ESI PF Rates ESI: The Employee State Insurance (ESI) is directed by the Employee State Insurance Corporation (ESIC). This is an autonomous body that works under the Ministry of Labour and Employment. The ESI scheme had been started in order to provide monetary, medical and other benefits to the Indian workers. In case a non-seasonal company or factory that has more than 10 employees (in a few states, it is 20 employees) having the maximum salary of Rs. 21,000 needs to compulsorily register themselves with ESIC, providing the ESI benefits to the employees.
- Contribution Rate Under the ESI
- Period of Contribution
- Wages as per the ESI Act
- Computation of the ESI
- The Contribution and Benefit Period
- Documents Needed for ESI and PF Registration
- ESIC Return Due Date
Contribution Rate Under the ESI
The ESIC is a social security system that has been designed for providing socio-economic protection to its workers and immediate families and dependents. The contribution rates have been declared by the ESIC, and they are being revised from time to time.
The contribution involves both the employer as well as the employee contribution. The newest revision is w.e.f. 01.07.2019, and the rates are as the following stated:
- Employer’s Contribution is 3.25% of the wages payable or paid.
- Employee Contribution is 0.75% of the wages payable or paid.
In case the employee’s regular average salary is up to Rs. 137, they are exempted from the contribution; however, the employer needs to make their share of the contribution.
The Employers need to deduct the employee contribution from the salary bills and need to pay the employer and the employee contribution at the rates that have been specified above within the 15 days of the month-end in which the contributions are made. The designated branches of the State Bank of India and a few other banks have been authorised for receiving the contribution on behalf of ESIC.
Period of Contribution
The following table showcases the window span for the Contribution and for obtaining the cash benefit:
| Contribution made | Cash Benefit received |
| 1st April to 30th September | 1st Jan of the year following to 30th June. |
| 1st October to the 31st March of the following year. | 1st July to 31st December. |
Wages as Per the ESI Act
The contributions of the employee and the employer are made on the basis of the wages paid to the company’s employees. Some of the components of salary, which are inclusions and exclusions, are as follows:
| Inclusions | Exclusions |
| Basic Pay | Entertainment Allowance |
| Dearness Allowance | Retrenchment Compensation |
| City Compensatory Allowance | Encashment of leave and gratuity |
| House Rent Allowance | Deduction of health insurance |
| Incentives (including sales commission) | Tax Deductions |
| Medical Allowance | – |
| Meal allowance | – |
| Any other special allowances | – |
| Attendance and Overtime Payments | – |
Computation of the ESI
The ESI rate contribution is going to be calculated based on the wages paid. The employee contribution (as mentioned above) is 0.75% of salary payable or paid, and the employer contribution is 3.25% of salary payable or paid.
Illustration:
Let us say Ms. X works hard with wages of Rs. 18,000 in a factory unit.
The contribution is going to be as follows:
- Employee Contribution is going to be 0.75%*18,000 = 135
- Employer Contribution is going to be 3.25%*18,000 = 585
So, a total contribution of Rs. 720 is going to be made. The responsibility of deducting the contribution as well as depositing the same is on the employer. The employer needs to deposit the amount within a span of 15 days of the end of the calendar month in which the deduction has been made. The same can also be deposited online or to the authorised designated branches of SBI or other designated branches.
The Contribution and Benefit Period
The idea of contribution period involves the employee in the event of the salary increasing from the starting limit of Rs. 21,000.
Let us continue with the example given above, say Ms. X was earning a salary of Rs. 18,000 till the month of June 2020, the salary increases to Rs. 22,000 from July 2020. The contribution period is April 1st, 2020, to September 30th, 2020. Therefore, the deduction is going to continue on the revised salary up to the month of September, and she will be eligible for the benefit up to June 30th of the upcoming year.
Similarly, say an employee Ms. Diligent earns a salary of Rs. 20,000 till the month of October 2020, and from next month, she earns Rs. 23,000. The deduction needs to continue on the revised salary up to March 31st, 2021, and she is going to be eligible for the benefit up to the month of December 2021.
| Name | Salary Revision | Contribution Period | Benefit Period |
| Ms. X | July 2020 | 1st April 2020 – September 30th, 2020 | January 1st to June 2021 |
| Ms. Diligent | November 2020 | October 1st to March 31st, 2021 | July 1st to December 31st |
Therefore, the ESI contribution needs to be made by both the employee and employer, and the benefits will help the employee during unfortunate circumstances.
Documents Needed for ESI and PF Registration
- The company’s name. (Incorporation Certificate)
- The Company’s PAN (Proprietor’s, if there is proprietorship concern) as well as Incorporation Certificate.
- Copy of the available licenses in the company or firm’s name. (Like GST/MSME).
- The company’s address with proper address proof.
- ID, Pan and Address proof of the Proprietor or Director or Partner of the company.
- Email address, Mobile Number of the Proprietor or Director or Partner of the company.
- Specimen Signature according to the attached format.
- A Digital Signature
- Details of the 10 & 20 Employees (10 for ESIC & 20 for EPF) (according to the Sheet attached)
- Consent Letter according to the attached format (In case of EPF Voluntary Registration)
ESIC Return Due Date
Both ESIC Return was filling as well as payment can be made at the same time. Thus, the ESI return due date is the same as the payment. I.e., on or before the 15th of each month.