Salary Increase and ESI Deductions: Can We Stop Contributions Mid-Month?

Please share any circular reference based on which we can stop contributing in the same month if the salary increases beyond the ESI limit. It would be helpful to many people who go by the rulebook. My salary got revised on June 14 (+15k Now). Still, ESI is deducting from my salary. HR is saying that ESI cannot be stopped.

For the gross salary of Rs. 15,000/-, ESI deduction is compulsory. If the gross exceeds Rs. 15,000/-, then you can be exempted from ESI contribution either in the month of April or October. In between, you can't be exempted.

Even though your salary is beyond Rs. 15,000 (15,001) until the end of the contribution period (up to September), ESI needs to be paid.

Regards,
V. Subbarao

The copy of any circular that you desire is not available because, by virtue of the provisions contained in section 2(9) of the ESI Act, 1948, read with Rule 50 of the ESI (Central) Rules, 1950, employees are deemed to be covered until the close of the respective contribution period.

However, when calculating Rs. 15,000 per month, please ensure that the amount does not include overtime. An employee cannot be exempted based on overtime.

Thank you.

You are well aware that the ESI ceiling limit is ₹15,000 per month on gross salary. If a person is drawing a salary not exceeding ₹15,000 per month, they will be covered under the ESI Act, and ESI contributions shall be payable on the gross salary at the applicable rates (Employee @ 1.75% & Employer @ 4.75%).

Contribution Periods under the ESI Act

In the ESI Act, there are two contribution periods: April to September and October to March.

Your salary was revised starting from June, and as such, you are falling within the contribution period from March to September, due to which ESI contributions shall be deducted until September. Your HR Department will stop the deduction of ESI contributions from your salary effective from October. However, it is to be noted that you will continue to receive medical facilities from ESIC until the end of the next contribution period (October to March).

Regards

I want to know if an employee who earns more than 15,000 cannot be covered under ESI. Why?

If the gross salary exceeds Rs 15,000, i.e., Rs 15,001, then he/she comes under ESI exemption. The wage period in relation to an employee shall be the unit in respect of which all contributions shall be payable under this Act.

Thank you.