ESI Return- Many important social security schemes had been introduced in our country before independence. The urgency of such schemes has been more badly felt after World War II.
Social security to the workers of an industry can be provided by a self-balancing scheme of social insurance or by public assistance or a combination of the two methods.
Social security measures adopted in any country can be said to be dependent upon a number of factors. E.g.- Population, economic resources, the standard of living, availability of technical experts, and development of the industry.
The Employees’ State Insurance Act is legislation which aims at bringing about social and economic justice to the poor labour class of the land. It aims at Labour welfare.
Labour welfare is a very comprehensive term and includes everything undertaken by the state, employers, and association of workers for the improvement of workers’ standard of living and promotion of their social and economic well-being. ESI Registration
The Employees’ State Insurance Act, 1948 extends to the whole of India. It is applicable to all factors and other establishments as defined in the Act.
Under the Act, it was Rs 15,000 per month, which changed to Rs 21,000 in December 2016.
Units or Establishments having 10 or more employees’, drawing the wages of up to Rs 21,00 are covered under the schemes.
The scheme also supports restaurants, motor road transport, newspaper establishments and undertakings, movies and purview theatres, hotels, shops.
The Employees’ State Insurance Corporation has been reduced with enforcement from 1st July 2019. The employer share was 4.75% which reduced to 3.25%. The Employee share was 1.75% which reduced to 0.75%. So, the total rate before was 6.50% which reduced to 4.00%. ESI Return
Composition of Employees’ State Insurance Corporation
- The Director-General of ESIC, ex-officio
- Chairman appointed by the Central Government
- Vice-president appointed by the Central Government
- Not more than 5 people nominated by the Central Government
- 1 person representing each state appointed by the Central Government
- 1 person nominated by Central Government representing UT’s.
- 10 persons representing employers nominated by Central Government
- 10 persons representing employees nominated by Central Government
- 2 persons representing the medical profession nominated by Central Government
- 3 members of the parliament (2 from Lok Sabha and 1 from Rajya Sabha).
An employer is liable to pay its own Contribution for every employee and deduct the employees’ Contribution from wages bill and pay these contributions to the ESI within 15 days of the last days of the calendar month in which the contributions are due.
Section 1(5) of the Act, the scheme extended to private medical institutions, educational institutions and to contract and casual employees of the municipal corporation/municipal bodies employing 10 or more persons in certain states/UT’s. In the case of disability Rs 25,000/- per month is given to the person. ESI Return
Items which forms the part while computing salary under this scheme-
- Basic pay, Wages, Salary.
- Allowance/HRA/CCA/Overtime/Officiating allowance/Heat, Gas, Dust allowance/Education allowance/Food and Tea allowance/ Conveyance allowance.
- Wages & salary
- Commission paid to sales staff.
- An allowance made to an employee by the Employer -during the period of his suspension.
- Attendance bonus or incentive or ex-gratia in lieu of attendance bonus or production incentive.
- Honorarium/salary/ remuneration paid to the directors.
- Collection Batta paid to running staff.
- Actual payments made towards leave salary, lay-off compensation, or wages for strike period.
Before setting the ESI wage limit, the Central Government from time to time keeps in mind the inflation rate, economy growth and other factors.
The benefits of this scheme can be categorized in below two categories –
- a) Cash Benefits – Includes Sickness, Maternity, Disablement (Temporary and Permanent), Funeral expenses, Rehabilitation allowance, Vocational Rehabilitation and Medical bonus.
- b) Non- cash benefits through medical care.
Benefits of ESIC
- ESIC Provides medical treatment to registered employees. It not only helps the employees, but it also provides the same facility to the family of the employees.
- ESIC provides unemployment cash benefits to employees.
- It also facilitates women who are in their maternity period. The ESIC grant excludes female employees in that period.
- ESIC gives benefit of certain illnesses to employees regarding many diseases.
- ESIC also provides rehabilitation stipend.
Medical Aid, Maternity Aid, Disablement Benefits, Sickness Benefit, Dependent Benefit, Funeral Expenses and Confinement Expenses
- PAN Card of the business.
- Address proof of business.
- The license obtained under shop and establishment act or factories act.
- Basic documents required as per the nature of entity- Articles of Association, MOA in case of a company and Partnership deed in case of a partnership and Limited Liability partnership.
- Details of all directors, partners, and shareholders.
- Details of all employees along with their salary information.
- Bank details.
On successful registration of the establishment, returns can be filed online by the Employer.
- Once the aforesaid documents are ready, the company can file the details in Form-1.
- A PDF format of the from is available on the website. Fill in the from and submit is to ESIC for registration on the web portal.
- The registration certificate will be issued once all the information and documents verified.
- All Employees registered shall get the ESI card once they submit the form with photographs and details of family members with the department.
The following documents must be maintained regularly: –
- Attendance register.
- Register for Form-6.
- Register of wages
- Register of any accidents on the premises.
- Inspection book
- Monthly challans and returns submitted for ESI
Annual ESI filings
The ESI returns are half-yearly and can be done through their online portal.
To file ESI returns online, one needs to follow these steps-
- One has to click on the official portal- http://www.esic.nic.in/ .
- Press ‘Click’ here to login on the right-hand side of the home page.
- Login to the portal, Click ‘Login’ to enter.
- File monthly, half-yearly and annual return.
- For filing monthly returns, one has to click “FILE MONTHLY RETURNS” tab on the right-side tab. Before filing your monthly Contribution, however, ensure that your employee details are current and updated.
- Pay Contribution and then click on submit.
- After payment of Contribution one can generate the challan for records.
Consequences of Non-payment
Amount deducted from employees’ wages as an employee contribution is deemed to have been entrusted to the Employer. Therefore, the Employer has a higher responsibility to deposit the Contribution with ESI.
Non-payment or delayed payment of the employee’s Contribution deducted from the wages of the employees amounts to ‘Criminal Breach of Trust’ is punishable under IPC sections 406, 409 and also an offence under section 85(b-g) of ESI act. It may attract imprisonment for a period extending up to 2 years and fine up to Rs 5000.
Consequences of Delayed payment
Those Employer who fails to make payment of the Contribution within the limit specified in the regulation shall be required to pay simple interest of 12% per annum for each day of delay or default which is made in payment of Contribution. ESI Return
Penal provisions/Penalties for non-payments or delayed payment
- a) Less than 2 months – 5%
- b) 2-4 months – 10%
- c) 4-6 months – 15%
- d) 6 months and above – 25%
The Employer shall be liable for prosecution as defined in section 85(a) and if the Employer repeats the offence, he will be liable for enhanced punishments for every repetition.
The ESI has been established for the benefit and betterment of workers and the employers must ensure that the purposes are served.