All You Need to Know about ESIC

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As we know, Employees’ State Insurance is a self-financing social security and wellness insurance scheme for Indian workers. The fund is administered by the Employees’ State Insurance Corporation according to rules and regulations stipulated in the ESI Act 1948. In this article, we discuss all you need to know about ESIC.

Know About ESIC

ESI stands for Employee State Insurance. The Employees State Insurance Corporation, a legal body set up under the ESI Act, 1948 Act, governs and manages the ESI scheme in India.

The ESI scheme provides financial help to Indian employees covered under the plan against problems that arise out of events like sickness, disablement, or death due to injuries at work. The scheme also provides complete medical care to employees and their families during such times.

Under this scheme, an employer contributes 3.25% of the total monthly wages payable to workers, while an employee needs to contribute only 0.75% of his/her monthly wages. The only exception is that employees who earn less than Rs. 176 per day do not need to make any contribution.

Organizations Covered under ESIC

The ESI scheme applies to all factories and establishments in India as defined in the Factories Act or under the Shops and Establishments Act, which employ ten or more people (20 in some states) and where workers’ monthly wages do not exceed Rs. 21,000.

As per the notification issued by the Government under Section 1(5) of the ESI Act, the scheme covers the following organizations employing ten or more people:

  • Cinemas, Shops, Hotels or restaurants engaged in sales only.
  • Road Motor Transport Establishments.
  • Newspaper establishments that do not come under the Factories Act.
  • Private Educational Institutions (including Corporate, Joint Sector, trusts, charitable and private ownership etc.

Documents Required for ESIC Registration

Since the registration process is online, physical documents are not required. The list of documents required while filling the online registration form are:

  • A registration certificate issued under the Factories Act, or the Shops & Establishments Act.
  • A partnership deed in case of a partnership or a certificate of registration for a company.
  • A copy of the company’s Memorandum of Association and Articles of Association.
  • A list of the employees working in the organization.
  • PAN Card of the Business and its employees.
  • The compensation structure of all employees.
  • A cancelled cheque of the company’s bank account.
  • A list of the company’s directors.
  • A list of the company’s shareholders.
  • Register of employee attendance.

Need to know about ESIC Registration Benefits

There are several benefits of registering under ESIC, some of which include:

  • Sickness benefits equaling 70% of an employee’s salary in case of any validated illness that endures for 91 days at the most in any given year.
  • Medical benefits to employees and their family members.
  • Paid maternity leaves to pregnant women.
  • If employees die while at work, a monthly payment equal to 90% of their salary is made to their dependents.
  • Funeral expenses.
  • Old-age medical care expenses.

Returns to be filed every year after ESIC registration

After registering, employers have to file ESI returns twice a year. The documents required for filing the returns include:

  • Employee attendance register.
  • Form 6 Register.
  • Register of Wages.
  • Record of accidents on the business premises.
  • Monthly returns and challans.

If you want any other guidance related to ESIC Registration, please feel free to talk to our business advisors at 8881-069-069.

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