Payroll still tests ESI on “gross under ₹21,000.” After the Code wage definition, special allowance gets pulled back into wages. Three people who were “out” are suddenly in - and a Madhya Pradesh plant that was outside notified ESI areas became covered from 1 October 2026. The challan does not care that the Excel formula is vintage.
Ceiling unchanged. Definition changed.
ESI coverage still uses a monthly wage ceiling of ₹21,000. Contribution rates remain 0.75% employee / 3.25% employer unless a later notification revises them. The shock is elsewhere: “wages” now means Code wages - mainly basic, dearness allowance and retaining allowance, with the 50% add-back when excluded allowances exceed half of remuneration.
A person whose gross looked safely above ₹21,000 can still fall under the ceiling once you strip and re-tag components correctly. The reverse also happens when teams still test gross instead of Code wages.
Geography moved in October 2026
From 1 October 2026, ESI contributions became payable in additional areas of Madhya Pradesh (including Niwari and previously partial districts) and across remaining non-implemented / partially implemented areas of Gujarat. If your location master still says “not ESI notified,” rebuild it before November remittance.
What payroll must recompute
Eligibility engine
Test Code wages against ₹21,000 - not CTC gross, not “basic only” without add-back.
Location coverage
Mark MP / Gujarat expansions and hazardous-process mandates as first-class site attributes.
PF vs ESI bases
EPF now has a ₹25,000 ceiling story; ESI stays at ₹21,000 on Code wages. Do not share one formula blindly. See EPF ceiling ₹25,000.
Evidence
Keep who was added or removed and why - inspectors ask for the wage sheet that produced the challan.
ESI mistakes rarely look dramatic in one month. They look expensive when six months of wrong coverage meet an inspection. Fix the wage map and the location map together.
The way forward
Rebuild component tags, re-run eligibility for every active employee, and update site coverage for MP and Gujarat. Keep ESI on the same statutory wage engine as PF inside Bynarize payroll. For the wider mistake list, read PF, ESI & professional tax.
Practical operations guidance, not legal advice. Confirm coverage notifications for each site with counsel or your ESI consultant.
Is your ESI list still on gross pay?
Move eligibility onto Code wages and location truth in one payroll run.
