As per government rules, ESI is a mandatory contribution made by the employer and employee towards the employee. The rates are revised from time to time. Currently, the employee's contribution rate is 0.75% of the wages and that of employers is 3.25% of the wages paid/payable to the employees in every wage period.
Employees who have a daily average wage up to Rs.137 are exempted from payment of contribution. Employers must however contribute their share for these employees.
The ESI contribution period or ESI cycle is divided into two parts for a financial year:
- 1st April to 30th September.
- 1st October to 31st March.
Due to a revision in employees' gross salary, employees' stop being eligible for ESI in the middle of a financial year. In such cases, the deduction of ESI is done for the complete cycle in which employee was eligible for ESI.
For example, the employee gets a salary revision in August. As per ESI cycle, ESI deduction will be done till September. ESI deduction will stop from the next ESI cycle i.e. October.
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Related Links:
Video- To watch the video on the Bank/PF/ESI page, click here.
FAQs- To read more FAQs about ESI, click here.
Documentation- To learn more about the ESI page, click here.
Product Update-To read about the product update, click here.
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