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Employee State Insurance (ESI) is managed by the Employee State Insurance Corporation (ESIC) which is an autonomous body working under the Ministry of Labour and Employment. The ESI scheme was started for providing medical, monetary and other benefits to Indian workers.
Any non-seasonal factory or company having more than 10 employees (in some states it is 20 employees) who have a maximum salary of Rs. 21,000 has to mandatorily register itself with the ESIC and provide the ESI benefits to its employees.
E.S.I.C. contribution rates are reduced W.E.F. 1st July 2019.
The ESIC is a social security system that is designed to provide socio-economic protection to workers and their immediate family and dependants. The rates for the contribution are declared by the ESIC and are revised from time to time.
The contribution includes both the employer and employee contribution. The latest revision is w.e.f. 01.07.2019 and the rates are as follows:
If the employee’s daily average wage is up to Rs.137, they are exempted from making the contribution; however, the employer must make their share of the contribution.
The Employers must deduct the employee contribution from the wages bill and must pay the employer and employee contribution at the rates specified above within 15 days of the end of the month in which contributions are made.
Designated branches of the State Bank of India and some other banks are authorized to receive the contribution on behalf of ESIC.
The following table illustrates the window period for Contribution and for obtaining cash benefit:
|1st April to 30th Sept||1st Jan of the following year to 30th June.|
|1st Oct to 31st March of the year following.||1st July to 31st December.|
The Government of India fixes the contribution rate for the ESI scheme. The rates are revised from time to time. Currently, the government reduced the rate of contribution in June 2019, effective from 1st June 2019. At present, the employee’s contribution rate (w.e.f. 1.07.2019) is 0.75 % of the wages, and that of the employer is 3.25% of the wages paid/payable in respect of the employees in every wage period.
If the wage of an employee exceeds the wage limit of Rs.21,000 after April or October for the respective contribution periods, then the employee continues to be an employee till the end of that contribution period. Hence, the contribution is to be deducted and paid on the total wages earned.
You can view the current ESI rate of contribution on the ESIC website. The government publishes the updated rate of contributions to be made by the employee and the employer on the website.
ESI scheme is an insurance scheme in which the premiums are provided by the employees and employers in form of contributions. You can avail of the ESI fund amount for medical use or other benefits provided under the ESI scheme only, and it cannot be withdrawn for personal use. The ESIC funds can only be claimed against various ESIC benefits provided under the ESI scheme.
The ESI scheme provides the following benefits to the employees:
An ESIC or ESI card, also known as a pehchan card, is a magnetic card given to each insured person. This card is required to avail of various ESIC benefits, including hospital payments.
The employer needs to download the counterfoil of the ESIC pehchan card from the ESIC portal and give it to the employees. The employees need to attest their photographs and signature on the counterfoil of the ESIC pehchan card and submit it to the nearest ESIC office. The employees need to take their dependents to the ESIC office to capture the fingerprints. Once the ESIC office captures the fingerprints, it will send two ESI cards to the employees through a courier.
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