PF vs ESIC: what every employer must file each month
Provident Fund (PF) and Employees' State Insurance (ESIC) are the two social security payments almost every growing business in India deals with. They are often mentioned together, but they cover different things, use different salary figures and have different limits. Here is what you need to know in 2026.
In short
- PF builds an employee's retirement savings and pension. ESIC gives medical care and cash benefits during sickness, maternity or injury.
- PF applies once you have 20 or more employees; ESIC once you have 10 or more.
- The PF wage ceiling went up from ₹15,000 to ₹25,000 a month on 17 September 2026. The ESIC ceiling stays at ₹21,000.
- Both contributions are due by the 15th of the following month.
What changed in 2025–26
India's four Labour Codes came into force on 21 November 2025. PF and ESIC are now governed by the Code on Social Security, 2020, which replaced the old EPF Act and ESI Act. The new EPF Scheme, 2026, notified on 29 June 2026, replaced the scheme that had been in place since 1952.
For most employers, the day-to-day routine is the same: register, deduct, deposit and file every month. Contribution rates have not changed. Two things have:
- Higher PF wage ceiling. From 17 September 2026, employees earning up to ₹25,000 a month must be covered by PF. Employees earning between ₹15,000 and ₹25,000, who were outside compulsory PF earlier, now need to be enrolled. September 2026 payroll is calculated on a split basis: the old ceiling for 1–16 September and the new ceiling for 17–30 September, reported in a single return.
- Wider ESIC coverage. ESIC now applies across the country, not only in specially notified areas. Businesses with fewer than 10 workers can join voluntarily, and businesses doing hazardous work must register even with a single worker.
PF and ESIC side by side
| PF (EPFO) | ESIC | |
|---|---|---|
| What it covers | Retirement savings, pension (EPS) and life insurance (EDLI) | Medical treatment, plus cash benefits during sickness, maternity and work injury |
| When registration is required | 20 or more employees | 10 or more employees (1 or more for hazardous work) |
| Wage ceiling | ₹25,000 a month from 17 Sep 2026 (₹15,000 before) | ₹21,000 a month gross (₹25,000 for persons with disabilities) |
| Salary used | "Wages": mainly basic pay + DA | Gross monthly wages |
| Employee share | 12% | 0.75% |
| Employer share | 12% (8.33% to pension, 3.67% to PF), plus 0.5% EDLI and 0.5% admin charges | 3.25% |
| Monthly deadline | Pay and file the ECR by the 15th of the next month | Pay by the 15th of the next month |
| Other returns | Monthly ECR covers it | Half-yearly returns by 11 May and 11 November |
Which salary do you calculate on?
This is where most payroll errors happen. ESIC is simple: it is calculated on the employee's gross monthly wages, and applies only to employees earning ₹21,000 or less.
PF is calculated on "wages", which is mainly basic pay plus dearness allowance. Under the Labour Codes, if allowances make up more than half of an employee's total pay, the excess is added back to wages. Salary structures with a very low basic and large allowances will therefore see a higher PF base. It is worth reviewing your salary structures once against this rule.
A worked example
Take an employee with gross pay of ₹20,000 a month, all of which counts as wages for PF:
| Contribution | Employee pays | Employer pays |
|---|---|---|
| PF – employee share (12%) | ₹2,400 | – |
| Pension, EPS (8.33%) | – | ₹1,666 |
| PF – employer share (3.67%) | – | ₹734 |
| EDLI insurance (0.5%) | – | ₹100 |
| PF admin charges (0.5%) | – | ₹100 |
| ESIC (0.75% / 3.25%) | ₹150 | ₹650 |
| Total | ₹2,550 | ₹3,250 |
Before 17 September 2026, this employee's PF would have been limited to ₹15,000. From that date, the full ₹20,000 falls within the new ceiling.
Your monthly routine
- Finalise payroll and check which employees fall under each scheme, especially anyone whose pay has crossed ₹21,000 (ESIC) or ₹25,000 (PF).
- Register new joiners: generate or link their UAN for PF and their insurance number for ESIC.
- Deduct the employee shares from salary.
- Upload the PF ECR and pay the challan on the EPFO portal by the 15th.
- Pay the ESIC contribution on the ESIC portal by the 15th.
- Keep the challans and returns on file for inspections and audits.
What happens if you pay late?
Missing the 15th attracts interest from the due date until the day the money is paid, and damages can be added on top. ESIC charges simple interest at 12% a year on late contributions. Liability starts from the date you crossed the registration threshold, not the date you registered, so delays can add up quietly until an inspection finds them.
Quick checklist for October 2026
- Update your payroll software's PF wage cap to ₹25,000.
- Enrol employees earning ₹15,000–₹25,000 who were not in PF.
- Check that your September 2026 ECR used the split calculation.
- Prepare the ESIC half-yearly return for April–September, due 11 November.
- If you use contractors, ask for proof of their PF and ESIC payments for your workers.
This guide is general information based on the rules in force on 14 October 2026. Labour laws, rates and state rules change, so check the latest notifications or speak to an expert before acting on it.
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