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Provident Fund (PF) is one of the most important statutory obligations for employers in India. It supports the long‑term financial security of employees and helps businesses build trust with their workforce. Yet many small and medium businesses find PF rules confusing and worry about penalties, inspections, and portal issues. This blog explains PF compliance in simple language so you can understand what is required and how to manage it smoothly.
PF is a social security scheme where both employer and employee contribute a fixed percentage of wages to an individual PF account. The amount grows over time and can be used by employees after retirement or in specified situations. In India, establishments that cross the prescribed employee threshold and come under the PF Act must register and start contributing for eligible employees. Once covered, you are expected to continue complying even if your employee strength fluctuates.
The first step is to obtain registration on the PF portal with basic details of your organisation. You will need documents such as incorporation certificates, address proof, PAN, and information about responsible signatories. After registration, the organisation receives a PF code number. All eligible employees then need to be added with accurate personal details so that their PF numbers and universal account numbers (UANs) are correctly mapped.
Every month, PF contributions are calculated on eligible wages as per the notified rate. Both the employer and employee shares are worked out on this wage figure. It is important to use the correct wage components and to apply any caps or conditions as per current rules. Mistakes such as excluding mandatory components or misclassifying allowances can lead to short‑payments and interest demands later.
After calculating contributions, the employer must generate the electronic challan‑cum‑return (ECR) on the PF portal. The payment has to be made within the statutory due date each month. Proper reconciliation between your payroll records and the ECR is essential to avoid mismatches. Timely payment and filing keep your PF records clean and reduce the chances of notices or inspections.
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