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CONTRIBUTION

How is the Scheme financed ?

The Scheme is funded by the contributions raised from the employees and employers of the covered employers. The rates of contribution, as a percentage of wages paid / payable to the employees, are as under:

Employees’ contribution – 1.75% of the wages.

Employers’ contribution – 4.75% of the wages.

Thus, in respect of each of the employee, 6.50% of the wages (including overtime allowance) is to be paid as contribution to Scheme. The Scheme does not receive any budgetary support from the Government. The State governments, as per the provisions of the Act, contribute 12.5% of expenditure on medical care on ESI beneficiaries in their respective States within the per capita ceiling

In respect of IPs whose average is less than Rs.100/- per month, the employees exempted from payment of contribution, only the employers share of 4.5% needs to be remitted.