Suggestion request - EPF / Corporate NPS
This query is : Resolved
12 April 2024
Note: Our Company is a Startup Company (Pvt Ltd) with 18 Employees at present. Our Director asks for suggestions: 1. Get the EPF registration (or) 2. Contribute to Corporate NPS.
Question: 1. Which one is Safe (Statutory need Purpose) for the Company in the Future? 2. Which one is better benefits to the employee and employer? 3. For Example Each Employee's Gross Salary is Rs.50,000/- per month which one is cost-wise effective for the company?
Please guide me and also give your best suggestion.
Thanks.
Question: 1. Which one is Safe (Statutory need Purpose) for the Company in the Future? 2. Which one is better benefits to the employee and employer? 3. For Example Each Employee's Gross Salary is Rs.50,000/- per month which one is cost-wise effective for the company?
Please guide me and also give your best suggestion.
Thanks.
13 April 2024
1 Employees salary above statutory need, no compulsory EPF registration required.
2 Better opt for corporate NPS.
2 Better opt for corporate NPS.
16 April 2024
Dear Sir, Thanks for your reply and additionally, In case the company recruits 4-5 members in 10K salary range in the future and the strength becomes more than 20. In this case will the EPF becomes mandatory or can we continue with NPS for all of them.
26 July 2025
Great question! Here’s a detailed comparison and guidance for your startup on **EPF vs Corporate NPS**:
---
### 1. **Statutory Requirement & Applicability**
* **EPF (Employees’ Provident Fund)**
* **Mandatory** if the company has **20 or more employees**.
* Applies when **monthly salary of employee ≤ Rs. 15,000** (w\.e.f Feb 2023).
* So, if you recruit 4-5 employees with salary ≤ Rs. 15,000 and total employees become ≥ 20, EPF registration **becomes mandatory** for all eligible employees.
* Even if higher salary employees exist, EPF is applicable on employees with salary ≤ Rs. 15,000.
* Non-compliance attracts penalties.
* **Corporate NPS (National Pension System)**
* Voluntary pension scheme.
* No statutory compulsion.
* You can enroll any number of employees regardless of strength or salary.
* Flexibility in contributions from employer and employee side.
---
### 2. **Benefits to Employees and Employers**
| Feature | EPF | Corporate NPS |
| --------------------- | ----------------------------------- | ----------------------------------------------------------------- |
| Statutory obligation | Yes (if conditions met) | No |
| Employee contribution | 12% of Basic+DA (mandatory) | Flexible (usually 10% of Basic) |
| Employer contribution | 12% of Basic+DA (some part to EPS) | Flexible (decided by company) |
| Interest rate | Declared yearly by EPFO (\~8-8.5%) | Market-linked returns (potentially higher but volatile) |
| Withdrawals | Allowed after 5 years or retirement | Allowed only at retirement age (some partial withdrawals allowed) |
| Pension benefit | Pension via EPS for eligible | Defined contribution pension fund |
| Administration | EPFO (government managed) | NPS Trust & Pension Fund Managers |
---
### 3. **Cost-wise Effectiveness for the Company**
* **EPF**
* Employer has to contribute 12% of Basic + DA.
* Some of this goes to EPS (pension), balance to EPF.
* Fixed cost, statutory liability once applicable.
* **Corporate NPS**
* Employer contribution is flexible.
* Can be less than EPF.
* Lower administrative burden.
**For employees with Rs. 50,000 gross salary:**
* Since salary > Rs. 15,000, **EPF is not mandatory** for them, so Corporate NPS is a better choice for flexibility and cost-saving.
---
### 4. **Answer to Your Additional Query**
* When you recruit 4-5 employees with salary ≤ Rs. 15,000 and your total employee strength crosses 20, **EPF registration becomes mandatory** for those eligible employees.
* You **cannot continue only with Corporate NPS** for those employees for whom EPF is applicable.
* You may continue Corporate NPS for employees above the salary threshold if you want, but you must comply with EPF for others.
---
### **Summary**
| Scenario | Suggested Action |
| ------------------------------------------ | --------------------------------------------------- |
| Current: 18 employees, salary Rs.50,000 | No EPF mandatory, opt for Corporate NPS |
| Future: >20 employees, some ≤15,000 salary | EPF registration mandatory for eligible employees |
| Cost-effectiveness | Corporate NPS more flexible, EPF mandatory for some |
| Employee benefit | EPF provides assured interest, NPS market linked |
---
### **My Best Suggestion**
* Start with **Corporate NPS** now, since EPF is not mandatory yet.
* Keep monitoring employee strength and salary.
* Once you cross 20 employees with eligible salary ≤ Rs.15,000, get EPF registration **and comply** for those employees.
* Continue Corporate NPS optionally for higher salary employees as an additional benefit.
---
If you want, I can also share some sample cost calculations or compliance checklists. Would that help?
---
### 1. **Statutory Requirement & Applicability**
* **EPF (Employees’ Provident Fund)**
* **Mandatory** if the company has **20 or more employees**.
* Applies when **monthly salary of employee ≤ Rs. 15,000** (w\.e.f Feb 2023).
* So, if you recruit 4-5 employees with salary ≤ Rs. 15,000 and total employees become ≥ 20, EPF registration **becomes mandatory** for all eligible employees.
* Even if higher salary employees exist, EPF is applicable on employees with salary ≤ Rs. 15,000.
* Non-compliance attracts penalties.
* **Corporate NPS (National Pension System)**
* Voluntary pension scheme.
* No statutory compulsion.
* You can enroll any number of employees regardless of strength or salary.
* Flexibility in contributions from employer and employee side.
---
### 2. **Benefits to Employees and Employers**
| Feature | EPF | Corporate NPS |
| --------------------- | ----------------------------------- | ----------------------------------------------------------------- |
| Statutory obligation | Yes (if conditions met) | No |
| Employee contribution | 12% of Basic+DA (mandatory) | Flexible (usually 10% of Basic) |
| Employer contribution | 12% of Basic+DA (some part to EPS) | Flexible (decided by company) |
| Interest rate | Declared yearly by EPFO (\~8-8.5%) | Market-linked returns (potentially higher but volatile) |
| Withdrawals | Allowed after 5 years or retirement | Allowed only at retirement age (some partial withdrawals allowed) |
| Pension benefit | Pension via EPS for eligible | Defined contribution pension fund |
| Administration | EPFO (government managed) | NPS Trust & Pension Fund Managers |
---
### 3. **Cost-wise Effectiveness for the Company**
* **EPF**
* Employer has to contribute 12% of Basic + DA.
* Some of this goes to EPS (pension), balance to EPF.
* Fixed cost, statutory liability once applicable.
* **Corporate NPS**
* Employer contribution is flexible.
* Can be less than EPF.
* Lower administrative burden.
**For employees with Rs. 50,000 gross salary:**
* Since salary > Rs. 15,000, **EPF is not mandatory** for them, so Corporate NPS is a better choice for flexibility and cost-saving.
---
### 4. **Answer to Your Additional Query**
* When you recruit 4-5 employees with salary ≤ Rs. 15,000 and your total employee strength crosses 20, **EPF registration becomes mandatory** for those eligible employees.
* You **cannot continue only with Corporate NPS** for those employees for whom EPF is applicable.
* You may continue Corporate NPS for employees above the salary threshold if you want, but you must comply with EPF for others.
---
### **Summary**
| Scenario | Suggested Action |
| ------------------------------------------ | --------------------------------------------------- |
| Current: 18 employees, salary Rs.50,000 | No EPF mandatory, opt for Corporate NPS |
| Future: >20 employees, some ≤15,000 salary | EPF registration mandatory for eligible employees |
| Cost-effectiveness | Corporate NPS more flexible, EPF mandatory for some |
| Employee benefit | EPF provides assured interest, NPS market linked |
---
### **My Best Suggestion**
* Start with **Corporate NPS** now, since EPF is not mandatory yet.
* Keep monitoring employee strength and salary.
* Once you cross 20 employees with eligible salary ≤ Rs.15,000, get EPF registration **and comply** for those employees.
* Continue Corporate NPS optionally for higher salary employees as an additional benefit.
---
If you want, I can also share some sample cost calculations or compliance checklists. Would that help?
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