Payroll6 min readEZER Team
PF vs ESIC vs PT: A Quick Reference for HR Teams
Three deductions show up on almost every Indian payslip. Three different government bodies. Three different purposes. And three different sets of rules on who's covered and how much gets deducted. Here's the reference we wish someone had handed us on day one.
PF (Provident Fund)
A retirement savings scheme run by the EPFO. Since 21 November 2025 it sits in Chapter III of the Code on Social Security, 2020, and in 2026 the EPF, EPS and EDLI Schemes, 2026 replaced the 1952, 1995 and 1976 schemes.
- 12% + 12%Employee + employer, on wages as the Code defines them
- ₹25,000/moWage ceiling from 17 Sept 2026 (was ₹15,000)
- 20+Employees for mandatory coverage
Of the employer's 12%, 8.33% routes to the Employees' Pension Scheme, up to the pensionable-wage limit, and the rest to the employee's own EPF account. On 17 September 2026 the mandatory wage ceiling rose to ₹25,000 a month, its first revision since 2014, so employees earning ₹15,001 to ₹25,000 are now covered as of right. Above the ceiling, contribution is voluntary. Filed monthly via the Electronic Challan cum Return (ECR) on the EPFO Unified Portal.
What counts as wages changed too: under the Codes, Basic, DA and retaining allowance must make up at least half of total pay. If the excluded allowances (HRA, conveyance and the like) come to more than half, the excess is added back to wages for PF, ESIC and gratuity.
ESIC (Employees' State Insurance)
A health insurance and social security scheme, now under Chapter IV of the Code on Social Security, 2020 (the ESI Act, 1948 was repealed on 21 November 2025). It covers medical treatment, sickness benefit and maternity benefit.
- 0.75% + 3.25%Employee + employer, on wages
- ₹21,000/moWage ceiling, unchanged (₹25,000 for PwD)
- 10+Employees (20 in a few states)
ESIC's ceiling decides who is covered at all, and the contribution is worked out on the employee's wages for the period. Coverage runs in two six-month contribution periods (April–September, October–March); if wages cross the ceiling mid-period, coverage continues until the period ends.
PT (Professional Tax)
A state-level tax under Article 276 of the Constitution. Every state that levies it sets its own slabs and schedule.
- ₹2,500/yrConstitutional maximum, any state
- ~20 statesLevy PT. Delhi, Haryana, UP don't
- Both regimesPT is deductible under Sec 16(iii)
Side by side
| PF | ESIC | PT | |
|---|---|---|---|
| Governed by | Code on Social Security | Code on Social Security | State PT Acts |
| Calculated on | Code wages (50% rule) | Wages for the period | Gross (slab) |
| Ceiling | ₹25,000/mo | ₹21,000/mo | ₹2,500/yr |
| Purpose | Retirement | Health cover | State revenue |
Where teams actually get this wrong
Leaving ₹15,000 as the PF ceiling in the payroll master from 17 September 2026, everyone earning up to ₹25,000 is mandatorily covered.
Calculating ESIC on Basic alone under-deducts and under-reports.
Assuming PT applies everywhere Delhi, Haryana, UP, Rajasthan, Punjab don't levy it.
Missing the ESIC contribution-period rule coverage continues to period end, not from the salary-change date.
Not separating voluntary PF above the ceiling causes Form 130 (formerly Form 16) reconciliation issues later.
EZER calculates all three automatically, every run
State-aware PT, Code-wage ESIC, the new ₹25,000 PF ceiling, without a separate spreadsheet.
Request a DemoThis is general information about Indian payroll and statutory rules, not legal or tax advice. Rules are still being notified state by state, so check your own position with your consultant before you act on it.
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