ESIC (the Employees' State Insurance scheme) gives covered employees medical care and cash benefits for sickness, maternity, disablement and dependants' support after death. Employers and employees both contribute a percentage of wages every month.
A lot of 2026 content suggests that ESIC changed this year. The rates did not. They have been the same since July 2019. What did change is the legal framework: since 21 November 2025, ESI sits under the Code on Social Security, 2020, and the Code's definition of wages applies.
ESIC Contribution Rates in 2026
| Who pays | Rate (of wages) |
|---|---|
| Employer | 3.25% |
| Employee | 0.75% |
| Total | 4% |
The employer deposits both shares. The employee's 0.75% is deducted from their salary.
The ₹21,000 Wage Ceiling
Employees whose monthly wages are up to ₹21,000 are covered. For persons with disabilities, the limit is ₹25,000.
The ceiling has not changed since 2017. Some websites mention a revision to ₹30,000. That is a proposal, not a notified change. Use the figure in the official notifications, and check the ESIC portal before each financial year.
Two points are easy to miss:
- Do not confuse it with PF. The PF wage ceiling became ₹25,000 on 17 September 2026. The ESIC ceiling is still ₹21,000. So an employee with wages of ₹23,000 is inside PF's mandatory range but outside ESIC.
- Coverage continues through the period. An employee already covered generally stays insured for the benefit period even if wages rise temporarily above the ceiling. Check the contribution and benefit period rules with ESIC for your case.
Who Must Register
- Establishments with 10 or more employees. The threshold is 20 in some states. Register within 15 days of crossing it.
- Employees with wages up to ₹21,000 a month.
- Low earners: employees whose average daily wage is up to ₹176 pay no employee share, but the employer still pays 3.25%.
How to Calculate ESIC: Examples in INR
Contribution = wages × rate. Figures below are unrounded; your payroll software rounds as ESIC requires.
| Monthly wages | Employee 0.75% | Employer 3.25% | Total 4% |
|---|---|---|---|
| ₹12,000 | ₹90 | ₹390 | ₹480 |
| ₹15,000 | ₹112.50 | ₹487.50 | ₹600 |
| ₹18,000 | ₹135 | ₹585 | ₹720 |
| ₹21,000 | ₹157.50 | ₹682.50 | ₹840 |
Example: A support engineer earns ₹18,000 a month in wages. The employee pays ₹135 and the employer pays ₹585, so ₹720 is deposited with ESIC. The employee's take-home falls by ₹135.
The Wage Definition: What Counts
From 21 November 2025, the Code on Social Security's definition of wages applies to ESI. Under it, listed exclusions such as HRA, conveyance and overtime are capped at 50% of total remuneration. Anything above that is added back to wages.
The ceiling itself has not moved, but the 50% rule can change what counts as an employee's wages. A salary structure with a low basic and a large special allowance can end up with a different ESIC base than before. Ask your CA or payroll consultant how your own structure is treated. For a worked example of the same rule, see our PF calculation guide.
What IT Companies Should Check
- Headcount. Once you reach 10 employees (20 in some states), register within 15 days.
- Employees near the ceiling. Freshers, interns converted to full-time roles and support staff are most likely to be covered.
- Different thresholds for PF and ESIC. Keep a separate list for each, because the ceilings are now ₹25,000 and ₹21,000.
- Salary structure. Re-check allowances against the 50% rule.
- Due date. Both shares must reach ESIC by the 15th of the following month.
Where TrackPM Fits
Accurate ESIC deductions depend on accurate attendance and leave, because wages follow days worked. TrackPM's office management keeps attendance and leave records, and its payroll module links salary to them. For employees marked ESI-applicable, payroll calculates the 0.75% employee and 3.25% employer shares against the ESI wage limit set in your company's ESI settings (₹21,000 by default).
Frequently Asked Questions
What are the ESIC contribution rates in 2026?
The employer pays 3.25% and the employee pays 0.75% of wages, 4% in total. These rates have been unchanged since July 2019.
What is the ESIC wage ceiling in 2026?
₹21,000 a month, or ₹25,000 for persons with disabilities. A proposal to raise it to ₹30,000 has been reported but not notified.
Who must register for ESIC?
Establishments with 10 or more employees, or 20 in some states, must register within 15 days of crossing the threshold. Covered employees are those with wages up to ₹21,000 a month.
Do employees with very low wages pay ESIC?
Employees whose average daily wage is up to ₹176 pay no employee contribution. The employer still pays 3.25%.
When is ESIC due each month?
Both the employer's and employee's contributions must be deposited by the 15th of the following month.
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