ESI Deductions After January Salary Increase: Should I Continue or Stop?

For example, a person's gross salary from Oct-14 to Dec-14 is Rs. 14,000, and he received an increment in Jan-15 of Rs. 3,000. Therefore, the total gross salary for Jan-15 is Rs. 17,000. Should I deduct ESI at 1.75% of Rs. 17,000 up to the March salary, or should I stop ESI deduction from Jan-15? Please clarify ASAP.

(Apr to Sept, Oct to Mar, these are the ESI 6-month periods. So, my doubt is once we enter the 6-month period, is it compulsory for the same to be applicable until the half-year end, or not?)

Thank you.

Dear member, you should have submitted the total details of wages of the concerned employee as per his pay slip/wage register. In the past, in some cases, it was observed that the "Gross Salary" mentioned was wrongly noted and was actually the so-called "CTC".

However, in view of the facts submitted above, you are required to deduct contributions under the ESI Act, 1948, and the rules/regulations framed thereunder till the close of the contribution period, i.e., up to 31/3/2015. Please ensure that the amount of wages of Rs. 17,000/- as mentioned above does not include "Overtime" before exempting any employee.

Contribution is required to be paid on the total amount of wages of Rs. 17,000/- till the close of the contribution period as mentioned above.

ESI Eligibility and Deduction Clarification

A person within ESI limits continues to be under ESI until the end of the 6-monthly period (in this case, October - March), irrespective of their wage crossing the ESI limit. They only go out of the ESI limit in April.

Hope this helps.

Regards.

Yes, the ESI contribution will be applicable until March 2015. Effective April 2015, you can forgo the ESI contribution since the salary is beyond the ceiling limit. Hope this clarifies your query.

In this case, as per ESIC rules, ESIC contributions will be deducted on ₹17,000 until March '15. After March, he will be exempt from ESIC.

There are two contribution periods, each of six-month duration as follows. The employee has to pay or have deducted for ESIC benefits.

Contribution Periods and Cash Benefit Periods

Contribution Period: 1st April to 30th September
Cash Benefit Period: 1st January of the following year to 30th June

Contribution Period: 1st October to 31st March of the following year
Cash Benefit Period: 1st July to 31st December

Regards,
Hetal Solanki

Clarification on ESIC Contribution Beyond Ceiling Limit

The benefit rate (sickness or TDB/PDB) is not allowed beyond the maximum ceiling limit by ESIC. Then why is there only a contribution beyond the ceiling limit? Can someone clarify?

Regards.

At present, there is no maximum ceiling limit regarding the payment of benefits under the ESI Act, 1948, and the rules/regulations framed thereunder. The rates of payment of benefits have been amended to a percentage system by an amendment in the ESI (Central) Rules, 1950, which was made applicable with effect from 1/7/2011.

Therefore, the higher the rates of average wages in any contribution period, the higher will be the rate of benefit in respect of cash benefits in the corresponding benefit period.

I have not seen any ceiling on wages to be a member of ESI and also accrue the facility therein. Mr. Harsh Kumar Mehta is right. Where has this ₹17,000 per month come from? Seniors and experts, please clarify.

When can an employer mark an employee out of coverage? We had a salary revision in September. Can anyone help me with this?

Under which section of ESI does it state that after crossing the wage limit during the contribution period, one must pay ESI on total wages (excluding OT and washing allowance) above a gross salary of 21000?

Please clarify.

Regards,
Srinivas