ESI Return Filing

ESIC Return must be filed every month to avoid interest and penalty. Get your ESIC Return Filed on time while sitting at your office. Our dedicated team will assist you in Computation and filing of ESIC Return across India at a very affordable price. We extend our support from computation to filing of Return through 100% online process.

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ESIC Return Filing

As per THE EMPLOYEES’ STATE INSURANCE ACT, 1948, any establishment having 10 or more Employee is liable to take a mandatory registration under ESIC. ESIC (Employee State Insurance Corporation) provides benefits to employees and their dependents in the event of their sickness, death, disablement, injury, etc. Its also cover a major network of clinics & hospitals having expertise in critical medical ailments. The ESIC scheme is beneficial to all Employee whose monthly income is less than Rs. 21000 per month. Under the Scheme, Employee has to contribute 0.65% of his monthly salary and Employer have to contribute 3.25% of the monthly salary of the Employee.

Returns filing under ESIC

Monthly Return

Every Employer who is registered under ESIC have to pay a monthly contribution and file Return by the 15th of the next month. Even if there is no employee contribution during the month, the Employer needs to submit a NIL Declaration to ESIC Department. Non-Filing or Late Filing of Return may attract legal consequences and penalty.

Half Yearly Return

Under ESIC a half-yearly Return need to file for the period of every six months. The due date for the period of 1st April to 30th September is 12th November and for the period of 1st October to 31st March is 12th May every year. Non-Filing or Late Filing of Return may attract legal consequences and penalty.

Documents (3)

Process for Filing of ESIC Return

Step 1 – Preparation of Payroll

Preparation of Payroll involves a series of basic calculations to determine each Employee’s basic pay as well as deductions for PF, ESIC, PT, TDS etc. Once the ESIC contribution is determined, we can move further for return filing and payment.

Step 2 – Computation of ESIC Liability

Once Payroll is completed, we need to make a computation fo ESIC Payable to ESIC Department. The calculation includes the Employee contribution and Employer contribution both.

Step 3 – Generate ESIC Number of Employee

A insurance number need to generate for the Employee before payment of contribution and submission of Return to ESIC Department. The Insurance Number must be generated within ten days of joining of Employee.

Step 4 – Payment of Contribution and Filing of Return

Once Insurance Number is generated for all employee, we have to pay the contribution and file the monthly return by the 15th of the next month.

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Consequences of Non-Payment or Late Payment of Contribution

1. ESIC Regulation 31 A and 31 C (Interest and damages on late payment)

An employer who fails to pay the esic contribution within the due date, shall be liable to pay 12 % per annum interest. The ESI Corporation may also levy and recover damages at the following rates. However, the damages may not exceed the amount of contribution payable for default or delay in payment of the contribution.

If delay in payment is less then Two Months the Damages will be charged @ 5% per annum.
If delay in payment is between Two Months to Four Months , the damages will be charged @ 10% per annum.
If delay in payment is between Four Months to Six Months , the damages will be charged @ 15% per annum.
If delay in payment is above than Six months, the damages will be charged @ 25% per annum.

2. Section 85(a): Penalty on the failure of contribution payment

Amount deducted from Employee’s 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 of contribution may attract imprisonment for a period extending up to 2 years and a fine up to Rs. 5,000.

3. Section 85(b) to (g): Penalty for non-compliance with other requirements

If an employer deducts the total contribution (employer & employee contribution) from the salary of the employee, reduce the wages of the employee for ESIC Reporting purpose, makes a false return, prevent any ESIC Inspector in discharge his duties etc. He may attract the fine up to Rs. 5,000 and imprisonment up to one year.

4. Section 85-A: Punishment for repeating an offence

If an employer is convicted by a court for an offence and punished under THE EMPLOYEES’ STATE INSURANCE ACT, 1948. And he/she commits the same offence again. He/she will be punishable with the imprisonment for a term which may extend up to two years and with a fine of Rs. 5000.

5. Section 85 B: Power of ESI Corporation to recover damages

Under Section 85-B state that if an employer neither pays the payable contribution within the prescribed time nor pay the contribution later. The department may recover damages from the employers by way of penalty and arrear. However, such penalties may not exceed the amount of contribution payable or paid. Furthermore, the Employer shall be given a reasonable opportunity of being heard before levying the penalty.

6. Section 85 C: Court’s power to direct payment of contribution/ damages

If an employer is convicted by Court for non-payment of contribution and ordered to file the returns and pay the dues. And the employer still fails to pay the said contribution and submit the returns within the given time. The Court may deem it as a further offence and punish the employer with imprisonment and a fine up to Rs. 1000 every day of default.

7. Section 86-A: Offences by companies

If any company commits an offence under ESI Act, every person who was in-charge and responsible for conducting the business of the company at the time of the offence committed shall be assumed to be guilty and shall be liable to be proceeded against and punished accordingly.

8. Penal Action under IPC Section(s) 405/406/409

Under Section 405/406/409 of Indian Penal Code 1860, if an employer deducts employees contribution from their wages and not deposit the said contribution to ESIC, he commits an offence of Criminal Breach of Trust and punishable with fine or imprisonment, which may extend to 3 years.

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FREQUENTLY ASKED QUESTIONS

How to compute ESI contribution?

ESIC contribution is calculated on the gross wages of an employee for the month. For example, if an employee is getting Rs. 20000 per month salary, then the employee contribution will be 0.65% of 20000, i.e. Rs. 130 and Employer contribution will be 3.25% of 20000, i.e. Rs 650.

Do we need to pay contribution on Overtime Wages?

Overtime for an employee is not a regular and continuous payment. It is an occasional payment. If overtime is also taken for wage limit during the computation of contribution, there are chances that employee may be out of coverage (cross the threshold limit of Rs 21000) for the overtime month. And again he will come under the cover in the next month where no overtime did by the employee. Hence there is no requirement to pay contribution on overtime wages.

What is the benefit of ESIC after the retirement of an employee?

Any Insured person who retires under a voluntary Retirement Scheme or takes premature retirement, can take the medical benefit for himself and his spouse after making payment of a nominal contribution of Rs. 120 per year to ESIC. However, the insured person should be a member of ESIC for not less than five years before he takes retirement.

If the salary increases the threshold limit during the year, what will the effect?

If the gross salary of an employee increases the threshold limit of 21000, the employee will be exempted from deduction of ESIC Contribution. However, the contribution will be deducted until the end of the contribution period, i.e. April – September and October – March.
For example, if the employee salary increases to 25000 in May, he must have to contribute the ESIC till September. After September there will be no requirement to contribute to ESIC

Apart from the Return, what are the records need to maintain for ESI Purpose?

Apart from return filing, the employer have to maintain below records.

i. Accident Register in Form 11
ii. Inspection Book
iii. Muster Roll
iv. Wage Record
iv. Books of Account maintained under other law.
v. The immediate employer is also supposed to maintain the Employees’ Register for the employees deployed to the principal employer.

What will happen if IP Number is allotted after ten days of joining of the employee ?

As per section 10B, 11 & 12 of the Employees State Insurance Regulation. Registration of an employee is required to be done within ten days from the date of appointment. Where the Date of Registration of an employee is more than ten days from the date of appointment, the matter may be forwarded to the concerned RO/SRO for examination/verification. Until then, the date of registration shall be treated as the date of Appointment.

What are the benefits to an employer covered under the Scheme?

Below are the benefits of the employer registered under ESIC –

The employer is relieved from providing medical care to the employee and their family.
In case of any accident, the employer is relieved from compensation under Workmen’s Compensation Act.
Employer’s ESIC Contribution payment is exempted from Income Tax Payment. However, it may be disallowed in case not paid on time.
The employer is also relieved from the payment of Maternity Benefit to woman employees under the State Maternity Benefit Act.

Do I need to file a separate ESIC return of different branch location?

Yes, we need to allot a sub-code of sub-unit, branch office, sales office or Registered Office of a covered factory or Establishment located in the same state or different state. We also have to file a separate return of each sub-code regularly.

Can we revise the ESIC Return once filed?

No, there is no provision for revision of ESIC Contribution and return; however, we can pay arrear contribution of employees if required. Authorised capital can be increased at any point of time in future by following necessary steps as prescribed in the Companies Act 2013.

Can an establishment go out of coverage if the number of employee therein goes down to the minimum limit prescribed?

Once a factory or Establishment is covered under the ESIC Act, it continues to be covered notwithstanding the fact that the number of employees therein at any time falls below the required limit or there is a change in the manufacturing activity.