What is ESI?
The Employees' State Insurance scheme, run by ESIC, provides medical care, sickness, maternity and disablement benefits to workers. It applies to factories and notified establishments employing 10 or more people (20 in some states) and covers employees whose monthly gross wages are ₹21,000 or less (₹25,000 for persons with disability). Both employer and employee contribute a percentage of gross wages each month.
Contribution rates and formula
- Employee share: 0.75% of gross wages (nil if daily wages are ₹176 or less).
- Employer share: 3.25% of gross wages.
- Each share is rounded up to the next rupee; the challan is due by the 15th of the following month.
- Wages include basic, DA, HRA, overtime and all regular cash allowances; annual bonus, gratuity and washing allowance are excluded.
Worked example
Gross wages ₹20,000 for a full month: employee ESI = 0.75% × 20,000 = ₹150; employer ESI = 3.25% × 20,000 = ₹650; total ₹800 deposited by the 15th of next month. For 15 days' wages of ₹10,000, the shares are ₹75 and ₹325.
Contribution and benefit periods
ESI runs on two six-month contribution periods — April to September and October to March. Benefits for each are available in the corresponding benefit period: January to June of the next year and July to December respectively. If an employee's wages rise above ₹21,000 in the middle of a contribution period, contributions continue on the full wages until that period ends; coverage stops only from the next period. The calculator shows both periods and flags this rule when gross exceeds the ceiling.
Who should use it
Small-business owners, hospital and factory payroll staff, and consultants preparing monthly ESIC challans. Enter the number of employees on similar wages for a quick total.
Registration thresholds
Coverage starts automatically once an establishment crosses the employee threshold in a notified area; the employer must register on the ESIC portal within 15 days, generate insurance numbers for staff and file the half-yearly return of contributions.
Frequently Asked Questions
What is the ESI wage limit?
₹21,000 gross per month since 1 January 2017 (₹25,000 for employees with disability). Employees earning above this are not covered.
When did ESI rates change to 0.75% and 3.25%?
From 1 July 2019. Earlier rates were 1.75% (employee) and 4.75% (employer).
Is ESI deducted on overtime?
Yes, overtime is included in wages for ESI contribution, but it is ignored while checking the ₹21,000 eligibility ceiling.
What happens if salary crosses ₹21,000 mid-year?
Contributions continue till the end of the running contribution period (30 September or 31 March) and the employee stays covered for the matching benefit period.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.