ESI Applicability and Contribution Limits For F.Y 2021-22

What Is ESI? Employees’ State Insurance (abbreviated as ESI) is a public social security and health insurance fund for Indian workers/employees. It involves contributions both from the employer and employee. It is managed by the Employees’ State Insurance Corporation (ESIC) according to rules and regulations stipulated in the Specified Act i.e. ESI Act 1948.ESIC is a Statutory and an Autonomous Body under the Ministry of Labour and Employment, Government of India.

Applicability:

As per section 2(12) It is applicable to all non-seasonal factories having 10 or more employees.. It also covers the establishments that are covered under the Factory Act and Shops and Establishments as defined in the Act.

Note:

The scheme under the ESI Act 1948 also covers Shops, Hotels, Restaurants, , Cinema including preview theatres, Newspaper establishments etc .employing 20/10 or more Persons where Central /State Govt. is the appropriate Govt.

Limit:

The limit is applicable to those establishments  having 10 or more employees who draws a monthly wages up to Rs. 21,000 earlier it was 15,000(Rs.25,000 if the Person is disable) has to mandatorily register itself with the Employees’ State Insurance Corporation(ESIC ) and provide the ESI benefits to its employees.

Rate:

The rates of contribution are revised from time to time. Currently, the employee’s contribution rate is 0.75% (Earlier it was 1.75%) of the wages and that of employer’s is 3.25% (Earlier it was 4.75%) of the wages paid/payable in respect of the employees in every wage period effective from 01.07.2019.

Contribution Period and Benefit Period:

There are two contribution periods each of six months duration and two corresponding benefit periods i.e. also of six months duration as mentioned in below table:

Illustration: Let us Suppose Mr. A Working with wages of Rs.20,000 works in a establishment on which ESI Act 1948 applicable.

Then contribution will be calculated as mentioned below:

Employee Contribution –20,000*0.75% = 150

Employer Contribution –20,000*3.25% = 650

Here , Total contribution will be made of Rs.800.

Time Limit:

Every employer who deducts the ESI amount (including Employee’s and Employer’s contribution) must deposit the amount to the ESIC within 15 days from the last day of the Calendar month in which the contributions is made. The ESIC has authorized designated branches of the State Bank of India and some other banks to receive the payments on behalf of ESIC.

Disclaimer: This information is shared by author only for knowledge purposes. In no event the author shall be liable for any direct, indirect, special, or incidental damage resulting from or arising out of or in connection with the use of this information.

Compiled By: CA Amrish Aggarwal

Email Id: Amrish.aggarwal [email protected]