Treatment of PF & ESI

suppose

basic salary(mean to say payable in hand)  :10000

employee PF contribution:500

Employer's contribution: 500

Entry will be

Salary A/c Dr.                    (10,000+500)-----P&L

Employer's contribution A/c           500------P&L

                    To Pf payable                                   1,000---------B/S

                   To salary payable                           10,000---------B/S

and due date of PF payment is 20th ( including days of grace) of the nxt mnth....

And for ESIC its 21st( including days of grace) of nxt mnth

The entry for ESIC is same as of PF

Plz correct me if m wrng

Consider the following entries

1. At the time of deduction from salary

     Salary A/c Dr

            To EPF

             To ESI

             To Salary Payable

(Employee Share is deducted here)

2. Now for deposit of EPF- Employee share as well as employer share

         EPF A/c Dr.(employee+employer share)

        ESI A/c Dr

                   To Bank A/c

Originally posted by : CA Sumit Grover
	suppose basic salary :10000 employee PF contribution:500 Employer's contribution: 500   Entry will be Salary A/c Dr.                    (10,000+500)-----P&L Employer's contribution A/c           500------P&L                     To Pf payable                                   1,000---------B/S                    To salary payable                           10,000---------B/S   and due date of PF payment is 20th ( including days of grace) of the nxt mnth....   Plz correct me if m wrng

Agreed.......!!!!!!!

suppose basic salary is 10000,

employer share for esi 100, epf 500 , employee share for esi 100. epf 500 then.

at the last day of every month.

salary a/c dr. 10000

                            to salary payable. 10000

(being salary payable for the month ......)

epf a/c dr. 1000

esi a/c dr 200

        to esi payable 200

         to epf payable 1000  

(being epf and esi payable for the month ..)

on the date of payment of salary to employees.

 salary payable a/c dr. 10000

               to epf 500

              to esi 100

               to cash/ bank 9400

(being salary paid to employee after deduct his sahre of esi and epf.)

 on the day of payment of esi and epf

     esi payable a/c dr 200

     epf payable a/c dr 1000

                 to bank a/c 1200 (being esi and epf paid)

Originally posted by : CA Sumit Grover
	suppose basic salary :10000 employee PF contribution:500 Employer's contribution: 500   Entry will be Salary A/c Dr.                    (10,000+500)-----P&L Employer's contribution A/c           500------P&L                     To Pf payable                                   1,000---------B/S                    To salary payable                           10,000---------B/S   and due date of PF payment is 20th ( including days of grace) of the nxt mnth.... And for ESIC its 21st( including days of grace) of nxt mnth The entry for ESIC is same as of PF   Plz correct me if m wrng

Completely concur with this reply 

suppose

basic salary(mean to say payable in hand)  :10000

employee PF contribution:500

Employer's contribution: 500

Entry will be

Salary A/c Dr.                    (10,000+500)-----P&L

Employer's contribution A/c           500------P&L

                    To Pf payable                                   1,000---------B/S

                   To salary payable                           10,000---------B/S

and due date of PF payment is 20th ( including days of grace) of the nxt mnth....

And for ESIC its 21st( including days of grace) of nxt mnth

The entry for ESIC is same as of PF

i need to correct. here in place of PF payable we may show Employee PF payable and Employer PF Payable because once you see the challan of PF there are seprate amount shown for employer and employee contribution and it is also better for MIS.

I am doing in this way correct if i am wrong

can u ppl jus stop pasting the previous answers plz

cm with smthng new plz ...

CPFC Notification - Employer PF contribution under section 6 is payable only on basic wages (which excludes HRA, Overtime Allowance, Bonus, Commission etc.), dearness allowance (which includes cash value of any food concession) and retaining allowance, if any. https://www.payrollinsights.com/blogs/pf-contribution-is-not-payable-on-ctc/

Regards,

Arti

Originally posted by : ankur bansal (CA Final)
	suppose basic salary is 10000, employer share for esi 100, epf 500 , employee share for esi 100. epf 500 then. at the last day of every month. salary a/c dr. 10000                             to salary payable. 10000 (being salary payable for the month ......) epf a/c dr. 1000 esi a/c dr 200         to esi payable 200          to epf payable 1000   (being epf and esi payable for the month ..) on the date of payment of salary to employees.  salary payable a/c dr. 10000                to epf 500               to esi 100                to cash/ bank 9400 (being salary paid to employee after deduct his sahre of esi and epf.)  on the day of payment of esi and epf      esi payable a/c dr 200      epf payable a/c dr 1000                  to bank a/c 1200 (being esi and epf paid)

These entries are okay, but I have a question, in which head of Balance Sheet of Salary Person (If maintain by salary person), Contribution in ESI (Both Employee as well as Employer) will be shown? as we can show the contribution in PF under investment in Balance Sheet (Please correct if I am wrong), but i dont know where i should show the contribution in ESI in Balance sheet.

Hope solution can be proposed from SAP or any ERP point of view where compound journal entry is not recommended.

Eg: Salary payable is related to employee (Seperate entry) & Employer contribution is to be arrived seperately. Both employee and employer combined to make payment. So total three entries.

SIR

HOW TO PASS THE ENTRY FOR GOVT CONTRIBUTION, FOR EXAMPLE ( A/C.01, A/C.02, A/C.10,A/C.21)

A/C 01 - EMPLOYEE & EMPLOYER CONTRIBUTION

A/C.02 - Administration Charges

A/C.10 - EMPLOYER - HOW TO ACCOUNT THIS CONTRIBUTIONS

A/C.21 - EMPLOYER TO GOVT - HOW TO ACCOUNT THIS CONTRIBUTIONS