The Employees’ State Insurance Corporation (ESIC) is a self-financing social security and health insurance scheme for Indian workers. For MSMEs, ensuring correct ESIC calculation and timely deposits is critical to avoiding penalties and providing health benefits to employees.
In this guide, we break down the latest ESIC contribution rates for 2026.
Who is Eligible for ESIC?
The ESIC scheme applies to factories and establishments with 10 or more employees (20 in some states). However, the deduction is only applicable to employees earning up to ₹21,000 per month in gross wages (₹25,000 for persons with disabilities).
[!NOTE] If an employee’s salary crosses ₹21,000 during the contribution period (April-Sept or Oct-March), they remain in the scheme until the end of that cycle.
ESIC Contribution Rates (2026)
The total ESIC contribution is 4.00% of the gross wages, shared between the employer and the employee.
ESIC Deduction Table
| Party | Contribution Rate | Calculated On |
|---|---|---|
| Employer Share | 3.25% | Gross Wages |
| Employee Share | 0.75% | Gross Wages |
| Total Contribution | 4.00% | Gross Wages |
Example Calculation
Let’s assume an employee has a Gross Wage of ₹18,000 per month.
- Employee Deduction: ₹18,000 × 0.75% = ₹135
- Employer Contribution: ₹18,000 × 3.25% = ₹585
- Total Paid to ESIC: ₹135 + ₹585 = ₹720 per month
[!IMPORTANT] Employees earning less than ₹137 per day are exempted from paying their 0.75% share. However, the employer must still pay the 3.25% share.
Automate ESIC with AccoNova
Calculating ESIC manually, especially keeping track of employees moving in and out of the ₹21,000 threshold across contribution periods, is extremely error-prone.
With AccoNova, our zero-touch payroll engine automatically tracks the ₹21,000 ceiling, computes exact deductions, and generates ESIC-ready return files instantly.