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PF For Manufacturing
as per New Labour Code Changes

Manufacturing and MSME owners, PF compliance under the new Labour Codes 2025 is straightforward but mandatory for factories. It requires deducting and depositing 12% of workers’ basic wages (up to ₹15,000 monthly cap) into their Provident Fund accounts every month through the EPFO portal. No major rate changes occurred in 2025, but basic pay must now form at least 50% of total salary, which can slightly adjust PF amounts.

PF for Manufacturing

Who Needs PF Compliance for Manufacturing? Updated as per New Labour Code

Any manufacturing unit or factory with 20 or more workers (if using electricity/power) or 40 or more (without power) must register for PF within one month of reaching this threshold. This covers MSMEs in textiles, auto parts, food processing, or metalworking. Contract workers handling core tasks like machine operation or assembly count toward the total employee number. Smaller units below the limit can join voluntarily to attract talent and claim tax benefits under Section 80C.

Key Updates from 2025 Labour Codes

The four Labour Codes, fully effective from November 2025, simplify old rules into one digital system. Highlights include:

  • One unified EPFO portal for PF, ESI, and gratuity—no more filing 1,400+ forms yearly.
  • "Wages" for PF calculation mean only basic salary + dearness allowance (DA) + retaining allowance.
  • Basic + DA must be at least 50% of total pay; allowances like HRA or bonuses don't count toward PF.
  • Overtime (double rate after 8 hours/day or 48 hours/week) gets added to monthly wages for PF.
  • Gratuity calculation uses average wages over the last year, payable after 5 years' service at 15 days' pay per year worked.
    These changes make everything online, reducing paperwork for busy factory managers.
Provident Fund Calculations

PF Contributions Explained with Simple Calculations

Both employer and employee contribute 12% of "PF wages" (Basic + DA, capped at ₹15,000/month). Employer also pays 0.5% admin charges on total wages and 0.3% for EDLI insurance (up to ₹7 lakh death benefit).

Example 1: Worker with ₹12,000 monthly salary

  • Basic + DA: ₹8,000 (at least 50% of total, under cap)
  • Employee PF deduction: 12% of ₹8,000 = ₹960
  • Employer PF: ₹960 (out of which ₹733 goes to EPS pension, ₹227 to PF corpus)
  • Admin charge: 0.5% of ₹12,000 = ₹60
  • Total monthly deposit per worker: ₹960 (employee) + ₹960 (employer) + ₹60 = ₹1,980

Example 2: Worker with ₹30,000 monthly salary

  • Basic + DA: ₹18,000 (≥50%, but capped at ₹15,000 for PF)
  • Employee PF: 12% of ₹15,000 = ₹1,800
  • Employer PF: ₹1,800 (₹1,250 to EPS, ₹550 to PF)
  • Admin: 0.5% of ₹15,000 = ₹ 75 & EDLI 0.5% of ₹15,000 = ₹ 75
  • Total per worker: ₹1,800 + ₹1,800 + ₹150 = ₹3,750

 

New Labour Code 2025

PF for Manufacturing -> Step-by-Step Registration Process

  1. Visit EPFO Unified Portal (unifiedportal-mem.epfindia.gov.in) --> "For Employers" --> "New User."
  2. Fill Form-5 with PAN, TAN, GSTIN, bank account proof, Udyam certificate (for MSMEs), and board resolution.
  3. Upload employee list and get your 14-digit PF code within 30 days (deemed approval if delayed).
  4. Generate Universal Account Numbers (UAN) for every worker and complete e-KYC using Aadhaar or biometrics.
  5. Link your payroll software (like Tally, Zoho, or GreytHR) for auto-ECR filing.
    MSMEs with Udyam registration get priority and fewer inspections.
Labour Law Compliance

Monthly, Quarterly, and Annual Tasks for PF Compliance

  • Monthly (by 15th next month): File Electronic Challan cum Return (ECR) online with joiners, exits, and wage details. Remit payments same day.
  • Quarterly: Pay admin charges by end of quarter.
  • Annually (by April 30): Submit Forms 3A (member-wise PF), 6A (consolidated), and 5 (return).
  • Ongoing: Issue monthly wage slips showing PF breakup; update KYC, addresses, and nominees yearly.
    Track exits and claims within 10 days to avoid penalties.

PF Compliance Checklist for Manufacturing Units

Pre-Registration Check:

  • Employee count: 20+ with power or 40+ without? Register immediately.
  • Gather documents: PAN, TAN, bank proof, Udyam (MSMEs), worker details.

One-Time Setup:

  • Submit Form-5 online for PF code.
  • Create UANs for 100% workforce; complete e-KYC.
  • Integrate the payroll system with the EPFO portal.

 

Monthly Duties (Complete by 15th):

  • Record new joiners/exits within 10 days.
  • Calculate 12% PF on basic+DA (capped at ₹15,000).
  • File ECR for PF, EPS, and EDLI.
  • Deposit contributions + 0.5% admin charges.
  • Reconcile with bank statements.

 

Ongoing Maintenance:

  • Process PF/EDLI claims under 10 days.
  • Conduct quarterly self-audits (payroll vs. deposits).
  • Train HR/supervisors on EPFO app and GRC (Grievance Redressal).

 

Inspection Readiness:

  • Organize 5 years of records: Payslips, challans, UAN proofs in bundles.
  • Use cloud storage for quick access during raids.
  • Fix minor errors on-site to waive fines.

Penalties for non-compliance: ₹1,500–₹3,000 per day delay, fines up to ₹10 lakh, and jail up to 3 years for fraud like under-reporting wages.

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Benefits for Your Business

Full compliance reduces worker turnover by 20-30%, eases bank loans, and qualifies for government schemes. It builds trust in manufacturing hubs like Haryana, helping scale under global trade opportunities.

 

Handling EPFO Inspections

Inspectors check for delayed deposits, incomplete KYC, or ghost workers—common in high-turnover factories. Keep digital bundles ready:

Monthly ECRs, payrolls, bank scrolls. Stay calm, cooperate, and rectify small issues immediately. MSMEs should do mock audits every quarter and use EPFO's free webinars.

Quick Connect

PF compliance is simple math—12% on capped basic wages, filed monthly online—and protects your factory from crippling fines or shutdowns. Use the checklist for weekly reviews, automate with software, and train your team to handle it effortlessly. In 2025's digital era, compliant MSMEs grow faster, retain talent, and avoid legal headaches. Start today: Register if needed, file your next ECR on time, and watch your business thrive securely. For hands-on support, reach local EPFO offices or compliance experts - Kaizen Consultancy Services

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