India statutory benefits & contributions.
The statutory contributions and benefits that apply when employing people in India — EPF, ESI, gratuity, professional tax, and statutory bonus — with rates, wage ceilings, eligibility, and the Act that governs each. Reference as of early 2026.
| Contribution / benefit | Employee | Employer | Wage base / ceiling | Applies when |
|---|---|---|---|---|
| Employees' Provident Fund (EPF) Employees' Provident Funds & Misc. Provisions Act, 1952 | 12% of basic + DA | 12% of basic + DA (8.33% to EPS up to the wage ceiling, remainder to EPF) | Statutory wage ceiling ₹15,000/month for mandatory coverage; many employers contribute on actual basic | Establishments with 20+ employees; voluntary below that |
| Employees' State Insurance (ESI) Employees' State Insurance Act, 1948 | 0.75% of gross wages | 3.25% of gross wages | Gross wages up to ₹21,000/month (₹25,000 for employees with disability) | Employees earning ≤ ₹21,000/month in covered establishments (10+ employees in most states) |
| Gratuity Payment of Gratuity Act, 1972 | Nil (employer-funded) | Effectively ~4.81% of basic accrued (15 days' wages per completed year) | Formula: (last drawn basic + DA) × 15 × completed years ÷ 26; statutory tax-exempt cap ₹20,00,000 | Payable on exit after 5+ years of continuous service (waived on death/disablement) |
| Professional Tax Levied by individual state governments | Deducted from salary; slab-based | Employer deducts and remits | State-specific; constitutionally capped at ₹2,500 per year | In states that levy it (e.g. Karnataka, Maharashtra, West Bengal, Tamil Nadu); not levied in some states/UTs |
| Statutory Bonus Payment of Bonus Act, 1965 | Nil | 8.33%–20% of eligible wages | Eligibility for employees earning ≤ ₹21,000/month; bonus computed on a wage base of ₹7,000 or minimum wage, whichever is higher | Establishments covered by the Act, for eligible employees with 30+ working days in the year |
Detail on each contribution.
Employees' Provident Fund (EPF)
Employer's 8.33% share (capped at the ₹15,000 ceiling, i.e. up to ₹1,250/month) goes to the Employees' Pension Scheme (EPS); the balance goes to EPF.
Employees' State Insurance (ESI)
Provides medical, sickness, maternity, and disablement benefits. Employees above the wage ceiling are outside ESI and typically covered by private group health insurance instead.
Gratuity
Establishments with 10+ employees. Many employers accrue gratuity monthly (~4.81% of basic) even though it is only paid out on eligible exit.
Professional Tax
Because it is a state levy, the exact slab depends on the employee's work state — verify the applicable state schedule.
Statutory Bonus
Minimum 8.33% and maximum 20% of eligible wages, linked to allocable surplus.
Important
Rates, wage ceilings, and tax slabs are set by Indian law and change over time; several vary by state, and the new Labour Codes are being phased in. Figures here are directional, current as of early 2026, and provided for reference only — not legal, tax, or payroll advice. Always verify against current EPFO, ESIC, CBDT, and applicable state rules, or speak with Remvix, before relying on them.
India statutory contributions — common questions.
What statutory contributions must employers make in India?
The main statutory contributions are Provident Fund (EPF — employer 12% of basic), Employees' State Insurance (ESI — employer 3.25% of gross, for wages up to ₹21,000/month), gratuity (15 days' wages per completed year, payable after 5 years), and statutory bonus (8.33–20% for eligible employees). Professional tax is a state levy deducted from salary. Exact applicability depends on establishment size and state.
What is the EPF wage ceiling?
The statutory EPF wage ceiling is ₹15,000/month for mandatory coverage — the employer's 8.33% pension (EPS) share is capped at this ceiling (about ₹1,250/month). Many employers contribute on actual basic above the ceiling.
When is gratuity payable in India?
Gratuity is payable on exit after 5+ years of continuous service (waived on death or disablement), under the Payment of Gratuity Act, 1972. The formula is (last drawn basic + DA) × 15 × completed years ÷ 26, with a statutory tax-exempt cap of ₹20,00,000.
Do these figures apply everywhere in India?
Rates, wage ceilings, and tax slabs are set by Indian law and change over time; several vary by state, and the new Labour Codes are being phased in. Figures here are directional, current as of early 2026, and provided for reference only — not legal, tax, or payroll advice. Always verify against current EPFO, ESIC, CBDT, and applicable state rules, or speak with Remvix, before relying on them.
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