Saswatabanerjee
Partner - Risk Management
Suresh2511
Labour Consultant
Rdsyadav
Educator, Management Consultant & Trainer
+1 Other

Respected members,
Since ESIC has raised its limit from 15,000 to 21,000 from 1st Jan 2017 onward. I have a question which I request you to clarify.
1) We have few employees drawing a consolidated salary of rs 15200.
Their breakup is like:
Basic: 7300
HRA: 7300
Other allowance: 600
However, we have been providing accommodation to them and hence deducted the entire HRA of Rs 7300 from their salary and finally pay (Basic + Other allowance) which comes to 7900 after HRA deduction.
Till now, we have not been deducting PF as well on such employees as their gross exceeded 15K.
Now, with revised limit. Could somebody please help with the calculation on ESIC with such salary structure?
3rd January 2017 From India, Delhi
Apparently, ESI is also not applicable but would be correctly advised if you give break up of Allowances ie Rs.600/ .
Moreover , its an opportunity for border line cases that can be corrected now.
Regds,
RDS Yadav
3rd January 2017 From India, Delhi
There is some mistake here
PF is payable unless their STARTING salary with your firm was above Rs. 15,000 (basic and DA only) and they did not have any PF account existing at that time. So you should be paying them PF.
ESIC is payable now for everyone whose salary is less than Rs. 21000. So you will need to pay ESIC also.
You will need to pay it on gross wages, which in your cases is on 15800 per month
4th January 2017 From India, Mumbai
Yes, its right clarification by Mr, Saswat Banerjee.Thanks !! Regds, RDS Yadav
4th January 2017 From India, Delhi
Dear Atulagar,
Your employees are getting Basic salary of Rs.7,300/- thus they are eligible for PF Membership as the PF coverage ceiling was enhanced to Rs.15,000 from Rs.6,500 w.e.f. 1st September 2014. Now you are liable to pay both the employee's & employer's contr. to PF from their joining date or 01.09.2014, whichever is earlier (legally).
As regards to coverage of ESIC w.e.f. 1st January, 2017, you can show only Basic salary of Rs.7,300 plus O.A. Rs.600 & discontinue showing HRA. This will save employer's contr. of 4.75% & employee will save 1.75% on his HRA amount. However, as a precautionary measure, you need to issue separate letter to employees informing that they will be provided with free accommodation and House Rent Allowance will be discontinued w.e.f. 1st January, 2017.(Pls ensure that the letter date should be prior to 31st Dec. 2016).
Tnx & Regds,
Suresh
6th January 2017 From India, Thane
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