Statutory Components

These are components defined under certain enactments passed by government bodies like Employee Provident Fund Organisation (EPFO) and Employees’ State Insurance Corporation (ESIC). Contributions are made by employees and employers towards the employees’ long term financial and social well-being.

There are 4 main statutory components in India.

Employee Provident Fund

EPF is a retirement benefit scheme available to all employees. The main purpose of this scheme is to help employees save a fraction of their salaries every month (12% of Basic Pay + DA), so that they can use it when they retire or if they develop any disability.

Guidelines for EPF

To set up EPF for your organisation,

EPF

Once you’ve set up EPF for your organisation, all you need to do is configure it when you add a new employee and their PF contributions will be deducted automatically every month.

Employee State Insurance

‌This is a self-financing social security and health insurance scheme applicable only to employees whose monthly salary is ₹21,000 or less. The employees’ contribution for ESI is 1.75% of Gross Pay and your contribution would be 4.75% of Gross Pay. It is available in all states except ‌Manipur, Sikkim, Arunachal Pradesh and Mizoram.

Guidelines for ESI

To set up ESI for your organisation,

ESI

Make sure that you configure ESI when you add a new employee, if it applies to them.

Professional Tax

It is a tax levied on all professionals and salaried individuals by the State Governments. Employees belonging to different salary slabs would need to pay different amounts as Professional Tax. The tax slabs vary for each state or municipality. The deduction cycle may be monthly, half-yearly or yearly depending on your state.

To set up Professional Tax for your organisation,

PT

All you need to do now is configure PT when you add a new employee.

Labour Welfare Fund

‌It is a scheme which ensures social security and improved working conditions for employees. It is applicable only for employees whose monthly salary is ₹15,000 or less. The deduction cycle may be monthly, half-yearly or yearly depending on your state.

LWF
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