ESIC Limit Increase: When Should We Start Deductions for Employees Earning Rs. 10,000 to Rs. 15,000?

Hi all, as we all know, ESIC has increased the limit from Rs. 10,000.00 to Rs. 15,000.00 effective 01/05/2010. My query is: Since we are aware that changes to ESIC membership can only be made in the months of April and October, do we need to begin deducting ESIC from May onwards for employees earning between Rs. 10,000 and Rs. 15,000, or should this deduction start from October onwards? Please advise.

Yes, ESI continues to be deducted in respect of employees who are drawing between 10k to 15k from 1.5.10.

Contribution Period Rule

The other rule is that, though at the beginning of the contribution period, i.e., during April & October, anybody drawing within the ceiling limit and later having their salary exceed the wage ceiling, their contribution is to be deducted until the end of such contribution period. For example, if a person is drawing 15,000 during May and exceeds the wage ceiling after May, the contribution must continue until the end of the contribution period, i.e., until the end of September.

If you have any doubts or queries, do not hesitate to call at [Phone Number Removed For Privacy Reasons] or email at [Email Removed For Privacy Reasons].

ESI Scheme Contribution Rule

The rule is: Employees already covered under the ESI Scheme, if their salaries increase beyond the prescribed wage ceiling, ESI deductions for such employees will continue until the close of the Contribution period. Such employees will be exempted from ESI coverage ONLY after the current Contribution Period is over. Trust this answers your query.

Regards,
Vasant Nair

Dear All,

Please find the attached notification for your help.

ESI Deduction Changes and Contribution Periods

In many pay packages, we have the option to change the ESI deduction only during April or October, which are the beginning months of the contribution period. If we opt for Non-ESI for those whose salary is Rs. 14,000.00 for the month of April 2010, ESI deductions will not be made until the end of the contribution period, i.e., for 6 months up to September 2010. However, now we have to recover ESI contributions for Rs. 14,000.00 from 1/5/2010, which many salary packages may not have the option for. If we deduct ESI for Rs. 14,000.00 from 1/5/2010, the package will deduct ESI for Rs. 14,000.00 for April 2010.

Can anyone help me in this regard?

With regards,
Raju M.R.G.
ESI, PF, and Labour Consultant
[Email Removed For Privacy Reasons]

I am herewith attaching the wage ceiling enhancement notification for your reference.