The document summarizes changes to Employee State Insurance (ESI) contribution rates in India. It states that as of July 1, 2019, ESI contribution rates were reduced from 6.5% to 4% of wages, with employers' contributions decreasing from 4.75% to 3.25% and employees' contributions decreasing from 1.75% to 0.75%. Approximately 3.6 crore employees and 12.85 lakh employers will benefit from this reduction. It also provides details on ESI eligibility, applicability, and benefits that are covered like medical, cash, maternity and dependent benefits.

1. E S I Contribution Rates: Eligibility,
applicability and benefits for employees

2. E S I contribution rate
• Under the Employees’ State Insurance Act 1948 (the E S I Act)
the rate of contribution has been reduced from 6.5 per cent to
4 per cent of the wages. The employers’ contribution is being
reduced from 4.75 per cent to 3.25 per cent and employees’
contribution being reduced from 1.75 per cent to 0.75 per cent
effective from 01.07.2019.
• Presently, the rate of contribution is fixed at 6.5 per cent of the
wages with employers’ share being 4.75 per cent and
employees’ share being 1.75 per cent. Overall, the E S I
contribution reduction would benefit about 3.6 crore employees
and 12.85 lakh employers. The E S I card will reflect the
changes in the coming months.
ESI Contribution Rate Reduced
Particulars Old[%] New[%]
Employers Share 4.75 3.25
Employee Share 1.75 0.75
Total 6.5 4.00

3. E S I applicability
• The E S I Act primarily applies to premises where 10 or more
persons are employed and therefore applies to both organised and
unorganised sectors. The E S I applicability is also to non-seasonal
factories employing 10 or more persons and since 2011 it has been
extended to shops, hotels, restaurants, private medical and
educational institutions, cinemas and newspaper establishments
employing 20 or more persons.

4. E S I benefits
• The E S I benefits include medical, cash, maternity, disability and dependent benefits to
the Insured Persons under the E S I Act. The contributions made by the employee and the
employer fund these E S I benefits.
• The scheme provides full medical care to the employee registered under the E S I Act,
1948 during the period of his incapacity, restoration of his health and working capacity. It
provides financial assistance to compensate for the loss of wages during the period of his
abstention from work due to sickness, maternity and employment injury and during the
hospitalization in any E S I hospital. The scheme provides medical care to the employee
family members also.
• Earlier in February 2019, the income limit for availing the medical benefit for the dependent
parents of an Insured Person covered under E S I Scheme has been enhanced from the
existing Rs.5000 per month from all sources to Rs.9000 per month.

5. E S I eligibility
• Employees whose monthly wages are Rs 21,000 or below are covered under the
E S I Act. The wage limit for coverage under the Act had been increased from Rs
15,000 per month to Rs 21,000 in December 2016. An employer is liable to pay its
own contribution for every employee and deduct the employee’s contribution from
wages bill and pay these contributions to the E S I within 15 days of the last day
of the calendar month in which the contributions are due.

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7. Important Posters
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