ESI Query A Bit Tricky

:confused:Dear Friends,


Would like to know from you all whether Conveyance allowance is not taken into consideration for coverage purpose in ESI i.e if employee X draws a gross salary of Rs. 10,150/- per month which also includes a conveyance allowance of Rs. 200/- as such whether since we exclude Rs. 200/- (Conveyance from Gross) it is Rs. 9950/- hence ESI is deducted.

But whether on Conveyance allowance is ESI deducted or excluded? I am confused… I hope I could convey my query to you’all.

Pls help me … I need ur opinions / advice on the above.

Pls respond…

Jagdish

Travelling or conveyance allowance will not form part of salary for the purpose of coverage and also for the purpose of contribution. Therefore, if the employee is getting less than Rs 10000 after eliminating the traveling allowance, he will be covered and his contribution will be calculated on the salary excluding such traveling allowance.
Regards,
Madhu.T.K

T.All is wages since it is a payment arising out of the contract of employment. But travelling reimbursement of the actual expenses is not wages.There is clarification from ESI based on courts judgements.

I subscribe to the the following view from ESI based on courts judgements that
Travelling/Conveyance is wages since it is a payment arising out of the contract of employment. But travelling reimbursement of the actual expenses is not wages.
essceeca

dear
as mr madhu said rightly,conveyance aloowance paid fixed everymonth will not attract contribution towards ESI.if your salary is less than 10000 after leaving conveyance than you are covered under ESI and contribution to be paid towards ESI.
tks
j s malik

dear all another question............. wat if the convence allowence is a part of ctc? its not the reimbursement...... its the fixed component in the ctc??

dear riya
if it is a part of CTC and not reimbrused than also ESI is not deducted on conveyance.
its a court decesion and after that ESIC corporation has given circular.
earleir conveyance was part of wages under ESI and after some decision of court it has been excluded.
tks
j s malik

Dear Mr. Mallik...
i think u r right..i m agree with u...
Can u tell me the citation of the case...or provide me the reference..if possible..for further clarification...
Thanks...
Regards,
ady
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As Con. part of ctc and it ia part of wages it will be considered in covering an employee in esi scheme or not if his gross salary(+con). is above 10,000/- he is exempted frm esi.

There is no need of any clarification in this regard. The definition of wages u/s 2 (22) is reproduced under.

"wages" means all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock out, strike which is not illegal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include - (a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) any travelling allowance or the value of any traveling concession;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(d) any gratuity payable on discharge.

Regards,

Madhu.T.K