ESI Registration

ESI or Employee State Insurance is a self-financing social security scheme in India. ESI was originally applicable for factories that employed 10 or more persons. Subsequently, the coverage of ESI scheme has been expanded. Currently, any factory or establishment employing 10 or more persons drawing wages of upto Rs.21,000 per month must obtain ESIC Registration.

Definition of Factory under ESI Act

Under ESI, a factory is defined as any premises, including the precincts thereof, where ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and, in any part of which, a manufacturing process is being carried on with or without the aid of power.

If within the same premises of a factory a number of departments are situated and the departments are engaged in the work in connection with or incidental to a manufacturing process of the factory, they would all form part of the factor.

Also, the definition of factory under ESI includes a seasonal factory which works for a period not exceeding seven months in a year and is engaged during that period in any process of blending, packing or repackaging of tea or coffee or other manufacturing process notified by the Central Government.

The definition of factory under ESI does not include a mine, subject to operation of the Mines Act, 2952 or a railway running shed.

In summary, as long as the number of persons working on the factory premises is ten or more, the premises is a factory irrespective of the consideration whether they are paid wages or not. Also, all persons working in a factory need not be employed for the manufacturing process.

Definition of Establishments under ESI Act

Under the ESI Act, an establishment is an organised body of men or women or an institution, not necessarily confined to a premises or place. Hence, as long as an establishment employs 20 or more persons, it would be required to obtain ESI registration. Establishments employing less than 20 employees drawing less than Rs.21,000 per month as wages will not be required to obtain ESI registration.

Shops must also be registered under the ESI Act. The Supreme Court has held that ESI Act is a beneficial legislation and hence the word shop has to be construed in a liberal sense. Further, The Supreme Court has held that a ‘shop’ includes the premises where economic activities leading to sale or purchase are carried on. Thus, the essential ingredient for determining a shop is that services are rendered to the customer. Hence, service providers like advertisement agencies, liaison office, consultancy service providers, real estate service providers and more will be required to obtain ESI registration, if other criteria’s are fulfilled.

However, while considering the coverage of shops, educational institutions, hospitals, dispensaries, offices of Auditors and Solicitors, Chartered Accountants and private commercial hospitals are excluded.

Number of Employees Required for ESI Registration

To determine the coverage of a factory or an establishment under ESI, the following categories of persons are to be counted in addition to the persons directly employed:

1. Persons on the roll of a factory, who are on leave with or without wages.
2. A substitute or badli worker employed for wages.
3. Directors who are on the pay roll of a company.
4. Persons drawing over Rs.21000 per month as wages, but not coverable otherwise.
5. Persons employed by, or through a contractor and working under the direct supervision of the employer.

While counting the number of employees, apprentices or trainees undergoing training and learning the trade under an approved scheme will not be counted for determining the covered of a manufacturing unit or an establishment.

BENEFITS OF ESIC REGISTRATION

ESI Registration provides monetary and medical benefits to employees in case of sickness, maternity and employment injury and to make provisions for related matters.

Some of the benefits of ESI Registration are :

• Sickness benefits at the rate of 70% (in the form of salary), in case of any certified illness certified and which lasts for a maximum of 91 days in any year
• Medical Benefits to an employee and his family members
• Maternity Benefit to the women who are pregnant (paid leaves)
• If the death of the employee happens while on work – 90% of the salary is given to his dependents every month after the death of the employee
• Same as above in case of disability of the employee
• Funeral expenses
• Old age care medical expenses

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ESI Contribution of Employer and Employees

Every month, employers are required to contribute 3.25 % and employee contributes 0.75% of the wages payable. Total ESI contribution i.e. 4% deposited to the ESIC fund.

Total ESI contribution is 4%

ESI contribution rates for employee and employers are as below:

ESI returns to be filed by the employer

All the business entities having an ESIC Registration need to do regular ESI return filing.

The following below are ESI returns as follows:

ESI REGISTRATION PROCESS

1. Upload the Necessary Documents on our web portal.
2. Choose the appropriate Package and Pay online with various payments modes available.

3. On placing the order, your application will be assigned to one of our dedicated professionals.
4. Our professional will fill up the required ESI registration form for the employee.

5. Upon verification, the ESI registration form will be submitted.
6. After ESI account is created, the ESI registration certificate will be sent to the applicant.  

DOCUMENTS REQUIRED FOR ESI REGISTRATION

• Registration Certificate GST Certificate, Shopex, COI
• Address proof Electricity Bill, Rent agreement, Telephone Bill, Water bill.

• PAN card of business entity and all partners/directors.
• Cancelled cheque Cancelled cheque is required for authentication of bank details.

• Digital Signature of anyone Director. (Pen drive) DSC will be affixed on the application form.
• Additional Document In case of Company - COI/MOA, In case of partnership firm - Partnership deed.

PACKAGES

-ESI/PF Return Filling Upto 10      Employees

(If you need any guidance related to ESIC registration, feel free to contact our business advisor at 8808226868)

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