Sections 28-29 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 28 says every employee in an establishment to which Chapter IV applies shall be insured, and defines the "Insured Person". Section 29 says contribution has two halves, the employer's and the employee's, payable at rates the Central Government prescribes for each wage period, and ordinarily due on the last day of that wage period.
Every employee in a Chapter IV establishment shall be insured, electronically or otherwise, as the Central Government prescribes (s.28(1)). An employee for whom contributions are or were payable and who is entitled to a benefit is an "Insured Person" (s.28(2)). Contribution has an employer's share and an employee's share, both paid to the Corporation at prescribed rates (s.29(1)-(2)). Contribution for a wage period ordinarily falls due on the last day of the wage period (s.29(4)). Rule 19 of the Central Rules, 2026 prints the rates: three and one-fourth per cent (employer) and three-fourth per cent (employee) of wages payable.
Section 28: every employee insured
Monthly ESI remittance is where these two sections show up for an employer, and it is the work our ESI and PF return filing service covers.
Section 28(1) is short and strong: subject to the Code, every employee in an establishment to which this Chapter applies shall be insured in the manner prescribed by the Central Government, "whether electronically or otherwise". Which establishments fall under Chapter IV depends on section 1 and the applicable notification; see sections 1 and 164 and, for registering, section 3.
Section 28(2) then defines "Insured Person": an employee, whether insured or insurable, in respect of whom contributions are or were payable and who is, because of that, entitled to any benefit under the Chapter. The definition is wide. It covers a person currently paid, and one for whom contribution was payable earlier, if a benefit follows.
How insurance happens in practice: rule 18
Rule 18 of the Central Rules, 2026 gives the procedure for the Central Government's prescription:
- the employer registers the person before or on the day of taking him into employment, unless already registered under Chapter IV, by entering his name and Aadhaar number and other details on the specified portal;
- an insurance number is allotted automatically on registration and remains valid for thirty days;
- within that period the employer enters the updated particulars of the employee and family on the declaration form on the portal, and an Aadhaar-linked identity card is provided to the Insured Person and dependent family members, electronically or otherwise;
- the number becomes invalid if the declaration form is not updated within thirty days or if the Aadhaar number is returned unauthenticated;
- the employer answers for the correctness of the employee's particulars, and the Insured Person for the correctness of the family particulars he gives the employer;
- the insurance number is used for filing contributions and for claiming benefits.
These are Central Rules. Where a State Government is the appropriate Government, the State's own rules apply to that establishment.
Section 29: the two halves of contribution
| Sub-section | Rule |
|---|---|
| 29(1) | Contribution has two parts: employer's contribution and employee's contribution, paid to the Corporation |
| 29(2) | Both are paid at rates prescribed by the Central Government |
| 29(3) | The wage period, as specified in the regulations, is the unit for which contribution is payable |
| 29(4) | Contribution for a wage period ordinarily falls due on the last day of the wage period; for part-period employment, or employment under two or more employers in the same wage period, due dates are as specified in the regulations |
The Code itself states no rate. It leaves that to the Central Government. The Central Rules, 2026 fill the gap in rule 19:
| Share | Rate (rule 19(1)) | Base |
|---|---|---|
| Employer's contribution | Three and one-fourth per cent | Wages payable to the employee, rounded to the next higher rupee |
| Employee's contribution | Three-fourth per cent | Wages payable to the employee, rounded to the next higher rupee |
"Wages" here carries the meaning in the Code's definitions; read our article on section 2 definitions of wages and wage ceiling. We do not state a wage ceiling here, because the Code leaves it to notification and we only quote figures printed in the Code or Rules.
Employees with disability
Rule 19(2) says that for an employee who is a person with disability under the Rights of Persons with Disabilities Act, 2016 or the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999, the employer does not have to pay the employer's share for up to three years, or such period as the Central Government specifies, from the start of the contribution period. Rule 19(3) says the Central Government reimburses that employer's share to the Corporation. The employee's share is not mentioned in that concession.
Due date and part periods
Section 29(4) sets the general rule: the contribution for a wage period is due on the last day of the wage period. When someone works only part of the period, or for two employers in the same wage period, the regulations decide the due dates. We have not relied on regulations that are not in the Code or Rules text, so check the current ESI regulations for the date of actual payment and any grace arrangement. Late payment attracts interest and damages under sections 127 and 128; see sections 127 and 128.
Employer duties that follow
The next section, section 31, makes the employer liable for both shares, including for employees engaged through a contractor, and allows deduction of only the employee's share from wages. We cover it in the next article. Payroll teams can build the monthly contribution check into their routine so the shares are computed, rounded and remitted on time.
Need help with ESI insurance numbers and contributions?
Getting every new joiner onto the portal before or on the first day, and the contribution right every wage period, is routine work that is easy to get wrong at scale. If you would like support with ESI and PF return filing, including contribution calculation and remittance checks, our team can help set it up.
Key takeaways
- Every employee in a Chapter IV establishment must be insured (s.28(1)).
- An Insured Person is an employee for whom contributions are or were payable and who is entitled to a benefit (s.28(2)).
- Contribution has an employer's and an employee's share; the Code leaves rates to the Central Government (s.29).
- Rule 19 prints 3.25 per cent (employer) and 0.75 per cent (employee) of wages payable, rounded to the next higher rupee.
- Contribution ordinarily falls due on the last day of the wage period (s.29(4)).
- Under rule 18, register the person on the portal before or on the day of joining; the insurance number is valid for thirty days until the declaration form is updated.
Read next
- Sections 25, 26 and 27: ESI Fund and its expenditure
- Sections 30 and 31: Administrative expenses and payment of contributions
- ESI contribution rates, employer 3.25%, employee 0.75%
- How to generate an ESI challan and pay online
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.