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What EPF, ESI and professional tax actually are, who contributes what, and how each one reduces take-home pay — including a recent EPF wage-ceiling change.
Checked against current rules for EPF wage ceiling, ESI wage ceiling/rates, professional tax cap on 29 September 2026. Source: EPFO wage-ceiling notification (effective 17 Sep 2026); ESIC contribution rules (unchanged since Jul 2019).
PF, ESI and professional tax are the three most common statutory deductions on an Indian payslip, alongside income tax. Each is a separate scheme with its own purpose, its own wage ceiling, and its own contribution rates — and mixing them up is a common source of payroll confusion.
EPF, administered by the Employees' Provident Fund Organisation (EPFO), is a retirement savings scheme. Both employee and employer contribute a percentage of PF wages every month into the employee's PF account.
A recent change worth flagging
The EPF statutory wage ceiling — the maximum PF wage on which mandatory EPF contributions are calculated — was raised from ₹15,000 to ₹25,000 per month, reported effective from 17 September 2026, the first such increase since 2014. This is a very recent change: if you're relying on this figure for payroll or compliance decisions, confirm the current ceiling and its effective date directly against EPFO's own notifications, since secondary sources may not yet be fully consistent on rollout details.
ESI, administered by the Employees' State Insurance Corporation (ESIC), is a health and social security scheme covering medical care, sickness benefit and related support. It applies to employees at ESI-covered establishments whose gross monthly wages fall within the ESI wage ceiling.
An employee whose gross wages exceed the ESI ceiling is simply outside ESI coverage at that employer — there's no partial or pro-rated ESI contribution above the ceiling.
Professional tax is a small tax on income from employment or a profession, levied by state governments (not the central government), under Article 276 of the Constitution. Because it's state-levied, it is genuinely not uniform:
Free Salary & CTC Calculator
Break down a CTC into Basic, HRA, PF, ESI, Professional Tax and Net Take-Home Pay, with an optional New Tax Regime income tax estimate — no signup required.
Is professional tax the same in every Indian state?
No. Professional tax is levied and set by individual state governments under Article 276 of the Constitution, not centrally, so rates, slabs and even whether it's levied at all vary by state. Several states — for example Delhi, Haryana and Uttar Pradesh — currently do not levy professional tax on salaries. Where it is levied, the total is capped at ₹2,500 per person per year across all states.
Do all employees get ESI coverage?
No. ESI applies only at establishments covered under the ESI Act (generally those with 10 or more employees, though the threshold can be lower in some states/industries) and only to employees whose gross monthly wages fall within the ESI wage ceiling. Employees earning above the ceiling are not covered by ESI at that employer.
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Create a professional salary slip / pay slip online with employer, employee, earnings, deductions and net salary — free A4 PDF and print, no signup required.
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Create a professional salary certificate online — enter employer, employee and compensation details, preview the certificate and download a free A4 PDF or print, no signup required.
Salary & Payroll
How to Calculate Take-Home Salary in India
Take-home salary is gross salary minus PF, ESI, professional tax and income tax — here's how each deduction is worked out, with an example.
Salary & Payroll
How to Calculate CTC in India
A worked walkthrough of how basic salary, HRA, allowances, employer PF and gratuity provisioning add up to CTC — with a full example.
Because professional tax genuinely differs by state — and can change with each state budget — treat any specific slab figures as illustrative and confirm the current slab for your state before finalizing payroll.
| Deduction | Who pays it (employee side) | Reduces which figure |
|---|---|---|
| Employee EPF | 12% of PF wages (subject to the wage ceiling) | Take-home salary |
| Employee ESI | 0.75% of gross wages (only if ESI-covered) | Take-home salary |
| Professional tax | State-specific slab amount, capped at ₹2,500/year | Take-home salary |
All three reduce take-home pay directly, but only EPF and the employer's share of ESI feed back into CTC on the employer-cost side — professional tax and income tax are purely deductions from what you're already being paid, not employer costs.
Once you know which of these apply to your situation, running your salary through a calculator that accounts for the current wage ceilings gives a far more reliable take-home estimate than a flat percentage guess.