Confused About ESI Deductions After Salary Increase? Need Advice on Next Steps

Hi all, my salary was 12K per month for two months for which I had given ESI, but I got an increment in two months, and my salary went to 15.5K. I have to pay ESI for this too, as the consultant said that you would have to pay ESI for six months whether you are getting 15.5K per month.

ESI Payment Query

Please give me suggestions, is it right or wrong? Do I have to pay ESI for the next four months?

ESI deductions will be made up to September 14, and you are entitled to ESI benefits until the next Benefit Period.

Thank you.

Thank you for your reply. I have a small doubt. How do we deduct the money for the next 4 months? (I need to make a ceiling of 15,000 from the new hike.) Please advise.

Thank you.

The ESIC contribution works on a specified contribution period as determined by ESIC. The contributing wage period is from April to September and October to March. If a member has contributed at the beginning of any wage period and their wages/salary increase above the ceiling limit, they are bound to contribute until the end of the wage period. For example, if an employee has a salary of 15,000/- or less during the month of April and in May or June, their wage/salary increases to Rs. 16,000 or more, they are bound to continue paying their contribution until September and will be out of coverage from October onwards. Both the employer and employee are obligated to do so.

Regards,
Purushotham A

Hi Purushotam, thank you for the reply. I have a query regarding how to deduct ESI for the remainder of the month if I received a salary hike in June. Should we deduct the 6.5% from the old salary (e.g., 14,000/-) or the new salary (e.g., 16,000/-)? Could you please clarify this for me?

Thank you.

Please refer to the proviso to section 2(9) of the ESI Act, 1948, and also the proviso to Rule 50 of the ESI (Central) Rules, 1952, which clarifies the issue raised by you.

There is no maximum limit or cap regarding ESI deductions during any contribution period. Therefore, even if the wages have been increased to Rs. 16,000, the contribution on the total amount of Rs. 16,000 will be payable at the prescribed rates until the end of such contribution period.

Thank you.

Understanding CTC and ESI Eligibility

First of all, employees often get confused. The CTC might be ₹15,000 or ₹15,500/-, but the Gross should exceed ₹15,000 or more.

For example, if your CTC is ₹16,000/-, then you will not come under the ESI slab. However, if your CTC is ₹15,500/-, then you are eligible for ESI.

Regards

Until September, the deduction made would be based on actual wages/salary paid (as defined in ESI Act Sec 2(9), which normally excludes reimbursable elements). His rate for benefits would also be correspondingly higher. In October, he will be classified in the Exempted Category, and no deduction is to be made.