The system of record for how work actually happens.
EPF takes 12% from the employee and 12% from the employer (split 8.33% to the pension scheme, 3.67% to provident fund). ESI takes 0.75% + 3.25% on gross — but only when the monthly wage is at or below ₹21,000. The studio runs both, in parallel, and exports the ECR file and contribution sheet the portals actually accept.
₹18,000
basic + DA
₹20,500
gross wage
₹2,314
₹2,826
₹5,140
EPF anatomy
EPF looks like a simple 24% scheme on paper, but the employer's half splits — 8.33% diverts to the Employees' Pension Scheme (EPS), which pays a monthly pension after retirement; only 3.67% lands in the employee's actual PF account. Knowing that split is the whole point of reading the contribution slip carefully.
Deducted from the employee's salary every month. Calculated on basic + DA (not gross). Builds the employee's own retirement corpus, accrues interest annually at the rate EPFO declares (8–8.5% historical band).
EPF · employee's account at EPFO
Out of the employer's 12%, this slice diverts to the Employees' Pension Scheme. Capped on a wage base of ₹15,000 — so the maximum EPS contribution per month is ₹1,250 (8.33% × ₹15k). The cap is fixed at ₹15k regardless of actual basic.
EPS · monthly pension after 58
The remainder of the employer's 12% (after the 8.33% EPS cut). Lands in the employee's EPF account alongside the employee's own 12% contribution. The match grows the corpus 1:1 with the employee share — within whichever wage cap is elected.
EPF · employee's account at EPFO
Employees can voluntarily contribute more than 12% — up to 100% of basic + DA — into the Voluntary Provident Fund. Same EPF account, same interest rate, no employer match on the voluntary portion. Useful for retirement-corpus padding under the old regime where 80C cap is binding.
EPF · same account, no employer match
EPFO declares the interest rate annually after consulting the central government. Interest credits to the member's account once a year (typically Aug–Sept following the FY-end), compounding the corpus. EPS doesn't carry an interest rate — it converts to a pension formula instead.
EPF account · compounding annually
EPFO has a statutory wage ceiling of ₹15,000/month above which the employer can elect to cap contributions. Below ₹15k basic, the cap doesn't matter — 12% applies on actual basic. Above ₹15k, the employer decides: 12% on full basic (uncapped) or 12% on ₹15k flat (capped).
Election made by the employer at hire
The ESI cliff
ESI is one of the few statutory schemes in India with a hard cliff. A ₹50 raise that pushes monthly wages from ₹20,999 to ₹21,049 takes the employee out of the entire scheme — no contribution, no medical cover, no maternity benefit. The studio surfaces this with a clear flag so a marginal raise doesn't accidentally strip coverage.
Both contributions are tied to the same monthly gross wage. Employee's share comes off the salary; employer's share is a top-up cost. Together they fund the entire benefit pool the employee can later draw against.
TOTAL · 4% OF GROSS
ESI applies only to employees whose total gross monthly wage — basic + HRA + allowances + reimbursements — is at or below the threshold. Persons with disability get a higher cap. Re-evaluated at the start of every contribution period (April–Sept, Oct–March).
CHECKED HALF-YEARLY
Full medical care at ESI dispensaries / hospitals for the employee + family. Cash benefit during certified sickness. Maternity benefit for 26 weeks paid at 100% of average wage. Funeral expenses up to ₹15,000. Disablement and dependants' benefits in case of work-related injury.
ACTIVE FROM DAY ONE
The wage-cap election
EPFO's statutory wage ceiling is ₹15,000. Employers can elect to apply that cap to PF — paying 12% on ₹15k flat (so the employer share tops out at ₹1,800/mo) — or stay uncapped and pay 12% on actual basic. For an employee with ₹40,000 basic, the difference is ₹3,000/mo in employer contribution, ₹36k/yr, compounding for the length of the career.
Employer matches the employee's actual basic + DA, every month. The retirement corpus grows in proportion to the employee's pay.
₹4,800 on ₹40k basic
₹4,800 on ₹40k basic
~₹54 lakh (8.1% interest, no cap)
₹4,800/mo less than uncapped capped
The employer wants to attract and retain mid- to senior-level talent. The employee values long-term corpus over immediate take-home. The CTC is structured to make this clear at offer time.
Employer caps EPF contribution at the statutory ₹15,000 wage ceiling — employer's share tops out at ₹1,800/mo regardless of basic.
₹1,800 max
₹1,800 max (or actual, employee's choice)
~₹20 lakh (8.1% interest, capped)
Higher today, smaller corpus tomorrow
The employer is cost-sensitive on EPF specifically and prefers to redirect the corpus contribution to higher cash wages. The employee independently builds retirement savings via NPS / mutual funds / VPF.
The double burden
CTC says "₹15 lakh" but inside that figure the employer is already counting their EPF and ESI contributions. The employee, meanwhile, only sees the deductions side: PF + ESI + TDS coming off the gross. The studio reads both sides — the employer's real outlay, the employee's real take-home — so neither side gets surprised.
On a ₹20,000 base, the employer pays ₹2,400 to EPF + ₹650 to ESI = ₹3,050 every month over and above the visible salary. That's the cost-to-company arithmetic the CTC line embeds — but most CTC presentations don't separate it out.
From the employee's salary, ₹2,400 EPF + ₹150 ESI = ₹2,550 comes off as a deduction every month. The remainder, plus the take-home after TDS, is what shows up in the bank account.
The employee's ₹2,400 EPF deduction grows in their own retirement account. The ₹3,310 employer EPF (12% match, post EPS routing) lands in the same account. The ₹150 + ₹650 ESI buys full medical care + maternity benefit + sick pay coverage.
Many smaller employers quote CTC without separating PF / ESI clearly — the employee discovers the deduction on the first payslip. The studio's CTC builder makes this explicit at offer time; the salary calculator confirms it on the receiving end.
The employer's EPF contribution doesn't show on the employee's salary as taxable income — it lands directly in the EPF account and grows tax-deferred. Employer NPS under 80CCD(2) is the second leg of tax-deferred employer benefits.
Withdrawals from EPF are tax-free if the member has continuous service of 5 years or more — including across employers when the UAN carries the balance. Earlier withdrawals trigger TDS on the corpus depending on the amount and FY of withdrawal.
ECR + ESIC filing
Compute is one job. Upload is another. EPFO accepts an Electronic Challan-cum-Return file (ECR) in a specific tab-delimited format; ESIC accepts a contribution sheet in Excel. The studio exports both, named with the wage month and the deductor's PF/ESI codes, ready to drag into each portal.
The unified portal accepts a tab-delimited file with one row per member. Each row carries the UAN, wages, contribution amounts, and codes. The studio outputs the file in the exact column order EPFO's parser expects — no validation errors on upload.
ESIC's portal accepts an Excel upload listing each member's IP number, wages, contribution. The studio's sheet pre-fills the IP numbers from the employer profile and applies the threshold check — members above ₹21k gross are automatically excluded from the upload.
The Q&A column
Cross-employer transfers, voluntary contributions, the SSA exemption, what happens if the threshold flips mid-cycle. Narrow to statutory-contributions territory — the broader TDS / take-home / payslip questions live on their own pages.
ESI evaluates eligibility at the start of each contribution period (April–September and October–March). If wages cross ₹21k during a period, the employee stays in ESI till the end of that period — contributions continue on the actual wages, even above the threshold. At the next period start, eligibility re-checks and the employee can drop out cleanly. The studio applies this rule automatically.
Continue with
PF and ESI are statutory subtractions; the salary calculator nests them inside the full take-home view; the TDS calculator computes the third monthly deduction; the CTC builder respects both wage caps when authoring a structure; the payslip generator surfaces them as line items on the stub.
Two schemes, four parties, one monthly cycle. The studio tracks the wage caps, the eligibility cliff, the routing splits — and ships ECR + ESIC files the portals upload without complaint.