Guide for ESI Rate 2024

Employee State Insurance (ESI) is administered by the Employee State Insurance Corporation (ESIC), an independent entity operating under the Ministry of Labour and Employment's purview. Its primary objective is to extend medical, financial, and assorted privileges to Indian labourers.

Any non-seasonal industrial unit or enterprise with a workforce surpassing 10 employees (in certain states, the threshold is 20 employees) earning up to a maximum of Rs. 21,000 must undergo mandatory registration with ESIC and extend ESI benefits to its workforce.

As of 1st July 2019, the contribution rates for E.S.I.C. have undergone a reduction. The ESIC has set the employee contribution rate at 0.75% of their earnings, while the employer's contribution stands at 3.25% of the remuneration for the fiscal year 2023-24.

Rate of Contribution Under ESI

The Employee State Insurance Corporation (ESIC) operates as a pivotal social security network, extending comprehensive socio-economic safeguards to workers, their immediate kin, and dependents. Contribution rates are stipulated by the ESIC, subject to periodic revisions.

The contribution encompasses both the employer and employee allocations. Effective July 1, 2019, the rates stand at:

  • Employer’s Contribution: 3.25% of the wages paid/payable.
  • Employee Contribution: 0.75% of the wages paid/payable.
  • Employees with a daily average wage of up to Rs. 176 enjoy exemption from personal contributions. Nonetheless, employers are obliged to fulfil their contribution commitments.

    It falls upon employers to deduct the stipulated employee contribution from the wage bill and remit both employer and employee shares within 15 days following the month of contribution. Designated branches of the State Bank of India and select other banks to serve as authorized channels for ESIC contribution receipt.

Period of Contribution

The following table illustrates the window period for contribution and for obtaining cash benefits:

Contribution Cash Benefit
1st April to 30th Sept 1st Jan of the following year to 30th June.
1st Oct to 31st March of the year following. 1st July to 31st December

ESIC Calculation

The ESI contribution of each employee varies based on the wages paid to the employee. The ESI contribution for each employee is as follows:

  • Employer’s Contribution: 3.25% of the wages paid/payable.
  • Employee Contribution: 0.75% of the wages paid/payable.
  • Total ESI Contribution = Employer’s Contribution + Employee Contribution For instance: Let's consider Ms. 'B' who works in a corporation and earns a salary of Rs.25,000

The ESIC contribution will be calculated as follows:

  • Employer's Contribution – 3.25%*25,000 = 812.50.
  • Employees Contribution – 0.75%*25,000 = 187.50.
  • Hence, the total ESI Contribution will amount to Rs.1,000 (812.50 + 187.50).

Frequently Asked Questions

Who fixes the rate of contribution for the ESI scheme?

The Government of India determines the contribution rate for the Employee State Insurance (ESI) scheme, subject to periodic revisions. As of June 2019, the contribution rates underwent a reduction, becoming effective from the 1st of June 2019. Currently, as of July 1st, 2019, the employee's contribution rate stands at 0.75% of their wages, while the employer's contribution rate is 3.25% of the wages paid or payable for each employee in every wage cycle.

Is an employee still covered under the ESI scheme if his/her wages exceed Rs.21,000 in a month?

If an employee's salary surpasses the Rs.21,000 wage threshold either post-April or post-October within the corresponding contribution periods, the individual remains classified as an employee until the culmination of said contribution period. Consequently, deductions for contributions must be made and remitted based on the entirety of the earnings accrued during that period.

Where can I get the details of the current ESI rate of contribution?

You can find the prevailing ESI contribution rate listed on the official ESIC website. The government regularly updates the contribution rates for both employees and employers on this platform.

Can I withdraw my ESIC amount?

The ESI scheme operates as an insurance mechanism wherein both employees and employers contribute premiums. These contributions form the ESI fund, which can be accessed exclusively for medical expenses and other benefits specified within the ESI scheme. Withdrawal for personal use is prohibited; the funds are earmarked solely for utilization within the framework of the ESI scheme. Reimbursement from the ESIC funds is restricted to the array of benefits outlined within the ambit of the ESI scheme.

What are the various benefits provided under the ESI scheme?

The ESI scheme provides the following benefits to employees:

  • Medical benefit
  • Sickness benefit
  • Disablement benefit – Temporary disablement benefit and permanent disablement benefit
  • Dependent benefit
  • Maternity Benefit
  • Confinement expenses
  • Funeral Expense
  • Unemployment allowance

  • What is an ESI card?

    An ESIC or ESI card, commonly referred to as a pehchan card, is a magnetic identification card issued to every insured individual. Possession of this card is essential for accessing a multitude of ESIC benefits, notably facilitating hospital payments and other medical services.