ESI in 2026: ₹21,000 / ₹25,000 ceilings, contribution periods, continuation, rounding and registration on day one

Where ESI stands after the PF change

The EPF wage ceiling went to ₹25,000 on 17 September 2026. The ESI ceiling did not move.

• Ceiling: ₹21,000 a month, and ₹25,000 for persons with disability. Proposals for ₹25,000–₹30,000 have been discussed but not notified.
• Rates: unchanged since 1 July 2019. The employee pays 0.75% and the employer 3.25%, for 4% in total.
• Legal basis: ESI is now governed by Chapter IV of the Code on Social Security 2020 and the Social Security (Central) Rules 2026 (from 8 May 2026).
• ESI (General) Regulations 1950: these continue only under the Code's one-year savings clause, to 20 November 2026. Draft ESI (General) Regulations 2026 were published in July 2026 and are not yet final.

Coverage: establishments and employees

• Establishments. Establishments with 10 or more employees in areas where ESI is implemented. Once covered, an establishment stays covered even if headcount falls.
• Employees. Those whose wages are within the ceiling at the start of a contribution period, or on joining.
• Which wages? Coverage is tested on regular monthly wages. Contributions are then paid on all wages actually paid.

Two points shape the wage figure:

• Overtime counts towards contributions but is ignored for the coverage test.
• The Code's 50% rule. From 21 November 2025 the Code's definition of wages (s.2(88)) applies to ESI. ESIC's portal practice still tests coverage on gross regular wages. Structures that keep basic very low should check both readings.

Contribution periods and benefit periods

Contributions are due by the 15th of the following month, online through the ESIC portal. Late payment attracts interest and damages.

Continuation: a pay rise mid-period does not end coverage

S.O. 2351(E) dated 8 May 2026 reaffirms the rule under the Code. If an employee's wages go above the ceiling after the start of a contribution period, the employee remains covered for the rest of that period, and contributions continue on actual wages. Coverage is re-tested at the start of the next period.

Worked example.

• April–June 2026. Riya earns ₹20,500 a month, so she is covered from April. Contributions: employee 0.75% = ₹153.75, rounded to ₹154; employer 3.25% = ₹666.25, rounded to ₹667.
• July 2026. Her pay rises to ₹23,000. She stays covered to 30 September. Contributions: employee 0.75% = ₹172.50, rounded to ₹173; employer 3.25% = ₹747.50, rounded to ₹748.
• October 2026. A new period begins. Her wages of ₹23,000 exceed ₹21,000, so she is out of ESI from October. Mark her exit in the portal with the appropriate reason.

Overtime variation. Suppose Riya earned ₹20,000 plus ₹3,000 overtime in April. Her coverage test is on ₹20,000, so she is covered. Contributions are on ₹23,000.

Rounding

• ESI Rules (legacy) and ESIC's portal: contributions involving a fraction of a rupee are rounded up to the next higher rupee. That rule is used in the example above.
• Some publishers: describe rounding at 50 paise and above instead.
• In practice: match your payroll to the challan the portal generates. It is the figure you must pay.

Low-wage exemption

Employees whose average daily wage is ₹176 or less pay no employee share. The employer still pays its 3.25%. For a 26-day month the threshold is about ₹4,576. It mainly affects part-time, apprentice-type and piece-rated staff.

Registration: now on or before the date of joining

Under Rule 18 of the Social Security (Central) Rules 2026, as recorded in our dataset:

• An employee must be registered on or before the day he or she is taken into employment. Registration gives the Insurance Number (IP number) and e-Pehchan.
• The full declaration particulars are due within 30 days.

The old practice of registering within 10 days of joining should be replaced by a pre-joining step in the onboarding workflow. An unregistered employee who is injured in the first week is the classic exposure.

Establishment registration now runs through the Codes' common registration (Form I on Shram Suvidha). A certificate is issued within 7 days, or registration is deemed.

Other points

• Employment injury. Report serious injuries immediately, and others within 24 hours (Form 12). Keep the accident book (Form 11).
• Registers. Keep the register of employees and the inspection book for 5 years.
• Half-yearly return (Form 5). It is effectively produced from monthly online filings. Check ESIC circulars once the 2026 Regulations are final.
• Exits. Record the exit date and reason code in the next contribution file.

What employers should do

• To do: Keep the ESI ceiling at ₹21,000 (₹25,000 for PwD) in payroll, and do not copy the PF change.
• To do: Run the coverage re-test for the October 2026 – March 2027 period on 1 October 2026 wages, excluding overtime.
• To do: Keep employees who crossed ₹21,000 after 1 April covered until 30 September, then exit them from October.
• To do: Move ESI employee registration to on or before the date of joining.
• To do: Apply the ₹176/day exemption to the employee share only.
• To do: Reconcile payroll rounding with the ESIC challan every month.
• To do: Watch 20 Nov 2026, when the savings window for the 1950 Regulations ends, and the final ESI (General) Regulations 2026.

Effective dates at a glance

Status note (verify: true). Rates, ceilings and periods are high confidence. The ESI rounding convention (next higher rupee or 50 paise) is medium confidence. The Rule 18 timing is taken from our labour-law dataset's reading of the SS (Central) Rules 2026 and should be checked against the notified text. Whether the 50% add-back affects the ESI coverage test in practice is not yet settled.

General information, not legal advice. Last reviewed 27 Sep 2026.