Question 1

When does EPF registration become mandatory?

Accepted Answer

Under Section 1(3)(a) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, every establishment employing 20 or more persons is covered from the date it reaches that threshold. Coverage is automatic — the employer must register on the EPFO Unified Shram Suvidha Portal within 30 days. Voluntary coverage for establishments below 20 employees is available under Section 1(4).

Question 2

What is the ESI wage ceiling and which statute sets it?

Accepted Answer

ESI applies to employees earning up to Rs 21,000 per month (Rs 25,000 for persons with disabilities), as notified under Section 2(9) of the Employees' State Insurance Act, 1948 read with the ESI (Central) Rules, 1950. Establishments with 10 or more such employees in most states must register. The current contribution rate is 3.25% (employer) + 0.75% (employee) of gross wages, prescribed under the ESI (Contributions) Regulations, 1950.

Question 3

What are the EPF contribution rates and which scheme rules govern them?

Accepted Answer

Under the Employees' Provident Funds Scheme, 1952 (Para 29), the employer contributes 12% of basic wages plus dearness allowance. Of the employer's 12%, 8.33% is diverted to the Employees' Pension Scheme, 1995 (capped at Rs 15,000 wage ceiling) and 0.5% to EDLI, 1976. The employee contributes an equal 12%. A reduced rate of 10% applies to certain industries under an EPF Amendment Scheme notification.

Question 4

What penalties apply for delayed EPF registration or contribution defaults?

Accepted Answer

Under Section 7Q of the EPF Act, interest at 12% per annum accrues on delayed contributions. Under Section 14B, damages of 5% to 25% of arrears are levied depending on the period of default: up to 2 months 5%, 2-4 months 10%, 4-6 months 15%, above 6 months 25%. For ESI, Section 85 of the ESI Act prescribes imprisonment up to 3 years and/or fine for wilful failure — directors can be personally liable under Section 85A.

Question 5

Is TDS deducted on EPF withdrawals, and what is the threshold?

Accepted Answer

Yes. Under Section 192A of the Income Tax Act, 1961 (Section 392 of ITA 2025 for TY 2026-27 onwards), TDS at 10% applies on EPF withdrawals of Rs 50,000 or more where the member has not completed 5 years of continuous service. If PAN is not furnished, TDS is deducted at the maximum marginal rate under Section 206AA (Section 397(2) of ITA 2025). Withdrawals after 5 years of continuous service are exempt under Section 10(12) of ITA 1961.

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