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ESI Contribution - Gross Earnings

amit_lycos Started The Discussion:

Dear All,

I have a query regarding ESI:

Currently the ESI contribution is deducted on upto Rs.10000/- wages. There is provision in the ESI act that the if an employee is drawing wages less than 10,000/- at the beginning of his ‘contribution period’, his contributions are payable for whole period of contribution period of six months even if in between his wages go above Rs. 10,000/-

My question is, if the wage is increased beyond 10,000/- then on what amount the ESI will be contributed. Is it on the a) old wages b) on 10,000/- or on c) The increased total increased wages.

Pls help.

Regards
Amit

kousalya - Contributing Member
Amit, To my knowledge, I think it is calculated on the increased wages...I will go with your option C..... I am not sure with this......Pl verify this through someothers.

raajz_johnny - Contributing Member
Dear Amit

Greetings!

Contribution

E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Corporation in respect of an employee shall comprise of employer’s contribution and employee’s contribution at a specified rate. The rates are revised from time to time. Currently, the employee’s contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employer’s is 4.75% of the wages paid/payable in respect of the employees in every wage period. Employees in receipt of a daily average wage upto Rs.50/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

Collection of Contribution

An employer is liable to pay his contribution in respect of every employee and deduct employees contribution from wages bill and shall pay these contributions at the above specified rates to the Corporation within 21 days of the last day of the Calendar month in which the contributions fall due. The Corporation has authorized designated branches of the State Bank of India and some other banks to receive the payments on its behalf.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under.

Contribution period Corresponding Cash Benefit period

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following


Regarding ur query : They will deduct the amount for the Increased amount.

Rgds,

John N

arv_r123 - Contributing Member
Hi Amit, my answer is that the contribution will be paid on your new salary whether it is more than 10000/-.

arv_r123 - Contributing Member
ESIC contribution is paid on gross salary and gross salary includes BASIC, DA, HRA and other allowances as well. ESIC is paid on Overtime also...

Anuj Trivedi - Contributing Member
Dear Amit,
It should be on Rs. 10000/-. Question you are asking is not cleared/mentioned in ESI Act or Rules. If inspector asks for the contribution on full wage then you can ask for clarification under the Act.
Regards

Dhanuindian - Contributing Member
Dear Amit,

ESI will be paid on the Gross salary (which includes all components). If the person's old salary was below Rs. 10000/- you have to calculate on the original gross earnings. If the person get increased beyond Rs. 10000/- we need to pay on Rs.10000/- only. not on total increased salary. Having said, we need to continue the contribution total half year. After that he will be exempted from ESI.

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following

Kumar.Gaurav - Contributing Member
Dear CITE HR Team,

As per your mail, ESIC calculated on Gross Salary. With the Effect of Oct-07, If your Gross salary (Included salary compenents) is less than or equal to 10,000 then it's come under ESIC act. If Gross salary falls in contribution period which is mentioned in below. They willl be applicable for that period. After the contribution, he will not be applicable.

Contribution Period:-

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following

Kumar.Gaurav - Contributing Member
Dear CITE HR Team,

As per your mail, ESIC calculated on Gross Salary. With the Effect of Oct-07, If your Gross salary (Included salary compenents) is less than or equal to 10,000 then it's come under ESIC act. If Gross salary falls in contribution period which is mentioned in below. They willl be applicable for that period. After the contribution, he will not be applicable.

Contribution Period:-

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following

suraj_victor - Contributing Member
Dear sir, If a person salary increses over 10,000 then the Esi will be deducted on 10,000 and the for the contribution period for six months Regards Suman Singh

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