Labor Laws You Should Know about While Opening a Company in India
Some Basics about Labor Laws in India
In India, labor laws are made in such a way that they provide a high degree of protection to the laborers and also regulate the activities and welfare involving them. This blog is aimed at helping anyone who wants to open a firm in India, and giving them the information about the two most important funds in India that every organization should know about. These funds are ESI and EPF. The ESI stands for Employee State Insurance and EPF stands for Employee Provident Fund. ESI is a self-financing social security and health insurance scheme for Indian workers. The contribution to this fund by the employee is 0.75% of the income (or salary) and that of the employer’s part is 3.25%. Understanding both of these funds becomes really important for anyone who wants to open franchise in India and would have employees working eventually.
EPF is similar to ESI but in these funds, the employer and the employee both pay contribute 12% of the wages. However, this deduction happens if the salary is over INR 15,000. The Employee can decide to put in more money into this fund but the capping for the employer has to be fixed at 12% of 15,000 i.e. INR 1,800 per month. The people who want to open franchise in India should know all the statutory compliances related to the EPF scheme. The PF contributions by the employers are divided into two parts 8.33% makes up the first part of it which goes directly into the EPF scheme and the other part which is made up of the remaining 3.67% goes directly into the EPF i.e. the Employee’s Pension Scheme (administered by the Government of India). And the share that the employee puts into this goes directly into the EPF fund.
As a person who wants to open a firm in India, one should keep in mind that the payment of this EPF and ESI is done on a monthly basis and the delay in the same would result in levying interest charge on the amount and a possibility of a penalty as well.
You should also understand that the EPF is subject to interest income. The rate of interest of the same is revised annually by the Ministry of Finance (Government of India). Also, there is no tax that is levied on this EPF of the employee until his or her retirement.
DBPL helps you simplify all of these things, processes-procedures and break it down to handhold you in a simpler format so it reduces the stress on your plate. If you would any help in opening a franchise in India, get in touch with DBPL (www.dbpl.asia) today!