ESI Applicability, Requirement, Contribution, Benefits, Claiming procedure and taxability ?

Introduction:

The Employees' State Insurance (ESI) is a self-financing social security and health insurance scheme for Indian workers. The scheme provides medical and cash benefits to workers and their dependents in case of sickness, maternity, and employment injury. In this article, we will discuss the applicability, requirements,contributions, benefits & coverage, claiming procedures and taxability of the ESI scheme.

Applicability:

The ESI scheme is applicable to establishments with 10 or more employees in India. The scheme is applicable to all employees earning wages up to Rs. 21,000 per month. The employees covered under the scheme are entitled to medical benefits, sickness benefits, maternity benefits, and disability benefits.

Requirements:

The following are the requirements for the ESI scheme:

Registration of the establishment under the ESI Act.
Submission of the employee's details and salary information to the ESI Corporation.
Payment of the ESI contribution by the employer and the employee.

Contributions:

The ESI contribution is paid by the employer and the employee. The current rate of contribution is 4% of the employee's wages, out of which 3.25% is contributed by the employer and 0.75% is contributed by the employee.

Benefits & Coverage:

The ESI scheme provides the following benefits to the employees:

Medical benefits: The employees covered under the scheme are entitled to medical treatment for themselves and their dependents.
Sickness benefits: The employees covered under the scheme are entitled to cash benefits in case of sickness.
Maternity benefits: The female employees covered under the scheme are entitled to cash benefits in case of maternity.
Disability benefits: The employees covered under the scheme are entitled to cash benefits in case of permanent or temporary disability.
Funeral expenses: The employees covered under the scheme are entitled to funeral expenses.

Claiming Procedures:

The claiming procedures for the ESI scheme are as follows:

The employee has to inform the employer about the sickness, maternity, or injury.
The employer has to issue a certificate of employment to the employee.
The employee has to submit the certificate of employment and the medical certificate to the ESI Corporation.
The ESI Corporation will process the claim and provide the benefits to the employee.

Visit https://www.esic.gov.in/ to know about claiming procedure.

Taxability:

The contributions made by employers towards the ESI scheme are tax-deductible as a business expense under Section 37 of the Income Tax Act. However, the contributions made by employees towards the scheme are not tax-deductible i.e., employee cannot claim any deduction for contribution being made.

The cash benefits received by employees under the ESI scheme are not considered as income and are therefore not taxable. However, if an employee receives any other income while receiving ESI benefits, such income will be taxable as per the Income Tax Act.

Conclusion:

The ESI scheme is a self-financing social security and health insurance scheme for Indian workers. The scheme provides medical

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