The ESI deduction is always on the complete salary, who are drawing Rs. 15,000/- or less. It is not necessary for the management to deduct and pay the esi contribution for the employee who are drawing more than Rs. 15,000/- per month as wages/ salary. The employee share of contribution of esi is @ 1.75% and employer share of contribution of esi is @ 4.75%.
I hope that the above will satisfy your query.
ESI calculation as per ESIC rules of act 1948
WAGES FOR ESI CONTRIBUTIONS
To be deemed as wages
• Basic pay
• Dearness allowance
• House rent allowance
• City compensatory allowance
• Overtime wages (but not to be taken into account for determining the coverage of an employee)
• Payment for day of rest
• Production incentive
• Bonus other than statutory bonus
• Night shift allowance
• Heat, Gas & Dust allowance
• Payment for unsubstituted holidays
• Meal/food allowance
• Suspension allowance
• Lay off compensation
• Children education allowance (not being reimbursement for actual tuition fee)
NOT to be deemed as wages
• Contribution paid by the employer to any pension/provident fund or under ESI Act.
• Sum paid to defray special expenses entailed by the nature of employment – Daily allowance paid for the
period spent on tour.
• Gratuity payable on discharge.
• Pay in lieu of notice of retrenchment compensation
• Benefits paid under the ESI Scheme.
• Encashment of leave
• Payment of Inam which does not form part of the terms of employment.
• Washing allowance for livery
• Conveyance Amount towards reimbursement for duty related journey
so as per act now prepare ESI-wages list of employee where it is needed at the time of filling FORM 6 for half-yearly fillings and form 7 pertaining to employee esi wages / days applicable
Employer’s and Employee’s contribution to ESI:-
The employee’s contribution is 1.75% of wages, rounded to next higher rupee. Employer’s contribution is 4.75% of wages payable to each employee, rounded off to next higher rupee.
The contribution has to be paid within 21 days from close of the month. If the contribution is not paid in time, interest @ 12% is payable.
Best of luck
Rule 51 of The Employees' State Insurance (Central)Rules,1950 , which substituted by G.S.R 316, dted 26 th August,2004 and as corrected by GSR 58 dated 19 th January 2005 provides for the Rates of Contribution -The amount of contribution for a wage period shall be in respect of ,-
Employer's contribution-, a sum (rounded to the next higher rupee) equal to 4.75% of the wages payable to an employee ;
Employees's contribution-a sum (rounded to the next higher rupee) equal to 1.75% of the wages payable to an employee
Rule-50 provides for Wage limit for coverage of an employee under the Act is Rs. 15000/- wef 1/5/2010
Advocate & labour law Consultant
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One of my friends is working with a large group of hospital in the South. I would like to know if any ESIC exemption is allowed for Private Hospitals. Currently the nursing staff have a gross salary of below 15,000/- however we are not contribution to ESIC. This has been the principle that was followed even before I have joined this organisation. We are presently employing over 50 Employees in this salary range.
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