ESIC Deductions After Salary Increase: Do We Still Need to Deduct for Ineligible Employees?

Hi all,

Please help me understand the below case regarding ESIC contributions. I have one employee whose gross salary was 18300. After a mid-time increment, his gross salary is now 23350 starting from January 2020. As he is no longer eligible for ESIC, does the company still need to deduct ESIC contributions from his salary? If yes, for how many months should we continue deducting ESIC amounts from his salary?

Thank you.

Even if his gross salary is hiked due to an increment and goes above the ESI salary ceiling, he still has to complete the respective contribution period. In other words, out of the two contribution periods (April-Sept & Oct - Mar), since his salary is increased in January, he will have to complete the contribution period ending in March.

Company has to deduct ESIC on $23,350 till March 2020 and deposit it with the relevant authority. If the monthly gross continues to be $23,350 from April 2020, then the deduction will discontinue.

S K Bandyopadhyay (WB, Howrah)
USD HR Solutions.

Hi,

The contributions have to continue until the end of each period, which is every half-year: April to September and October to March. Attached is the old rules screenshot, which gives you an idea. In your case, the employee's salary has to be deducted until March 2020 on the increased wages, though not on arrears, if any.

Thanks and Regards

Hi,

Even after the salary hike in the middle of the contribution period, it is mandatory to complete the contribution cycle. ESI contribution needs to be deposited for the complete contribution period, which may be from October to March or April to September.