employees coverage.

Even the paid Directors of a company are "employees" if they are in receipt of salary not exceeding Rs. 10,000/- per month. However, a proprietor and working partners receiving salary are excluded from the coverage.

Part time employees employed on contract of service are also employees.