PF and ESI Contribution Worksheet for Indian Payroll (with the Labour-code Wage Check)

Provident fund (PF) and employees' state insurance (ESI) are the two monthly social-security contributions most Indian employers deal with. The calculations are simple once you know which salary components count, which ceilings apply and how the employer's share is split. The labour codes have added one more question: what counts as “wages”.

PF in brief

Under the Employees' Provident Funds scheme as commonly applied:

• The employee contributes 12% of PF wages (basic pay, dearness allowance and retaining allowance).
• The employer contributes 12%, split: 8.33% to the pension scheme (EPS) on wages up to the wage ceiling (₹15,000 a month, so at most ₹1,250), and the balance to the provident fund.
• The employer also pays EDLI (insurance) and administrative charges at the notified rates, on wages up to the ceiling for EDLI.
• Many employers restrict PF wages to the ₹15,000 ceiling; others contribute on full wages. Employees who joined after September 2014 with wages above the ceiling are generally not eligible for EPS.

Check every rate and the ceiling against current EPFO notifications — the worksheet keeps them all as settings.

ESI in brief

• Employees earning up to the wage ceiling (₹21,000 a month; higher for persons with disability) are covered.
• The employee contributes 0.75% and the employer 3.25% of gross wages, rounded up to the next rupee.
• Once covered in a contribution period, an employee generally stays covered for that period even if wages rise above the ceiling — check the rules for your case.

The labour codes and the 50% rule

The Code on Wages, 2019 and the Code on Social Security, 2020 were brought into force on 21 November 2025. They define “wages” to include basic pay, dearness allowance and retaining allowance, and exclude certain items such as HRA, conveyance, overtime and some others — but if the excluded items together exceed 50% of total remuneration, the excess is added back to wages. The intent is to stop salary structures with a very low basic pay from shrinking contributions and benefits.

How this flows into EPF and ESI contributions depends on the schemes, rules and circulars under the codes, which have been issued in stages. The worksheet has a switch: with it on, wages for PF are basic + DA + retaining allowance plus any excluded components above 50% of gross; with it off, the traditional basic + DA + retaining allowance. Confirm the current position with your payroll adviser before relying on either.

Using the worksheet

1. Check the rates, ceilings and switches on the settings sheet.
2. For each employee, enter monthly basic, DA, retaining allowance, HRA, conveyance and other allowances, and other components.
3. Read gross wages, wages for PF after the code check, PF wages used, employee EPF, employer EPS, employer EPF balance, EDLI and admin, ESI applicability and ESI contributions.
4. Totals at the bottom give the month's challan amounts to cross-check with the EPFO and ESIC portals.

Example (illustrative)

An employee with basic ₹12,000, HRA ₹6,000 and conveyance ₹4,000 has gross ₹22,000. Excluded components (₹10,000) are below half of gross (₹11,000), so PF wages stay at ₹12,000: employee EPF ₹1,440; employer EPS ₹1,000 (8.33% of ₹12,000, rounded); employer EPF ₹440. Gross is above ₹21,000, so ESI does not apply this month.

Deadlines and records

PF and ESI contributions are due by the 15th of the following month, through the respective portals (ECR for EPF). Late payment attracts interest and damages. Keep the monthly register, challans and returns together; inspectors ask for all three.

Where Bebaak helps

Bebaak People keeps salary structures and works out PF and ESI with the rates as settings, then produces payslips and the monthly summaries — see the payroll guide and salary structures.

Common mistakes

• Low basic pay with large allowances, without checking the 50% wage rule.
• EPS computed on wages above the ceiling.
• ESI stopped mid-period when wages cross the ceiling.
• Contributions paid after the 15th, attracting interest and damages.
• New joiners not registered (UAN / IP number) before the first payroll.

Monthly checklist

1. Lock attendance and leave; finalise salaries.
2. Run the worksheet (or payroll) and reconcile totals with last month — explain every change.
3. File the EPF ECR and pay; file the ESI contribution and pay — both by the 15th.
4. Keep challans and the register together for inspections.