2. I am also doubtful whether an employee who is getting wages of Rs. 21000/- per month throughout a financial year and have savings in the form of deductions relating to EPF Contributions / ESI Contributions and other expenses like Transport Allowance / HRA etc. will be required to pay any income tax. Hope, you will let the seniors and experts in this forum to know the basis of your calculations and suggestions.
3. Further, I think, you could have sent your suggestions to the appropriate Govt i.e. Ministry of Labour & Employment (Central Govt.) in response to their draft intention notification dated 6/10/2016 (before final notification regarding enhancement of wage ceiling was issued by the said Govt.) when the views and objections from general public etc. were called for by said government.
Thanks for your reply.
1. I admit, I could not locate the Gazette notification on continuation of membership after crossing threshold limit.
2. On Income Tax: Though employees ESIC Wages is Rs.21,000/-, his/her Gross Earnings can be more than Rs.21,000/-, due to Sales Incentives or overtime. For these employees ESIC will be more than Rs.368/-.
I have confirmed with payroll experts, this is not a hypothetical or an academic case, employee is covered under ESIC and paying Income Tax.
Secondly, ESIC limit is increasing periodically, one cannot keep hoping, due rules applicable to other components will keep employees out of Taxable limits.
Also, ESIC is a mandatory statutory deduction should have same treatment in Income Tax, like for Provident Fund, Professional Tax.
3. I did submit my suggestion during the period of suggestions to the concern authority.
Also, writing to Employees' representative in ESIC board.
a simple consideration of HRA 20% of gross or 25% of basic = 21000*20%=4200 x12= 50400
say the member pays EPF on 15000, so 15000 x 12% =1800x12 = 21600
252000 - (50400+21600) = 180000
if sales incentive is fixed in nature per month, then simply he will get excluded from ESIC scheme, as it would come as part of salary,
2. Further I think, Income Tax provisions are totally different than ESI Act, 1948 and has no relation with each other. Income Tax provisions are very lengthy and also spread over by various rules and has a separate purpose. If an employee has received amounts of Incentive and overtimes and his total taxable income falls within ambit of taxable slab, I think, govt. is justified in charging income tax.