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Watch Out!Payroll does not offer initial registration for ESI. Follow these steps to register on the ESIC Portal.If ESI is enabled for your organization, Payroll automatically deducts the ESI amount from all your employees’ salary, whoever is qualified for it.
  • ESI cannot be disabled for specific employees if they meet the qualification criteria for ESI.
  • If an employee’s salary increases above the threshold, the ESI contribution does not stop immediately. You can stop ESI only in April or October of every year.

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Requirements and Exceptions

  • ESI Registration for Employees:
ESI Corporation requires employers to register their employees within 10 days of their date of appointment. If ESI registration is done after these 10 days, a show cause notice is automatically sent to the employer asking for relevant documents. If an employer fails to provide this documentation, the date of registration is deemed as the date of appointment. Know more about the ESI circular.
  • ESI and Conveyance Allowance:
The Supreme Court of India passed an order dated 8 March 2021 that conveyance allowance or travel allowance do not fall under the definition of ESI wages. If you use a custom salary structure that includes an allowance called Conveyance Allowance, you must exempt it from ESI contributions and for computing the ceiling limit of ₹ 21,000 per month.