Applicability of pf & esi

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Querist : Anonymous

Querist : Anonymous (Querist)

30 April 2013 We have more than 20 employees in our concern(Partnership Firm). But still we have not deducted and contributed to pf & esi. And more than 18 employees are getting more than Rs.10,000/- as basic salary. Please let me know is pf & esi act applicable to us.
Regards,
KPK

Ankur Garg

Ankur Garg (Expert)
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02 May 2013 Please find below the details of component required to check the ESI eligibility and Liability of employee.
It will help you to understand the ESI applicability process.

ESI applicability is two step process:
1. ESI eligibility criteria;
2. ESI deduction criteria.

ESI eligibility criteria: That is, when employee is covered by ESI?

Employee is covered when the following components is less than or equal to Rs.15,000
a. Basic;
b. HRA;
c. Transport/Conveyance Allowance:

ESI deduction criteria: That is, at what amount ESI contribution/deduction is to be calculated?

The components are as under:
a. Basic;
b. HRA;
c. Transport Allowance:
d. Special/Conveyance Allowance

For both the situations reimbursement should not be considered.

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Ankur Garg

Ankur Garg (Expert)
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02 May 2013 ESI APPLICABILITY

Under Section 2(12) the Act is applicable to non-seasonal factories employing 10 or more persons.

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 20* or more persons.

Further under section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational institutions employing 20* or more persons in certain States/UTs.

*Note: 14 State Govts. / UTs have reduced the threshold limit for coverage of shops and other establishments from 20 to 10 or more persons. Remaining State Governments/UTs are in the process of reducing the same.

The existing wage limit for coverage under the Act is Rs. 15,000/- per month ( w.e.f. 01/05/2010).

AREAS COVERED

The ESI Scheme is being implemented area-wise by stages. The Scheme has already been implemented in different areas in the following States/Union Territories of Indian Union.

STATES

All the States except Manipur, Sikkim, Arunachal Pradesh and Mizoram.

UNION TERRITORIES

Delhi and Chandigarh

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Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2013 Thanks for your prompt reply Ankur. And please clarify that, while we calculating the number of employees included the peoples getting salary more than Rs.15,000/-(Basic+HRA+TA+CA)
and what about PF?

Ankur Garg

Ankur Garg (Expert)
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02 May 2013 Regarding PF, please go through the link mentioned below:

http://www.excelconsultancyservices.co.in/EmployeesProvidentFund/faqs.htm

Employee drawing salary more than Rs. 15000 (Basic+HRA+Conyeyance Allowance) would be outside the preview of ESI law.

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