Dear Member,
1. You are required to deduct the contribution from the wages of employees paid or payable at 1.75%. The number of days relevant for which the wages are paid or payable should be considered. Therefore, in addition to the number of days on which the employee was present, the days on which earned leave/casual leaves are sanctioned with wages, etc., are also to be taken into account.
2. The number of days for which wages are paid or payable should be correctly indicated in the records, i.e., in the Employees' Contribution Register or online records generated because, on the basis of such records, the eligibility of the employee to receive various benefits under the ESI Act and rules/regulations framed thereunder is determined. In case you indicate fewer days, the employee can be debarred or not eligible for certain benefits, and in case you mention in excess, it will be a wrong statement for the purposes of entitlement of benefits as calculated in the ESIC Branch Office. If any amount is paid wrongly to the insured person due to mentioning such a wrong number of days, the same will be objectionable as well as punishable under section 84 of the said Act.
3. Further, the terms "average daily wages" or "standard benefit rate," etc., are determined based on the records as furnished by you as mentioned in the paragraphs above. Please see the definitions of such words under Rule 2 of ESI (Central) Rules, 1952.
4. I suggest you also download relevant material from the official website of ESIC, or you can discuss the issue with the appropriate Branch Office of ESIC in your area in case you have any doubt on such procedural aspects.