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I have some doubts to clear regarding the ESI limit and contribution.
If an employee's salary is 15000/- and because of declaration of LTA or
other deduction, his salary is coming down to less than 10000/- in any of
the month, is it required to deduct ESI ?
If once ESI deducted, is it compulsory to deduct 6 months ,though his
salary limit enhance above 10000/-?
If it is to be deducted to what extent tobe deducted ( whether for Rs.
10000/- or if he is drawing 15000/- forRs. 15000/- we have to deduct ?
Please clarify
Gireesh Thampi.S
From India, Bangalore
Dear Gireesh,
To my knowledge,
If an employee's gross salary exceeds Rs. 10,000/- he will not be in purview of ESI act.
As you have stated, due to other deduction if his salary is less than Rs. 10000/-, again from that month onwards he will be falling under ESI. The amount for calculation purpose will be his gross salary, (whatever may be his gross amount), up to completion of half yearly returns.
S. Achuthananda
From India, Pune
Hi Achuthananad,
If the gross salary is less than Rs.10000/- or equal to Rs.10000/- and after deduction of LTA and other allowances it is not necessary to pay ESI because it is for the gross salary and not for the net salary.
pls correct me if I'm wrong.
Thanks & Regards,
Sivaranjani Sriram
From India, Madras
Dear Giresh, To my knowledge, For deduction of ESI, we have to take all components i.e, gross salary except washing allowance. Regards S. Achuthananda
From India, Pune
Dear All,
The calculation is done as follows:
CTC-Employers Contribution to PF = Gross Salary
4.75% of Gross Salary would be Employers contribution to ESI
1.75% of Gross Salary would be Employees contribution to ESI
Hope this clarifies.

Hi Girish,
As per my knowledge ESI is deducted on amount equal to or less than 10,000. The gross salary should be made in such manner that it does not come below 10,000 in that case if total salary is 15,000, ESI once deducted is deducted for a period of six months that is half yearly.
From India, New Delhi
Hi to all, ESI is deudcted on gross salary after all deudction whether it is LTA or anything. So employee gets below 10000 gross salary we have to deudct ESI on it. Regards Prashant Patil
From India, Nagpur
Dear Achuthananda
What I know that ESI is calculated on Gross salary EXCEPT conveyance and different allowances and one allowances mentioned by you.
Please go thru the www.esic.nic.in (wages section written in yellow boxes). this site is beneficial for all of us.
and share your information on it.
To my knowledge,
For deduction of ESI, we have to take all components i.e, gross salary except washing allowance.
S. Achuthananda[/quote]
From India, Delhi
Dear Gireesh,
As per ESI Act, If the Gross Salary is Less than or Equal to Rs. 10,000 the act applies. In your case the employee is getting Rs. 15,000 as Gross so, definitely the employee will not come under the preview of ESI Act. Whether his salary goes below Rs, 10,000/- in any one of the month (on the deduction of LOP, LTA and any other deductions) ESI act will not apply.
One the ESI Contribution has been done for the particular employee, it is compulsory to deduct 6 months ,though his salary limit enhance above 10000/-
The deduction should be limited only upto Rs. 10,000 for the particular contribution period.
If the particular employee contribution is not paid to the ESI account we can refund the same to the employee.
Saravanakumar B

Hi achutanand,
Good answer. I agree with your point. To add to it, according to the new ammendment passed in Oct'2006 ESI ded is calculated on the CTC which is 10,000 or less than that. But previously it was applicable on <=7500 gross salary. The rate of ESI ded is 4.75% of Basic salary.
From India, Mumbai
Hi All
What should be the minimum employees for the ESI coverage in a software company
one of the consultant told that minimum employees will be 10 are required to my knowledge it is 20employees for ESI Coverage
From India, Hyderabad
Please check the latest amendement in ESIC, the ceiling limit has gone upto Rs.15,000/-
You may have to consider his monthly salary & LTA is an annual benefit, hence you shuld not consider this.
Accordingly to my knowledge, the ESIC has to be contributed upto 6 months even if you start deduction even for one month,
From India, Bangalore
Hi All, I just wanted to know whether there is any changes as regards the amount of salary for which ESIC is to be deducted. Whether the maximum limit of Rs.10,000 has been enhanced. Thanks Mamta
From India, Mumbai
I need your help for two queries related to ESI deduction.
1. will incentive amount impact the ESI contribution?
2. How do we know if employees contribution is actually going in the government fund.As , i have not seen ESI no. given by the HR to the employees.
From India, Chennai
1. Sir, the amount of incentive, if paid every month and is paid as per agreement and wage structure of the establishment is to be counted as "wages" as defined under the said Act.
2. You may insist and request your employer/his HR to supply you the ESIC Identity Card alongwith family Identity Card. On the basis of Insurance Number allotted to you, you can confirm from the Branch Office of ESIC whether the employer is depositing contribution and making compliance. I think, now there is also some online procedure, vide which any insured person can get confirmation regarding compliance being made. You can get this information from appropriate Branch Office of ESIC to which you are attached.
From India, Noida

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