Harsh Kumar Mehta
Consultant In Labour Laws/hr
Suresh2511
Labour Consultant
+2 Others

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Whether it is CTC gross ( Including employer contribution to esic ,pf ) or ctc gross ( excluding employer contribution to esic ,pf )
Regards
Narendra ch
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ESI is calculated on monthly gross salary paid & not on CTC.
1. Sir, contribution under provisions of ESI Act, 1948 is calculated neither on "CTC gross", nor on "gross salary".
2. The contribution is payable on "wages" as defined under section 2(22) of above Act. Since the words like "CTC gross" and "gross salary" are no where defined in above Act, hence such like words are neither relevant nor applicable in deciding any matter so far as payment of contribution under above Act is concerned. Whatsoever is included or excluded in the meaning of term "wages" in above sub-section of the Act is relevant.
The concept of 'CTC' is unknown to ESI Act and other labour laws.As Mr.Harsh Kumar said, please stick to the definition of wages under sec.2(22) of ESI Act as you can not omit from or include any item in the four corners of the definition.
B.Saikumar
HR & Labour Relations Adviser
Navi Mumbai
Sir my Question , is for applicability we need to consider components of CTC ( In accordance with sec.2(22) of ESI Act ) and for Calaculation of contribution we need to consider wages earned ( In accordance with sec.2(22) of ESI Act )
and employer contribution towards pf and esi shall be excluded ?
please correct if my view is wrong
Regards
Narendra ch
For the purpose of applicability of ESI Act, the wages as per Sec.2(22) of the ESI Act is the wages earned by an employee every month + any payment made at intervals of two months but excludes the following;
1)Any contribution paid by the employer towards PF and ESI;
2)Any travelling allowance and value of travelling concession;
3)Any amount paid to meet any expenses incurred by him by nature of his employment;
4) Gratuity payable on discharge
5) Overtime wages.
Trust this will clarify your doubt.
B.Saikumar
HR & Labour Relations adviser
Navi Mumbai
Dear Narendra,
In a simple language whatever salary reflects in your monthly payroll is upto Rs.21,000/- will qualify for deduction of ESI Contribution. (Hope you are not showing employer's contribution to ESI & PF in the monthly payroll).
Therefore do not mixup gross salary or CTC for computation of ESI PF.
ESI raised coverage ceiling to Rs.21,000/- w.e.f. 01.01.2017 and you are raising query just after 1 year why so?
Regards,
Suresh
I agree with the views of 'Saiconsult', except overtime wages. Overtime wages are also included in wages for contribution, however, overtime wages is not counted in ceiling of 21000/-. Otherwords, including overtime wages, one IP/IW may cross Rs21000/- and ESI contribution will be counted the whole wages including overtime wages.
Rest all suggestions are as per law.
Yes you are right Bmpanigrahi. I did not notice that Narendra asked the query in connection with contribution.I thought the query is about applicability.I went through the query now to get it clarified. Yes, OT wages are included for the purpose of contribution but not for applicability.My earlier post stands corrected to this extent.
B.Saikumar
HR & Labour Relations Adviser
Navi Mumbai
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