Is ESI Applicable to Professional and Consultancy Fees? Let's Discuss

ESI Applicability on Professional and Consultancy Fees

Kindly let me know whether ESI is applicable to Professional Fees, Consultancy Fees, and other fees paid based on the legal agreements made between an individual and a company.

Thanks & Regards,
Manjunath.

They are coming as contract employees. We have to deduct ESI when the contract amount is not more than Rs. 150,001/- per month.

If you are talking about ESI = Employees State Insurance, then it is applicable only to employees of the organization who come under the ESIC area of the city. Also, it is not a one-time payment; charges are incurred regularly.

Regards,
Ashi

ESI applicability is irrespective of whether the company is a Ltd or Pvt one. It depends on the salary of the employees. If the employee's salary falls between ₹6,500 per month to ₹15,000 per month, ESI will be deducted. The contributions are as follows:
- Employee: 1.74%
- Employer: 4.75%

Regards,
Ashi

ESI is paid on a salary, so it will not apply to consulting fees. However, for payment to contractors for contract labor, you need to ensure that ESI is paid by him, or you need to deduct and pay it on his behalf.

ESI Applicability on Professional and Consultancy Fees

As Mr. Manish suggested, all HR executives, please look into the ESI Act. Someone (recruitme22) asks the very basic question: what does ESI stand for? I want to know his name (as it was not indicated in the posting) and if he is an HR person. If so, this question should not arise from him!

All HR executives and Freshers, please go through the ESI Act book to understand the basics. Any administrative clarifications, new developments, etc., can be discussed on this forum.

If someone asks basic questions like what is ESI, what is the contribution payable to ESI, or what is the eligible salary for ESI coverage, it is a disgrace to the HR community!

Mr. Manjunath, your question is valid. Please note, ESI is not applicable for professional fees or consultancy fees. For any other fees, you must specify, and then clarification can be provided. Also, note that any work carried out within the factory or office premises attracts ESI contribution.

Regards,
K. Ramachandra
Bangalore