ESI Threshold Limit Increase to Rs. 21000: What Does This Mean for You Starting January 2017?

Dear All,

Please find attached a Gazette notification dated 22.12.2016 on the captioned subject for your information and implementation.

This Gazette notification has not been updated on the ESIC website. Please check the current wage limit at the link provided below:

[Coverage | Employee's State Insurance Corporation, Ministry of Labour & Employment, Government of India](http://esic.nic.in/page.php?pid=NjU=)

Thank you for the Gazette of the ESI. However, we have already been deducting the new 21k wages from November 2016 and paid the same in December 2016. I would like to inquire whether this contribution will be applicable before the Gazette's published date. Kindly inform me about this. I appreciate your immediate response.

Regards,
Srinivas Kopilla
SLN Consultancy
Hyderabad

Since the effect of the increase in contribution is effective from 1.1.2017, you can claim a rebate/adjustment on the amount you paid extra for November 2016, paid in December 2016.

Wishes

If someone drawing within Rs 21,000/- doesn't want to be a part of the ESIC scheme and provides a written letter regarding that, can we exclude the employee from paying ESIC?

If an excess contribution was paid in the month of November 2016 and was paid in December 2016, it can be adjusted in the December 2016 contribution payable for January 2017.

Hello Everyone,

I need a better clarification on ESIC deduction. ESIC is deducted from the gross salary of 21000/-. What happens if the company pays an amount in incentive monthly?

For example, "X" salary details for Nov '16 are Basic- 6500, HRA- 3000, Special Allowance- 425, Conveyance- 1600, Other Allowance- 5474, and Incentive- 9750 (which is not fixed but varies based on sales target achieved). Could you please advise on the ESIC deduction?

Also, could you clarify if the ESIC amount varies monthly depending on the Incentive amount?

Thanks,
Richa

Basic salary, HRA, and conveyance are definitely included in the calculation of gross salary. Special allowance, other allowances, and incentives are questionable in terms of accountability for calculating gross wages.

As per ESI law, any amount paid after a gap of two or more months will not be considered for inclusion in the wage ceiling of INR 15,000/- or INR 21,000/- (from December 2016). However, this issue arises for the initial months of the contribution periods, i.e., April or October. Deductions will be made for the rest of the months if the gross wages exceed the wage limit by the end of the contribution period.