Business
India — Business: Hiring Employees
Indian employers contribute to two main social security schemes. Under the Employees’ Provident Fund, both employee and employer contribute 12% of basic wages plus dearness allowance, and the employer’s share is split between the EPF, the Employees’ Pension Scheme and the Employees’ Deposit Linked Insurance scheme. Under the Employees’ State Insurance scheme, the employer contributes 3.25% and the employee 0.75% of wages (rates effective 1 July 2019), for employees earning up to the coverage ceiling of Rs 21,000 a month (Rs 25,000 for persons with disabilities). Wage ceilings and rates are revised from time to time, and India's new labour codes may change these rules, so check the EPFO and ESIC sites for current figures.
VerifiedGovernment / official sourceEmployees’ Provident Fund Organisation (EPFO); Employees’ State Insurance Corporation (ESIC)Last reviewed: 2026-10-23
Key facts
- EPF: employer and employee each contribute 12% of basic wages plus dearness allowance; the employer's share is split between EPF, EPS and EDLI.
- ESI: employer 3.25% and employee 0.75% of wages (effective 1 July 2019).
- ESI covers employees earning up to Rs 21,000 a month (Rs 25,000 for persons with disabilities).
- Ceilings and rates are revised from time to time; confirm current figures with EPFO and ESIC.
Costs
- EPF employer contribution: 12% of basic wages plus dearness allowance
- ESI employer contribution: 3.25% of wages
Common mistakes
- Using old wage ceilings — they are revised, so check the current EPFO and ESIC notifications.