Difference between PF & ESIC

Difference between Provident Fund(PF) and Employee State Insurance Corporation (ESIC)

Introduction

PF and ESIC are two different types of social security schemes in India that are designed to benefit employees. While PF is mandatory for all employees earning more than Rs. 15,000 per month, ESIC is mandatory for all employees earning less than Rs. 21,000 per month. In this article, we will discuss the key differences between PF and ESIC.

What is a PF and PF returns?

Provident Fund (PF) is a retirement benefit scheme that is offered to employees by their employers. It is a statutory scheme regulated by the Employees’ Provident Fund Organization (EPFO). Under this scheme, both the employer and the employee contribute a certain percentage of the employee’s salary towards the fund. The employee can withdraw the accumulated amount along with interest at the time of retirement, resignation, or in the case of death.

A PF return is a statement filed by the employer with the EPFO, showing the contributions made towards the fund for each employee, as well as other details such as the employee’s basic salary, DA, and other allowances

What are the eligibility criteria for PF Registration?

Both private and public organizations are eligible for employee provident fund registration, allowing anyone to become a member of the EPF. Organizations with at least 20 employees are required to provide EPF benefits to their employees. Employees are entitled to various benefits such as pensions and insurance benefits.

What is Employee State Insurance?

Employee State Insurance (ESI) is a social security scheme that provides medical benefits, disability benefits, maternity benefits, and other benefits to employees. It is regulated by the Employee State Insurance Corporation (ESIC). Under this scheme, both the employer and the employee contribute a certain percentage of the employee’s salary towards the fund. The employee can avail of medical treatment at any of the ESIC hospitals or dispensaries.

What are the eligibility criteria for ESIC Registration?

ESIC registration is mandatory for businesses employing a minimum of 10 workers in various sectors such as road transport, hotels, cinemas, newspapers, shops, and educational/medical institutions. In some states, this threshold has been extended to 20 employees. Employees earning a monthly salary of up to Rs. 15,000 are eligible for coverage under the ESIC scheme.

What is the Difference Between PF and ESIC?

The key differences between PF and ESIC are s follows:

Differences	Provident Fund	ESIC
Applicability	Mandatory for employees earning more than Rs. 15,000 per month.	Mandatory for employees earning less than Rs. 21,000 per month.
Contribution	Both employer and employee contribute.	Only employer contributes
Perks	Retirement Benefits	Medical benefits, disability benefits, and other benefits.
Contribution Percentages	Employer: 12% of the employee’s salary.	Employer: 4.75% of the employee’s salary.
Interest Rate	Government-determined, currently 8.5% per annum.	Government-determined, currently 8.15% per annum.
Amount withdrawal	Upon retirement, resignation, or in the case of death.	Available only while the employee is working.
Compliance	Monthly filing of returns and payment of contributions.	Half-yearly filing of returns and payment of contributions.

Bottom Line

Both PF and ESIC are important government schemes that provide financial security to employees. While PF Return is focused on retirement benefits, ESIC provides medical benefits, disability benefits, and other benefits. It’s important for employees and employers to understand the differences between the two schemes and comply with the applicable regulations to ensure the well-being of the employees.