Calculation of ESI & PF
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
06 November 2009
Dear Sir
I want to know Calculation and Accounting Entries of PF and ESI
Please tell me with illustration.
Thanking You:-
I want to know Calculation and Accounting Entries of PF and ESI
Please tell me with illustration.
Thanking You:-
07 November 2009
PF is deducted on Basic salary i.e Basic + DA is Rs. 15000/- or less above that PF is not deducted.
1) Employee – 12 % (of Basic + DA & Food concession allowance & retaining allowance, if any)
2) Employer – 13.61 % (of Basic + DA & Food concession allowance & retaining allowance, if any)
[ 13.61 % = 3.67 % PF + 8.33 % Pension Scheme + 1.10 % Admin. Charges of PF + 0.5 % EDLI + 0.01 % Admin Charges of EDLI ]
EDLI - Employee deposit link insurance
The maximum ceiling limit of PF - Rs.15000/-from 01/09/2014
If the basic + DA exceeds 15000/- than the contributions is optional. Some company may have their own company policies.
Provident fund is calculated towards the employers is 13.61%
1. Employers Contribution
2.EPF A/c No.1 - 3.67%
3.EPF - Admn Charges - 1.1%
4.Pension Fund A/c No.10 - 8.33%
5.EDLI A/c No.21 - 0.5%
6.EDLI - Admn Charges - 0.01%
ESIC calculation:
-------------------
In this ESIC, it includes the medical benefit both for the employee and employer.
It has been calculated on the basic of gross pay per month and maximum limit is upto Rs.15000/- p.m
Employee side - 1.75% and Employer side - 4.75%.
So if the gross of an employee is 8000/- p.m his contribution would be 8000*1.75% = 140/-
Employer 8000*4.75% = 380/-
Therefore Net pay = Gross pay - Total deductions
1. Those who are getting 15000/- gross per month will not be applicable under ESIC act.
2. 20 eligible employees to get registered in ESIC
3. Eligible employees means those who are getting gross pay upto 15000/- or less per month.
Apart from that there is a tax deduction., it includes the Income & professional tax.
CTC means cost to the company.i.e .what are all the expenses incurred by the Company for any of its employee for a particular period(monthly/yearly)
gross pay + employers pf+employers ESI + bonus = CTC
i.e THE SALARY PAYABLE AND OTHER STATUTORY BENIFTS PAYABLE BY COMPANY.
CTC
-----
CTC is cost to company and the components are
Basic
+HRA
+CONVEYANCE
+MOBILE REIMBURSHMENT
+MEDICAL reimburshment
+All allowances
+LTA
+employer cotri of PF
+Employer Cotri towards ESI
+Total variable incentives
+Perks & benefits
+ insurance Premium (in case of Group insurance)
Gratuity calculation
t is been deposited @ 4.81% of Basic per month..
After completing 5 years of service one may claim Gratuity at the time of separation from the organisation and it is been paid @ 15 days of salary for per year of service...
Like for 6 years of experience one's gratuity will be calculated with this formula-
EPFO has cut the administrative fee charged from employers effective from 1st January 2015.
EPF Admin Charges
Existing Rate
New Rate
1.10 % of Total EPF Salary
0.85 % of Total EPF Salary
Minimum Rs 5 in case of Non Contributory Member
Minimum Rs 75 Per Month in case of non-functional establishment having no contributory member
Minimum Rs 500 for Contributory Members
EDLI Admin Charges
Existing Rate
New Rate
0.01 % of Total EDLI Salary
0.01 % of Total EDLI Salary
Minimum Rs 2 in case of Non Contributory Member
Minimum Rs 25 Per Month in case of non-functional establishment having no contributory member
Minimum Rs 200 for Contributory Members
1) Employee – 12 % (of Basic + DA & Food concession allowance & retaining allowance, if any)
2) Employer – 13.61 % (of Basic + DA & Food concession allowance & retaining allowance, if any)
[ 13.61 % = 3.67 % PF + 8.33 % Pension Scheme + 1.10 % Admin. Charges of PF + 0.5 % EDLI + 0.01 % Admin Charges of EDLI ]
EDLI - Employee deposit link insurance
The maximum ceiling limit of PF - Rs.15000/-from 01/09/2014
If the basic + DA exceeds 15000/- than the contributions is optional. Some company may have their own company policies.
Provident fund is calculated towards the employers is 13.61%
1. Employers Contribution
2.EPF A/c No.1 - 3.67%
3.EPF - Admn Charges - 1.1%
4.Pension Fund A/c No.10 - 8.33%
5.EDLI A/c No.21 - 0.5%
6.EDLI - Admn Charges - 0.01%
ESIC calculation:
-------------------
In this ESIC, it includes the medical benefit both for the employee and employer.
It has been calculated on the basic of gross pay per month and maximum limit is upto Rs.15000/- p.m
Employee side - 1.75% and Employer side - 4.75%.
So if the gross of an employee is 8000/- p.m his contribution would be 8000*1.75% = 140/-
Employer 8000*4.75% = 380/-
Therefore Net pay = Gross pay - Total deductions
1. Those who are getting 15000/- gross per month will not be applicable under ESIC act.
2. 20 eligible employees to get registered in ESIC
3. Eligible employees means those who are getting gross pay upto 15000/- or less per month.
Apart from that there is a tax deduction., it includes the Income & professional tax.
CTC means cost to the company.i.e .what are all the expenses incurred by the Company for any of its employee for a particular period(monthly/yearly)
gross pay + employers pf+employers ESI + bonus = CTC
i.e THE SALARY PAYABLE AND OTHER STATUTORY BENIFTS PAYABLE BY COMPANY.
CTC
-----
CTC is cost to company and the components are
Basic
+HRA
+CONVEYANCE
+MOBILE REIMBURSHMENT
+MEDICAL reimburshment
+All allowances
+LTA
+employer cotri of PF
+Employer Cotri towards ESI
+Total variable incentives
+Perks & benefits
+ insurance Premium (in case of Group insurance)
Gratuity calculation
t is been deposited @ 4.81% of Basic per month..
After completing 5 years of service one may claim Gratuity at the time of separation from the organisation and it is been paid @ 15 days of salary for per year of service...
Like for 6 years of experience one's gratuity will be calculated with this formula-
EPFO has cut the administrative fee charged from employers effective from 1st January 2015.
EPF Admin Charges
Existing Rate
New Rate
1.10 % of Total EPF Salary
0.85 % of Total EPF Salary
Minimum Rs 5 in case of Non Contributory Member
Minimum Rs 75 Per Month in case of non-functional establishment having no contributory member
Minimum Rs 500 for Contributory Members
EDLI Admin Charges
Existing Rate
New Rate
0.01 % of Total EDLI Salary
0.01 % of Total EDLI Salary
Minimum Rs 2 in case of Non Contributory Member
Minimum Rs 25 Per Month in case of non-functional establishment having no contributory member
Minimum Rs 200 for Contributory Members
Message likes :
139 times
14 September 2012
Sh. Ram Avtar Ji Thanks for such a nice information ,
However I would like one correction in your record .i.e .
Max. Limit for ESI is Rs. 15000.00 now instead of Rs. 10000.00
Over all I am fully agreed with the information provided by you.
Thanks & Regards
However I would like one correction in your record .i.e .
Max. Limit for ESI is Rs. 15000.00 now instead of Rs. 10000.00
Over all I am fully agreed with the information provided by you.
Thanks & Regards
Message likes :
3 times
20 November 2012
Agree with above..
Message likes :
1 times
08 December 2012
wow...what a info by ramavatarji.......
Message likes :
2 times
06 March 2014
Nice information provided
keep it on ....!
keep it on ....!
Message likes :
2 times
09 September 2015
From 01/09/2014, If Basic exceeds 15000, then PF contribution is optional. In this case, whether EDLI benefit will be applicable for those who we are paying PF (optional) on more than 15000 basic+DA.
Eg: One employee basic pay is 25,000 and joined in Dec 2014, company is deducting PF 3,000 on monthly basis. Will he gets EDLI benefit?
Eg: One employee basic pay is 25,000 and joined in Dec 2014, company is deducting PF 3,000 on monthly basis. Will he gets EDLI benefit?
09 September 2015
From 01/09/2014, If Basic exceeds 15000, then PF contribution is optional. In this case, whether EDLI benefit will be applicable for those who we are paying PF (optional) on more than 15000 basic+DA.
Eg: One employee basic pay is 25,000 and joined in Dec 2014, company is deducting PF 3,000 on monthly basis. Will he gets EDLI benefit?
Eg: One employee basic pay is 25,000 and joined in Dec 2014, company is deducting PF 3,000 on monthly basis. Will he gets EDLI benefit?
21 June 2018
EMPLOYEES’ PROVIDENT FUND - OVERVIEW
The objective of EPF Scheme is to develop a habit of saving among the workforce for their retirement
Every establishment having twenty or more employees is mandatorily required to comply with the EPF provisions
The establishment covered is required to deduct PF of every employee whose wages (Basic salary + Dearness Allowance) is upto Rs 15000 every month.
CALCULATION OF EPF
Employee is required to contribute 12% of “PF salary” while the employer is required to contribute 13% of “PF salary” towards Employees’ Provident Fund
where “PF salary” consists of Basic + DA (including the cash value of any food concession) and retaining allowance
Employer’s contribution of 13% is distributed in four different accounts i.e. EPF, Pension Scheme, Employee Deposit Linked Insurance and EPF Administration charges in following manner:
ILLUSTRATION
Suppose an employee earns salary of Rs 16000 comprising of:
Basic Salary – Rs 10000
Dearness Allowance – Rs 2000
HRA – Rs 4000
Since his Total of Basic salary and DA is less than Rs 15000, he is covered within the ceiling limit. Calculate EPF contributions and write journal entries.
SOLUTION
Employer’s contribution:-
EPF @ 3.67% Rs 440
EPS @ 8.33% Rs 1000
EDLI @ 0.50% Rs 60
EPF Admin charges @ 0.50% Rs 60
TOTAL Rs 1560
Employee’s contribution to EPF @ 12% = Rs 1440
So total contribution made is Rs 1440 + Rs 1560 = Rs 3000
ACCOUNTING ENTRIES
1 Salary DR 16000
To Bank (Salary payable) Rs 14560
To Employee’s contribution to EPF Rs 1440
2. Employee’s contribution to EPF DR 1440
Employer’s contribution to EPF DR 440
Employer’s contribution to EPS DR 1000
EPF Administration charges DR 60
Employer’s contribution to EDLI DR 60
To Bank (PF Payable) Rs 3000
The objective of EPF Scheme is to develop a habit of saving among the workforce for their retirement
Every establishment having twenty or more employees is mandatorily required to comply with the EPF provisions
The establishment covered is required to deduct PF of every employee whose wages (Basic salary + Dearness Allowance) is upto Rs 15000 every month.
CALCULATION OF EPF
Employee is required to contribute 12% of “PF salary” while the employer is required to contribute 13% of “PF salary” towards Employees’ Provident Fund
where “PF salary” consists of Basic + DA (including the cash value of any food concession) and retaining allowance
Employer’s contribution of 13% is distributed in four different accounts i.e. EPF, Pension Scheme, Employee Deposit Linked Insurance and EPF Administration charges in following manner:
ILLUSTRATION
Suppose an employee earns salary of Rs 16000 comprising of:
Basic Salary – Rs 10000
Dearness Allowance – Rs 2000
HRA – Rs 4000
Since his Total of Basic salary and DA is less than Rs 15000, he is covered within the ceiling limit. Calculate EPF contributions and write journal entries.
SOLUTION
Employer’s contribution:-
EPF @ 3.67% Rs 440
EPS @ 8.33% Rs 1000
EDLI @ 0.50% Rs 60
EPF Admin charges @ 0.50% Rs 60
TOTAL Rs 1560
Employee’s contribution to EPF @ 12% = Rs 1440
So total contribution made is Rs 1440 + Rs 1560 = Rs 3000
ACCOUNTING ENTRIES
1 Salary DR 16000
To Bank (Salary payable) Rs 14560
To Employee’s contribution to EPF Rs 1440
2. Employee’s contribution to EPF DR 1440
Employer’s contribution to EPF DR 440
Employer’s contribution to EPS DR 1000
EPF Administration charges DR 60
Employer’s contribution to EDLI DR 60
To Bank (PF Payable) Rs 3000
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