Hi
ESI is payable on all sorts of remuneration, provided they are paid in intervals not exceeding 2 months. In case the remuneration is paid in an interval exceeding 2 months (eg. once in a quarter) then contribution need not be paid since it does not fall within the definition of wages as envisaged in the ESI Act under Sec. 2(22).
Therefore, you may see the periodicity of the payment and decide accordingly. In case, the it is paid within 2 months interval (Eg monthly), then as said by seniors you shall add the monthly incentive with the payroll wages and check whether it is exceeding the ceiling limit of Rs.10,000/-(i.e) Rs. 10,001/- and above pm. In case it exceeds contribution need not be paid. However, a rule of ESI Act says that, if an employee who was continuously covered under ESI, if goes out of the Coverage due to crossing of the ceiling limit due to salary hike or so, then the contribution is needed to be paid until the closure of the contribution period. There are 2 contribution periods in a financial year (apr to mar). the first one starts from 1st April and ends in30th Sept; the second one follows from 1st Oct and end on 31st March.
So, an employee all alaong drawing a monthly salary of 9000/- for april & may, due to earing of higher incentive if his earnings shoot up to 12000/- on june and thereafter, even then contribution is payable for the entire gross earned until the end of that contribution period (i.e) 30th Sept.
Hope this would clear ur doubts
Regards
RAmesh Kumar
ESI is payable on all sorts of remuneration, provided they are paid in intervals not exceeding 2 months. In case the remuneration is paid in an interval exceeding 2 months (eg. once in a quarter) then contribution need not be paid since it does not fall within the definition of wages as envisaged in the ESI Act under Sec. 2(22).
Therefore, you may see the periodicity of the payment and decide accordingly. In case, the it is paid within 2 months interval (Eg monthly), then as said by seniors you shall add the monthly incentive with the payroll wages and check whether it is exceeding the ceiling limit of Rs.10,000/-(i.e) Rs. 10,001/- and above pm. In case it exceeds contribution need not be paid. However, a rule of ESI Act says that, if an employee who was continuously covered under ESI, if goes out of the Coverage due to crossing of the ceiling limit due to salary hike or so, then the contribution is needed to be paid until the closure of the contribution period. There are 2 contribution periods in a financial year (apr to mar). the first one starts from 1st April and ends in30th Sept; the second one follows from 1st Oct and end on 31st March.
So, an employee all alaong drawing a monthly salary of 9000/- for april & may, due to earing of higher incentive if his earnings shoot up to 12000/- on june and thereafter, even then contribution is payable for the entire gross earned until the end of that contribution period (i.e) 30th Sept.
Hope this would clear ur doubts
Regards
RAmesh Kumar