ESI (Employee State Insurance) Compliance in Bangalore

ESI (Employee State Insurance) Compliance in Bangalore

Introduction:

The employees’ state insurance or the E.S.I. is one of the most popular social security schemes that enhance healthcare facilities. The Central Government brought into force to make healthcare & medical facility affordable for the labours and all other working-class people. All private limited organizations should register under the E.S.I. Act of 1948 provides a sense of belonging in the people working for the organization. If they fail, then they may face penal actions in due course of time. So, abiding by the provisions of the E.S.I. Act will be best in your interest. E.S.I is a health insurance plan for Indian workers, offering medical and disability benefits. It is governed by the E.S.I. Act, 1948, & is a self-financing scheme managed by (ESIC) under the Ministry of Labour and Employment. 

Applicability of the ESI Scheme

The ESI scheme is applicable to all factories and other establishments as defined in the ESI Act with 10 or more persons (20 or more in some states) employed in such establishments. However, only those employees are covered under the ESI scheme whose monthly wages do not exceed Rs.21,000 (Rs.25,000 in the case of a person with a disability). The applicability of the scheme is explained through a flow chart below:

The scheme under the ESI Act also applies to the following: 

  1. Shops
  2. Restaurants
  3. Hotels
  4. Cinema theatres
  5. Road motor transport undertakings
  6. Newspaper establishments and undertakings
  7. Educational institutions
  8. Medical institutions
  9. Contract and casual employees of Municipal Corporations or Municipal Bodies. 

It also applies to the following establishments under the Central Government employing 20 or more persons engaged in: 

  1. Insurance business
  2. Non-Banking Financial Companies (NBFCs)
  3. Airport authorities
  4. Port trusts
  5. Warehousing establishments

Documents Required:

  1. Salary Details of Employees/Labours
  2. Details of Employer
  3. Details of responsible person
  4. Challan details

Features of the ESI Scheme

  1. Complete medical care and attention are provided by the scheme to the employees registered under the ESI Act, 1948 at the time of his incapacity, restoration of his health and working capacity.
  2. During absenteeism from work due to illness, maternity or factories accidents which result in loss of wages complete financial assistance is provided to the employees to compensate for the wage loss.
  3. The scheme provides medical care to family members also. As of 31 March 2022, the total number of beneficiaries covered under this scheme is 12.04 crore.
  4. Broadly, the benefits under this scheme are categorized under two categories:
    1. Cash benefits (which includes sickness, maternity, disablement - temporary and permanent, funeral expenses, rehabilitation allowance, vocational rehabilitation and medical bonus) and,
    2. Non-cash benefits through medical care.
  5. The scheme is self-financing and being contributory in nature. The funds under the ESI scheme are primarily built out of the contribution from the employees and employers payable monthly at a fixed percentage of wages paid.
  6. Currently, the employee contribution rate is 0.75% of the wages and that of employers is 3.25% of the wages paid.
  7. The employer makes the contribution from his own share in favour of those employees whose daily average wage is Rs 137 as these employees are exempted from his own contribution.
  8. The employer is required to pay his contribution and deduct employees’ contribution from wages and deposit the same with ESIC within 15 days from the last day of the calendar month in which the contribution falls due. The payment can either be done online or through designated and authorized public sector banks.

ESIC Contribution Rates

Particulars
 		Current Rate 
(Rate before 01/07/2019)		Reduced Rate 
(Rate after 01/07/2019)
Employer Share4%3.25%
Employee Share1%0.75%
Total5%4%

Created & Posted by Sony Garg

Accountant at TAXAJ

TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business, Trademark & Brand Registration, Digital Marketing, E-Stamp Paper Online, Closure of Business, Legal Services, Payroll Services, etc. For any further queries related to this or anything else visit TAXAJ

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