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Hello All,

Can anyone plz tell me What is ESI How do I calculate it?

Akshay_M Answered question February 23, 2022
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Employee State Insurance Corporation or ESIC is a self-financing social security and health insurance scheme which provides medical benefit, sickness benefit, maternity benefit, disablement benefit and various other benefits such as funeral expenses, free supply of physical aids etc. to the employees and their family.

ESI applicable to all employees whose monthly incomes (excluding overtime, bonus, leave encashment) does not exceed Rs. 21,000 per month, are eligible to avail benefits under the Scheme.
Salary for this purpose shall be
– Basic pay,
– Dearness allowance,
– City compensatory allowance,
– House Rent Allowance (HRA),
– Incentives (including sales commissions),
– Attendance and overtime payments,
– Meal allowance,
– Uniform allowance and
– Any other special allowances.

The gross monthly salary, however, does not include Annual bonus (such as Diwali bonus), Retrenchment compensation, and Encashment of leave and gratuity.
Contribution to ESI shall be 4% of which
Employees share 0.75%
Employers Share 3.75%
Ex: If the salary is 10,000/-
Employees contribution Rs. 75/-
Employers contribution Rs. 375/-
In case of out side contractor who did not comply with ESI but within the premises; it shall be bill value less profit portion (we consider it as 30%), 4% there on.
Example: if the bill value say Rs. 10,000
ESI will be = 10000*70%*4% = Rs. 280.

Akshay_M Answered question February 23, 2022
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ESI stands for Employee State Insurance managed by the Employee State Insurance Corporation which is governed by the ESI Act 1948. It is an autonomous body created by the law under the Ministry of Labour and Employment, Government of India. It has started for the benefits of Indian workers. Under the scheme, there is huge benefits of medical and monetary through the employer.

Hope from the above words will have been clarified what is esi

There is some contribution ratio between employer and employee.

In this scheme, the employer needs to contribute and the amount of 4% of the total monthly salary of an employee and employee needs to contribute 0.75% of the amount

How to Calculate ESI:

Let’s understand the esi calculation with the example:

Gross Salary of an employee is INR 10,000,

Employee’s share of contribution would be: 0.75/100 * 10,000 = INR 75

And, the Employer’s share of contribution would be: 3.25/100 * 10,000 = 325

Hence, the total ESI contribution would be: 75 + 325 = INR 500

Amit Kumar Answered question June 15, 2020
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