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ESIC Registration Process – Benefits, Returns and Penalty

ESIC Registration

ESI is Employees State Insurance described in the Employees State Insurance (ESI) Act, 1948. It is an combined measure of employees social Insurance and task of protecting interest of employees. ESIC (Employee State Insurance Corporation) strictly regulates and administer this ESI scheme as per the bylaws given in the ESI Act of 1948.

In Independent India, this was the first significant Act on the workers social security which was established on the Pooling of risks and resources principle.

The registration under ESI scheme is treated as a mandatory responsibility of every concerned employer entity, engaged in any economic field. Keeping pace with the Indian industrialisation, the Scheme today stand executed in 33 States and Union Territories at over 843 centers.

What is the Rate of Contribution?

Rate of Contribution

Employee’s Share Employee’s Share Total
1.75% 4.75% 6.50%

 

Rate of Contribution for the Initial 2 Years in Newly Implemented Areas

Employee’s Share Employer’s Share Total
1% 3% 4%

What are The Contribution and Benefit Period?

Contribution Period Benefit Period
April – September January – June of the following year
October – March July – December

Entities Covered under ESIC

As per the Government notification the following entities are covered under ESIC:

  1. Shops
  2. Cinemas
  3. Road Motor Transport Establishments
  4. Restaurants or Hotels Engaged in Sales Only
  5. Private Educational Institutions
  6. Newspaper Establishments (which is not covered under the factory act)

Providing that:

The employer is located in an area where the State Government has extended the Scheme, and

Under the employer, 10 or more persons are employed

Advantages of ESIC Registration

All employees whose monthly salary (excluding overtime) does not exceed 21,000/- INR, are eligible to avail benefits under the ESI Scheme.

There are various benefits of registering under this scheme. Some of them are:

Medical Benefit:  From the day a person enrolls into a insurable employment that is from the first day of employment, full medical care is provided to an Insured person and his family members.

On the payment of an annual premium of Rs 120, medical care is also provided to permanently disabled & retired insured persons and their spouses.

Certain conditions must meet for super speciality treatment and they are prescribed below;

  • Employment shall be continuous for at least 2 years from the date of diagnosis
  • During immediate 4 CP, minimum 156 days of contribution shall be paid.
  • In at least 2 benefits Period shall be entitled for Sickness Benefits.
  • After obtaining a referral letter from Medical Superintendent of ESIS Hospital treatment can be cashless.
  • In the case of emergency such employee can be straightly taken to any of the linked hospital for treatment and the Referral formality can be carried out later.

Sickness Benefits: Generally, sickness benefits are given in the form of cash to the insured person at the time of sickness that results in absence of work. For such purpose the prescription must be duly certified by an (IMO) Insurance Medical Officer.

Name of benefits Contributory condition Duration Amount/Rate
Confinement Expenses Insured women or Wife of Insured person is eligible when confinement takes place at a location where ESI Hospital is not available Only 2 confinement 5000/-  INR per case
Funeral Expenses From the 1st day of Insurable employment Funeral expenses on Insured person death. Maximum 10000/- INR
Unemployment allowance  Rajiv Gandhi Shramik Kalyan Yojna(RGSKY) Contribution to be paid for minimum 2 years Maximum 24 month
For Loss of Employment due to ;
Closure of Factory or Retrenchment or Permanent Disablement due to Non-Employment Injury.
0-12 Months:
50 % of Last Average Wages
13-24 Months:
25 % of Last Average Wages

Maternity Benefit: Maternity benefit is paid to insured women in case of miscarriage or confinement or any related sickness due to pregnancy.

Name of benefits Contributory condition Duration Rate
Maternity Benefit In 2 previous contribution periods 70 days contributions to be paid by the insured women Up to 26 Weeks, 100% of wages
Extended 1 month for sickness due to pregnancy which is duly certified by the doctor

Other Benefits

Name of benefits Contributory condition Duration Amount/Rate
Confinement Expenses Insured women or Wife of Insured person is eligible when confinement takes place at a location where ESI Hospital is not available Only 2 confinement 5000/-  INR per case
Funeral Expenses From the 1st day of Insurable employment Funeral expenses on Insured person death. Maximum 10000/- INR
Unemployment allowance  Rajiv Gandhi Shramik Kalyan Yojna(RGSKY) Contribution to be paid for minimum 2 years Maximum 24 month
For Loss of Employment due to ;
Closure of Factory or Retrenchment or Permanent Disablement due to Non-Employment Injury.
0-12 Months:
50 % of Last Average Wages
13-24 Months:
25 % of Last Average Wages

Vocational Rehabilitation: The benefits of vocational rehabilitation can be claimed in case of insured person disablement that is under 45 years of age and the percent of such disablement is 40% or more.

Physical Rehabilitation: In case of any physical disablement arising out of employment injury.

Old Age Medical Care: For Insured Person retiring at the time of superannuation or under Voluntary Retirement Scheme (VRS) and person leaving services due to any permanent disability. On the payment of Rs 120 p.a. such benefit can be taken by the insured person & his/her spouse.

List of Essential Documents for ESIC Registration

Here is the list of essential documents needed for ESIC Registration:

  • A registration certificate obtained either under the:
    a) Shops and Establishment Act
    b) Factories Act
  • Registration Certificate in case of Company and Partnership deed in case of a Partnership
  • MOM and AOA of the Company
  • Employees list that working in the Establishment
  • Employees Compensation Details
  • PAN Card of the Business Entity including Employees PAN Card
  • A Cancelled Cheque of the Company’s Bank Account
  • List of Company’s Directors & Shareholders
  • Employees Attendance Register

After collecting all the above-mentioned documents the following procedure is to be followed for the ESI registration:

  • Employers Registration Form (Form No – 1) shall be downloaded and filled.
  • After downloading the form, it must be filled with the help of above stated documents and shall be submitted on the ESIC portal.

What is the Procedure After the Form Verification?

Step 1: The government will issue a 17 digit unique number after verification of the form.

Step 2: As a part of ESI registration process, every employee who wants to get registered under ESIC shall give filled form and photographs of his own family members to the employer. Once the ESIC registration is completed the employee will get an ESI card.

Note: ESIC shall be informed in case if there is any change in the Company or its employees.

After ESI Registration, How Many ESI Returns Have to be Filed?

ESI Returns shall be filed two times in a year after its registration. While fling an ESI Return the following documents are necessary:

  1. Attendance Register of the Employees
  2. Wages Register
  3. Register of Form 6
  4. Any Accidents Registered on the Business Premises
  5. Monthly Returns
  6. Monthly Challans

Penalties for Non-Payment or Delayed Payment

As per section 45 of ESI Act any employer who is not complying with the provision of ESIC may face several consequences that are mentioned below. Further, under Reg. 31C ESIC may impose and recover damages at the following rates, not more than the amount of contribution payable for default or delay in the payment of such contribution.

Duration Rate
Less than 2 months 5%
2 to 4 months 10%
4 to 6 months 15%
6 months and above 25%

Under Section 85 (a) to (g), Criminal and Civil Prosecution will be initiated which might attract fine and imprisonment up to 3 year maximum.