Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
The rates
ESI (Employees’ State Insurance) is funded by both sides: the employer pays 3.25% and the employee 0.75% of the employee’s wages, totalling 4%. The employer deducts the employee’s share from salary and deposits the combined amount monthly. Confirm the current rates, which can be revised.
Who is covered
ESI applies to employees earning up to ₹21,000 a month (₹25,000 for persons with disability), in establishments with 10 or more employees (20 in a few states). Once an employee is covered, they and their family get medical care and cash benefits (sickness, maternity, disability). It sits alongside PF as a core payroll deduction.
A worked example
Example: an employee earning ₹18,000 a month is covered — the employer deposits 3.25% (₹585) plus the employee’s 0.75% (₹135) = ₹720 that month. An employee earning ₹30,000 is above the ₹21,000 ceiling and not covered. Getting ESI registration and deposits right is part of payroll compliance. Our team can run your ESI compliance.