The Scheme is primarily funded by contributions raised from Insured Employees and their employers in the implemented areas as a small but specified percentage of wages payable to such employees.
Employees in receipt of an average daily wage of Rs. 40/- or less are exempted from payment of their share of contribution but are entitled to all social security benefits under Scheme.
The rate of contribution are
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Employees' contribution - 1.75 % of wages
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Employers' contribution - 4.75 % of wages
The State Governments as per provisions of the Act, contribute 12.5 percent of expenditure on medical care on ESI beneficiaries in their respective States within the per capital
ceiling. Any expenditure over and above this ceiling is borne entirely by the State Governments.
The contributions paid by employees and employers are deposited in a common pool known as the ESI Fund that is utilized for payment of cash benefits to the insured persons and their dependants, as well as, for providing medical facilities to the beneficiaries. The administrative and other expenses of the Corporation are also met from this fund.
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