Know the Contrasts between PF and ESIC

[Ishita Ramani]

Introduction

The Employee State Insurance Corporation (ESIC) and the Employee Provident Fund (EPF) are two distinct forms of employee-benefiting social security programs in India. Whereas ESIC is required for all employees making less than Rs. 21,000 per month,EPF is required for all employees making more than Rs. 15,000. We'll talk about the main distinctions between EPF and ESIC in this article.

What do EPF and EPF Return mean?

Employers provide their staff members with a retirement benefit plan called an Employee Provident Fund (EPF). It is an Employees' Provident Fund Organization (EPFO)-regulated statutory system. A predetermined portion of the employee's pay is contributed to the fund by the business and the employee under this plan. When an employee retires, resigns, or passes away, they are entitled to a withdrawal of the entire amount accumulated, plus interest.

An employee's basic pay, dependent allowance, and other benefits are all included in the EPF return, which is a statement that the business files with the EPFO detailing the contributions made by each employee to the fund.

What qualifications are needed to register for EPF?

Anyone can register for an employee provident fund (EPF) and become a member, regardless of whether their firm is public or private. Employers who employ 20 or more people are obligated to offer their staff EPF benefits. Pensions and insurance benefits are just two of the perks to which employees are entitled.

The following are essentials needed for EPF:

EPF Passbook: The Epf Passbook is the online statement or document that displays the total amount contributed by both employee and employer, along with interest earned.

KYC EPFO: EPFO mandates its employees to fill its KYC by providing essential documents such as Aadhar, Bank details and PAN

KYC EPFO update online: :EPFO allows its members to updates their details online

through EPFO member portal or UMANG mobile app, making it convenient for its employee to maintain their accurate records.

What does PPF mean?

In India, PPF( Public Provident Fund.) Account is a long-term savings plan designed to encourage savings for retirement while delivering attractive benefits. It is a government-backed investment option that allows individuals to deposit funds and earn tax-free benefits on savings.

The ppf interest rates and ppf interest rates in the post office are as follows:

The government reviews the ppf interest rates annually, which are usually competitive when compared to other fixed-income securities. As of 2024, the interest rate on the PPF account is determined by the Ministry of Finance and is subject to change. They can be opened in banks or designated post offices across the country, making them available to a wide range of people. The interest rates in post offices are similar to those offered by other banks, providing investors with a secure and reliable option for long-term financial planning.

What does Employee State Insurance mean?

A social security program called Employee State Insurance (ESI) offers health, disability, maternity, and other benefits to workers. The Employee State Insurance Corporation (ESIC) oversees it. A predetermined portion of the employee's pay is contributed to the fund by the business and the employee under this plan. Any of the ESIC hospitals or pharmacies is open to employees for medical care.

What qualifications are needed to apply for an ESIC registration?

For companies in a variety of industries, including retail, hotels, movie theatres, newspapers, road transportation, healthcare, and education, ESIC registration is required if they employ ten or more people. This cap has been raised to 20 employees in several states. Workers who get a monthly income of up to Rs. 15,000 are eligible for ESIC coverage.

Key differences between EPF and ESIC

EPF:

Relevance: Mandatory for employees earning more than Rs. 15,000 a month.

Contribution: The employer and employee both make contributions.

Benefits: Retirement

Contribution Ratios: Employer: 12 percent of the employee's pay.

Rate of Interest: Set by the government, it is currently 8.5% annually.

Amount taken out: In the event of a death, resignation, or retirement.

Compliance: submission of returns and contribution payments monthly.

ESIC:

Relavance: Required of workers making less than Rs. 21,000 a month.

Contribution: The employer alone makes a contribution.

Benefits: health, disability, and other benefits

Contribution Ratio: Employer: 4.75 percent of the employee's pay.

Rate of Interest: set by the government; it is now 8.15% annually.

Amount taken out: Only accessible when the employee is on the job.

Compliance: submission of returns and payment of contributions every six months.

Summary

Important government programs that give workers financial security are EPF and ESIC. ESIC offers medical, disability, and other benefits; EPF Return is primarily concerned with retirement benefits. To protect the welfare of the workers, it's critical that both employers and employees are aware of the distinctions between the two plans and abide by any applicable laws.