I am getting a salary of Rs. 12,000/- per month between April and August. From September onwards, my salary increased to Rs. 16,000/- per month.
Can I get a refund for ESI payments made between April and August? Also, do I need to make an ESI payment for September? If so, kindly let me know the rules as per the ESI Act.
Thanks in advance.
From India, Madras
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Can I get a refund for ESI payments made between April and August? Also, do I need to make an ESI payment for September? If so, kindly let me know the rules as per the ESI Act.
Thanks in advance.
From India, Madras
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Hi,
Please clarify whether the salary you have mentioned is gross salary or CTC. Considering that Rs 16,000 is the gross salary for ESIC purposes from the month of September, please note that ESIC contributions need to be paid until September as there is no provision for discontinuation of ESIC contributions in the middle of a contribution period even though there is an increase in the salary. You need to show your exit from the ESIC during the submission of the return. There is no requirement to pay the contributions from October onwards.
Regards,
Amitava
From India, Calcutta
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5Please clarify whether the salary you have mentioned is gross salary or CTC. Considering that Rs 16,000 is the gross salary for ESIC purposes from the month of September, please note that ESIC contributions need to be paid until September as there is no provision for discontinuation of ESIC contributions in the middle of a contribution period even though there is an increase in the salary. You need to show your exit from the ESIC during the submission of the return. There is no requirement to pay the contributions from October onwards.
Regards,
Amitava
From India, Calcutta
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Hi,
As per the ESI Act, contributions are divided into 2 periods: April-September and October-March in a financial year. ESI deductions for any employee deducted either in the month of April or October must continue until the period completes, i.e., up to September or March. Please note that no one receives a refund if contributions are made by mistake.
In your case, ESI contributions for the month of September also need to be paid.
From India, Madras
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As per the ESI Act, contributions are divided into 2 periods: April-September and October-March in a financial year. ESI deductions for any employee deducted either in the month of April or October must continue until the period completes, i.e., up to September or March. Please note that no one receives a refund if contributions are made by mistake.
In your case, ESI contributions for the month of September also need to be paid.
From India, Madras
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Hi, I resigned from my job in October 2018 because of my marriage. Contribution for ESI started on 1st May 2007 and continued until October 2019 across two organizations.
Now that I am pregnant, I am wondering if I am eligible for any benefits from ESI at this time.
From India, Vijayawada
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Now that I am pregnant, I am wondering if I am eligible for any benefits from ESI at this time.
From India, Vijayawada
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ESI Calculations
The rates of contribution, as a percentage of gross wages payable to the employees, are explained in the table below:
| Percentage of Gross Pay | Example Gross Salary | Contributions |
|-------------------------|----------------------|---------------|
| Employee Deduction | 0.75% | Rs 15,000 | 15,000 * 0.75% = 112.50 |
| Employer Contribution | 3.25% | | 15,000 * 3.25% = 487.50 |
| Total Contributions for this employee | | | 112.50 + 487.50 = Rs 600.00 |
In case the gross salary of the employee exceeds Rs. 21,000 during the contribution period (explained next), the ESI contributions would be calculated on the new salary and not Rs 21,000. For example, if the salary of an employee increases to Rs. 22,000 per month, then the ESI would be calculated on Rs. 22,000 instead of Rs. 21,000 during the contribution period.
Contribution Period and Benefit Period
Payroll administrators often face confusion when employees' salaries change—especially when the monthly salary exceeds the ESI limits of Rs 21,000. To handle this situation, ESI has a concept of contribution periods during which the ESI contributions have to continue, even when the salary exceeds the maximum limits. There are two contribution periods, each of six months duration, and two corresponding benefit periods, also of six months duration.
| Contribution Period | Cash Benefit Period |
|---------------------|---------------------|
| 1st April to 30th September | 1st January of the following year to 30th June |
| 1st October to 31st March of the following year | 1st July to 31st December |
After the commencement of a contribution period, even if the gross salary of an employee exceeds Rs. 21,000 monthly, the employee continues to be covered under the ESI scheme till the end of that contribution period. The contribution is deducted on the new salary. Let us look at an example to understand this better.
If an employee’s gross salary increases in June from Rs. 18,000 (within ESI limit) to Rs. 22,000 (above ESI limit), the deductions for ESI will continue to happen till the end of the ESI contribution period, i.e., September. The deduction amount for both the employee and employer will be calculated on the increased gross salary of Rs. 22,000. At the end of the contribution period, if the employee's salary is more than the ESI limit, no further deductions and contributions are required. The employee will still be covered under ESI till 30th June of the following year. Similar rules apply when an employee's salary increases in the 2nd contribution period.
From India
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The rates of contribution, as a percentage of gross wages payable to the employees, are explained in the table below:
| Percentage of Gross Pay | Example Gross Salary | Contributions |
|-------------------------|----------------------|---------------|
| Employee Deduction | 0.75% | Rs 15,000 | 15,000 * 0.75% = 112.50 |
| Employer Contribution | 3.25% | | 15,000 * 3.25% = 487.50 |
| Total Contributions for this employee | | | 112.50 + 487.50 = Rs 600.00 |
In case the gross salary of the employee exceeds Rs. 21,000 during the contribution period (explained next), the ESI contributions would be calculated on the new salary and not Rs 21,000. For example, if the salary of an employee increases to Rs. 22,000 per month, then the ESI would be calculated on Rs. 22,000 instead of Rs. 21,000 during the contribution period.
Contribution Period and Benefit Period
Payroll administrators often face confusion when employees' salaries change—especially when the monthly salary exceeds the ESI limits of Rs 21,000. To handle this situation, ESI has a concept of contribution periods during which the ESI contributions have to continue, even when the salary exceeds the maximum limits. There are two contribution periods, each of six months duration, and two corresponding benefit periods, also of six months duration.
| Contribution Period | Cash Benefit Period |
|---------------------|---------------------|
| 1st April to 30th September | 1st January of the following year to 30th June |
| 1st October to 31st March of the following year | 1st July to 31st December |
After the commencement of a contribution period, even if the gross salary of an employee exceeds Rs. 21,000 monthly, the employee continues to be covered under the ESI scheme till the end of that contribution period. The contribution is deducted on the new salary. Let us look at an example to understand this better.
If an employee’s gross salary increases in June from Rs. 18,000 (within ESI limit) to Rs. 22,000 (above ESI limit), the deductions for ESI will continue to happen till the end of the ESI contribution period, i.e., September. The deduction amount for both the employee and employer will be calculated on the increased gross salary of Rs. 22,000. At the end of the contribution period, if the employee's salary is more than the ESI limit, no further deductions and contributions are required. The employee will still be covered under ESI till 30th June of the following year. Similar rules apply when an employee's salary increases in the 2nd contribution period.
From India
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Hi,
Thank you so much for the clear explanation. I have one more query. One employee had ESI deductions earlier because his salary was 18k, but the employee received a hike to 28k which is effective from 1st September 2019. When will his ESI deductions be stopped?
Regards,
Bhanu
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Thank you so much for the clear explanation. I have one more query. One employee had ESI deductions earlier because his salary was 18k, but the employee received a hike to 28k which is effective from 1st September 2019. When will his ESI deductions be stopped?
Regards,
Bhanu
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BENEFITS UNDER ESI.ppt
ESI Circular - New Salary ceiling of Rs. 15,000 effective May 1, 2010.pdf