Salary Increase and ESI Deduction: Do I Still Need to Pay After My Raise?

As per amendments under the Employees' State Insurance Act, 1948, "all employees whose current gross salary is up to Rs. 15,000 per month would be covered under the ESI Act."

My gross salary per month was Rs. 14,000 in May 2010, and ESI was also deducted from my salary for that month. Increments are declared in the month of June 2010, and now my salary is out of this bracket (more than Rs. 15,000). Will ESI still be deducted from my salary? If so, how can I stop this?

Hi Neha,

Not to worry about it. If your gross is $15,000 or more, they won't deduct any further. Why don't you talk to the individuals handling payroll in your company to get clarification?

Regards,
Sundar

Dear Friend,

As per the ESI Act, even if a person crosses the limit in the middle of the contribution period (Apr - Sep & Oct - Mar), he has to contribute until the end of the contribution period. In your case, ESI would deduct for another four months, namely, June, July, August, and September. After that, they won't deduct. I hope this clarifies things for you.

Thank you.

Dear Madam,

Before responding to this, I would like to know from which date the revised salary figures are effective. If you have been paid arrears for the months of April/May, then it does not attract ESI contribution. However, if the revised figures are effective from June 1st, 2010, then it would attract ESI, and contributions will have to be made by both the employer and employee until September 30th, 2010.

My sincere request to all members: If you are not sure about any issue, please do not misguide other members.

In the above query, I endorse the opinion of Mr. Avinash.