Mr. HR Guru,,
Contribution to ESIC Fund:-
Both employee and employer have to make contribution to ESIC. The employer has to deduct contribution from wages of employee and pay to ESIC both the employer’s contribution as well as employee’s contribution [Section 39(1)].
The contribution is payable for ‘wage period’ i.e. the period in respect of which wages are payable to employee [Section 39(2)]. Normally, ‘wage period’ is a month.
The Employee’s contribution is 1.75% of wages. It should be rounded off to next 1 Rupee. Employees contribution is not payable when daily wages are below Rs. 15/-.
Employer contribution is 4.75% of total wage bill of all employees in respect of every wage period. Thus, it is not necessary to calculate employer’s contribution separately for each employee.
4.75% of gross wages should be calculated and rounded off to next 1 Rupee.
Employees drawing wages lower than Rs. 25 per day do not have to pay employee’s share.
The contribution has to be paid within 21 days from close of the month. It is payable by a challan in authorized bank.
If the contribution is not paid in time, interest @12% is payable [Section 39(5) (a)].
In addition, ESIC authorities can impose ‘damages’ varying 5% to 25% of arrears of contribution u/s 85B.
Employer cannot deduct employer’s contribution from the salary of employee [Section 40(3)].
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All the best
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