Understanding ESI: How Is It Calculated and What Are the Key Acts and Sections?

Hi Vijay,

I would like to know the details of ESI. What is the procedure? How is it calculated? Please share some important topics on ESI (Acts & Sections).

Regards,
Vijay

Hi Vijay,

ESI is contributed from both sides, employee as well as employer. It is calculated based on the gross salary per month, with a maximum ceiling of Rs. 10,000 per month. The contribution from both sides is as follows:

Employee Side: 1.75% of gross per month
So, if the gross of an employee is Rs. 8,000 per month, then the ESI contribution would be Rs. 140.

Employer Side: 4.75% of gross per month
The ESI contribution would be Rs. 380 for a gross of Rs. 8,000.

I hope this clarifies things for you.

Regards,
Amit Seth.

Hi Vijay,

The ESI contributions are of two types:
1. Employee contribution, i.e., 1.75% of the gross salary
2. Employer contribution, i.e., 4.75% of the gross salary

Please note: Round up both to the next higher rupee. For example, Rs. 238.10 should be rounded up to Rs. 239.

Hope this information is useful.

Vikas Pareek

Hi,

I would like to add something regarding the ESIC wage limit, which is 10k. The employee's and employer's share is 1.75% and 4.75%, respectively. This means the company's share is higher. So, what the company does is, if an employee's salary is fixed at 9900 or something similar, they adjust it to 10010/- so that the employee will be exempted from ESIC, which is beneficial for the company.

Additionally, an Insured Person (Employee) cannot include his/her brothers and sisters in taking benefits. There is a specific definition of "Family." One must submit Declaration Form No - 1 along with Form No - 3 at the Local ESIC office with the Sub Code. Please note that Male and Female Employees' forms should be submitted separately.

Kindly provide a specific query on the same for further clarification.

Regards, Chaitali
Surat, Gujarat

Hi Chaitali,

I am Amit Seth, working in Ahmedabad. If you don't mind, may I know where you are working, which industry, and your job profile? By the way, I am working with an IT company and I am responsible for handling all HR functions as the sole person here.

Regards,
Amit Seth

Hi all,

Thanks to all for your great valuable information. I am working in an IT company. Is it the same for IT companies as well as manufacturing companies? Please kindly clarify this doubt regarding ESI. Are there any specific acts and sections for IT companies?

Thanks & Regards,
Vijay

Hi Vijay,

Yes, it is the same in both companies. There is no separate Act related to IT companies, especially for ESI or PF. These are statutory Acts and are applied similarly in every industry.

Regards,

Amit Seth

Dear All,

Can you please provide me with the PF configuration we discussed for ESI? Kindly offer guidelines for handling PF administration and also suggest any difficulties that may arise and how to overcome them.

Regards,
Vijay
Email: vijayaryansprofessional@yahoo.co.in

Contact the ESIC Office in your state if you are planning to introduce ESIC. Ensure that there are a minimum of 20 employees in the organization and that the salary is less than 10000. Check if ESIC coverage is available in your area or if it can be included.

Regards,
Sweta

Hi,

To understand the PF Act, please go through the attachment below.