Dear Siva, you can exempt the Conveyance part from the ESI Contribution. CONVEYANCE ALLOWANCE Conveyance allowance is paid to the employee to compensate the expenses incurred by the employees on travelling etc. The travelling allowance or value of any travelling concession is also being paid to the employees in the nature of conveyance allowance, which is neither wages for the purpose of coverage of employees under Sec.2(9), nor it is treated as wages for the payment of contribution under Section 2(22) of the ESI Act. In the case M/s.Hyderabad Asbestos Cement Products Vs. ESIC, Punjab & Haryana High Court, Chandigarh as well in the case of M/s.Harihar Polyfibres, the Supreme Court have held that conveyance allowance is not wage under Section 2(22) of the ESI Act. (Earlier instructions were issued by this office vide No.P.11/13/97-Ins.IV dated 27.1.97.)
From India, Delhi
As per Sec. 90 (Exemption of factories or establishments belonging to government or any local authority) The appropriate government may, after consultation with the Corporation, by notification in the Official Gazette and subject to such conditions as may be specified in the notification, exempt any factory or establishment belonging to [* * *] any local authority, from the operation of the Act], if the employees in any such factory or establishment are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act. Can any body tell what is the procedure for seeking exemption under Section 90 as quoted above.
From India, New Delhi
Mr. Rajiv Verma has clarified the matter quoting the relevant section of the ESI Act and ruling by the apex court in this regard. Therefore, there seems to be any room for much controversy in this regard. Excemption: An employee who is in receipt of salary not less than Rs 10000 is exempted from ESI. However, the composition of his salary is also to be considered for deciding whether he is out of coverage or not. As such an employee with Rs 9900 as salary (Basic + DA + HRA+ Special Pay etc) and getting Rs 101 as Travelling Allowance as part of salary will get Rs 10001 as salary but will not be exempted from ESI and is subject to deduction and contribution towards ESI at the prescribed rates (1.75 % and 4.75%) on Rs 9900. If the salary of a covered employee increases and becomes more than Rs 10000 he will become out of cover of ESI but only after the current contribution period is over. Therefore, if the salary crosses Rs 10000 in May he has to contribute till Sept. Under EPF an employee once covered will continue to be covered irrespective of any salary increase. An establishment may be declared as exempted from the operation of the Act when the ESI Corporation is satisfied that the employees of the company are in receipt of better facilities than that provided by the ESIC. The duty to show this lies with the company. Like Provident Funs remittance, separate challans are available for remittance of ESI contributions. Regards, Madhu.T.K
From India, Kannur
Madhu, can u tell me the procedure for seeking exemption, if we have better facilities than provided in ESI.
From India, New Delhi
I do not find any specific procedure either in Employees State Insurance (General) Regulations, 1950 or ESI (Central)Rules for claiming exemption u/s 90 or 91 of the ESI Act, 1948. Therefore, it is to be construed that a formal submission to the Regional Director, ESIC of the medical and other benefits being given to the employees with relevant documents in support of the same has to be made to start with. The Corporation will then make a detailed inquiry into the matter and if satisfy themselves that your company is providing better facilities, then naturally will grant exemption. For more details and clarity please contact the ESI Inspector of the local office of your area. Also please ensure that your company is providing or will be able to provide facilities better than that offered by ESI because under ESI there are a lot of benefits available to the employees many of which are extended to the family members of the insured employees. Besides, ESIC takes the responsibility of workmen's compensation as well which would otherwise be a heavy load for the employer. Regards, Madhu.T.K
From India, Kannur
Hi Sivadasan
  • As per ESI Act It is necessary to deduct ESI contribution on Gross salary excluding this - 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 peried 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.
  • Amount towards reimbursement for duty related journey.
If your salary structure of our organization includes Basic, HRA, Special Allowance and Conveyance Allowance then it is necessary to deduct ESI contribution on gross excluding above wages/allowance. Deepak Raj New Delhi 9868941534

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