ESI Contribution & Calculation

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Esic Calculation &Amp; Contribution

Employees’ State Insurance is a social security scheme that benefits employees working in India for health related problems. Managed by ESIC under the ESI Act 1948, it is a self-financed insurance deposit that the workforce contributes to every month from their gross salary.

There are several important questions that pop up in the heads of working professionals such as what is the rate of ESI contribution, how to calculate ESI in current financial year 2023-24, what is the formula to check the deduction and many more.

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Let us walk through the answers to 9 such questions in detail:

  • What is the contribution for ESI?
  • How to calculate ESI?
  • What is the eligibility and applicability for ESI contribution?
  • Why do employees need ESI?
  • How to get an ESI card?
  • What is the penalty for late/non-payment of ESI?
  • How to claim ESIC benefit?
  • What is the ESI number?
  • Can I claim ESI in a private hospital?

What Is The Contribution For ESI?

As per the latest budget 2023-24, ESIC contribution remains the same.

As per the rules laid out by ESIC, the employees get 0.75% deducted from their respective gross salaries, whereas the employers make an ESI contribution of 3.25% of the employee’s gross pay towards ESI. Thus, a total of 4% (employee + employer) is deposited as the ESI contribution in the account of the employee that he/she can withdraw in case of any medical emergency such as disability, maternity, unemployment among others.

How To Calculate ESI?

When calculating ESI, the elements that comprise an employee’s gross salary include Basic Pay, Dearness Allowance, City Compensatory Allowance, House Rent Allowance, Attendance & Overtime Pays, Meal Allowance, Uniform Allowance, Incentives and other Special Allowances.

Let us now understand the concept with a simple example.

If the Gross Salary of an employee is INR 15,000,

The Employee’s share of contribution would be: 0.75/100 * 15,000 = INR 112.5

And, the Employer’s share of contribution would be: 3.25/100 * 15,000 = 487.5

Hence, the total ESI contribution would be: 112.5 + 487.5 = INR 600

Calculate Employee’s State Insurance of India
/ month

What is the eligibility and applicability for ESI contribution?

ESI is applicable to organizations that have a strength of 10 or more employees working full-time with them. It is compulsory for every working professional who earns less than INR 21,000 a month to get registered under this scheme. The ones getting monthly wages of more than this amount have an option to make a choice of getting the fund deducted or not.

Why do employees need ESI?

Working professionals registered under the ESI Act, 1948 are offered full medical care at the time of incapacity to work. Financial assistance is given to cover the loss incurred from the absenteeism from work due to sickness, maternity, disability, or injury during employment. The scheme also provides medical help to the family members of the registered employees.

Apart from ESI, there are other employee benefits that every professional must know.

How to get an ESI card?

The government ESIC portal ESIC Portal gives an option to the registered employers to download the ESI or penchant application form online and fill in the employee details. The employee then needs to do some needful like attaching a family photograph to the form and duly attesting it. After performing the relevant verifications, the ESIC office issues an ESI card to the applicant/employee.

What is the penalty for late/non-payment of ESI?

For each day by which the contribution of ESI is delayed, the registered employer is charged a simple interest of 12% per annum. Non-payments, delays, and fraud activities in ESI payment may also lead to imprisonment for a period of upto 2 years and a fine of INR 5,000. Furthermore, the ITA (Income Tax Act) also disallows ESI contributions deposited after the stipulated date. The employers do not get the deduction benefit of such contributions and end up paying income on it.

How To Claim ESIC Benefit?

One can get ESIC Form-9 to make a claim in case of Sickness/ Temporary Disablement/ Maternity Benefit as provided by the Employees’ State Insurance Corporation, Ministry of Labour and Employment, Government of India.

There are two types of benefits that one can claim as a beneficiary of the ESI scheme, as mentioned below:

  • Medical Benefits: The employee and his/her dependents can avail medical care. To avail this they need to visit any of the ESI empanelled hospitals.
  • Cash Benefits: Employees or workers who are beneficiaries of the ESI scheme can avail cash benefits in the case of sickness, disablement (temporary/permanent), maternity, unemployment, dependent, funeral costs, and vocational or physical rehabilitation.

What Is The ESI Number?

The ESI code number is a 17-digit number unique ID given to each of the beneficiaries of the scheme. It is allotted to each of the factories/establishments registered under the provisions of the ESIC Act,1948. One can generate this number through ESIC portal on submission of the pertinent information by the employer.

Can I Claim ESI In A Private Hospital?

Yes, it is possible to claim ESI in a private hospital. As mandated by the ESI Act, treatment has to be taken only from the ESIC hospitals or dispensaries. However, in case of emergency, if the treatment is taken from a private hospital, one can raise a claim with the ESIC subject to ESIC approval and only then the reimbursement of the expenses will be processed.

The ESIC has collaborated with a number of hospitals PAN India available on the ESIC online portal where one can claim the ESI amount.

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Sukriti Saini

Sukriti Saini works as a content marketing strategist at HROne. She has done Bachelors in Journalism from Delhi University and carries several years of experience in content development. HR trends, Productivity, Performance and topics related to Employee Engagement garner most of her writing interest here. During leisure, she loves to write and talk about fashion, food & life.

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