ESI, EPF, and Professional Tax Compliance by Sigma Solutions
Introduction
A mid-sized manufacturing company was dealing with mounting legal and HR compliance issues. Despite a growing workforce, the company lacked the systems and knowledge required for timely Employee State Insurance (ESI), Employees’ Provident Fund (EPF), and Professional Tax (PT) management. Employee dissatisfaction, legal penalties, and regulatory risks prompted the company to approach Sigma Solutions for a professional compliance overhaul.
Challenges Faced
1. Missed ESI & EPF Contributions
The company consistently missed monthly deadlines due to manual tracking, resulting in:
- Penalties and interest from ESIC and EPFO
- Employee disputes over benefit inaccessibility
2. Faulty Payroll Structure
- Employee salary components weren’t aligned with statutory deduction norms.
- UAN and ESI numbers were incorrectly mapped or missing.
- Manual payroll led to frequent deduction errors.
3. Non-Compliance with Professional Tax (PT)
- The company had not registered under PT with the state government.
- No deductions were made, leading to legal notices and reputational damage.
4. Legal Exposure & Workforce Discontent
- Employees couldn’t withdraw PF or access insurance claims.
- High attrition rate due to loss of confidence in employer compliance.
5. Absence of HRMS or Compliance Tools
- The payroll was managed in Excel sheets.
- No tracking of return filing deadlines.
- No centralized repository for HR compliance documentation.
Solution Provided by Sigma Solutions
Sigma Solutions implemented an end-to-end payroll compliance solution, integrating:
- ESI & EPF enrolment and filings
- State PT registration and deductions
- Automated payroll and HR compliance tracking
Implementation Process
1. ESI & EPF Setup and Contribution Automation
- Registered all employees with EPFO and ESIC.
- Activated Universal Account Numbers (UAN) and ESI numbers.
- Configured payroll software to auto-deduct and remit:
- EPF: 12% employer + 12% employee
- ESI: 3.25% employer + 0.75% employee
2. Salary Structuring & Payroll Digitization
- Reorganized salary components (Basic, HRA, Allowances) to ensure:
- EPF deductions from Basic + DA
- ESI eligibility based on gross wage limits
- Integrated Zoho Payroll and Tally ERP 9 for processing and compliance.
3. Professional Tax Registration & Filing
- Registered under the Arunachal Pradesh State PT Act.
- Automated PT deductions and filings via state tax portal.
- Created a filing calendar to avoid due-date lapses.
4. Statutory Filing & Legal Compliance
- Regular filing of:
- EPF: ECR, Form 5A, Form 10
- ESI: Monthly Contributions, Half-yearly returns
- PT: Monthly and Annual Returns
- Responded to labour department queries with reconciled payroll reports.
5. Employee Benefit Access & HR Support
- Assisted HR with:
- Online PF withdrawals
- ESI hospital claims
- Real-time grievance redressal
- Conducted training for HR staff on compliance best practices.
Results Achieved
Outcome | Details |
100% Statutory Compliance | No missed filings, no legal notices |
₹4 Lakhs Saved | Avoided penalties and corrected backdated errors |
Payroll Accuracy | Salary slips & deductions were error-free |
Employee Satisfaction | Increased benefit access and reduced attrition |
Legal Security | Fully compliant with Labour, EPFO, and ESIC departments |
Conclusion & Key Takeaways
Failing to comply with ESI, EPF, and PT regulations not only leads to penalties but also lowers employee morale and risks operational shutdowns during audits. Sigma Solutions delivered a customized compliance solution combining statutory expertise, HR technology, and continuous support.
Key Takeaways:
- Automate your payroll with professional software.
- Align salary structures with compliance requirements.
Partner with experts like Sigma Solutions for peace of mind.
Related Services by Sigma Solutions
- Payroll Structuring & HR Compliance
- Corporate Tax Planning & GST Filing
- Labour Law Advisory & Compliance
- EPF, ESI, PT Return Filings
- Financial Reporting & Audit Support
Other Case Studies
Client Testimonial
“Before Sigma Solutions, payroll
compliance was a nightmare. We missed filings, paid penalties, and had unhappy
staff. Their structured solution changed everything—no more legal stress,
better employee trust, and accurate reporting.”
— Accounts Head, Manufacturing Company