ESI Deduction on Salaries Over 21,000: What Actions Does the Department Take?

If we deduct ESI from a salary exceeding 21,000, what action will be taken by the department?

The current contribution period is from 1st October 2021 to 31st March 2022. So, even if, in the meantime, the salary of any employee exceeds Rs. 21,000, you will have to continue ESI deduction until the current contribution period is over. The employee will be eligible for the corresponding benefit period from 1st July to 31st December 2022.

To my understanding, the query is about what will happen if we contribute even for a salary above $21,000. If I am correct, there may not be any problem while making contributions, but the employee may be denied any benefits under the Act as the contributions are made against the provisions of the Act. I hope some seniors may shed light on this matter in this direction.

If you are paying beyond Rs 21,000/- legally, it is not valid as per the ESIC Act. If management knows about payments exceeding the ESIC limit, they may scold you, which could lead to job termination. ESIC officials may also be aware of the aforementioned issue and may deny benefits as per the act. Your company's audit may raise objections to payments exceeding the ESIC limit.

I don't know your relations with management. This is my suggestion.

Regards, Murthy