Is ESIC Deducted on Arrear Payments? Seeking Clarification from the Community

Dear all,

Please confirm if ESIC is deducted on arrear amounts.

Regards,
Satish

Hi Satish,

Yes, ESIC is applicable on gross salary and arrears amount, which is included in the gross salary. However, ESIC is not applicable on washing allowance. So, ESIC is applicable on arrears amount as well.

Regards,

Dear Mr. Swar,

Can you suggest to me the PF deduction on the minimum basic (basic + DA) Delhi minimum wages? The basic + DA is 3934. I can deduct PF at 2934, 2800, or 3934. Is it wrong, or is it right?

Thanks & Regards,
Sandy

Hi Satish,

Yes, ESIC is applicable on gross salary & arrears amount that comes in the gross salary. However, ESIC is not applicable on washing allowance. If the gross salary is not more than 10,000/-, ESIC will be applicable. Therefore, ESIC is also applicable on arrears amount.

Regards,

Yes, ESI is applicable on arrears of a person whose salary is less than or equal to Rs. 10,000/-

Regards,

Pankaj Chandan

Dear all,

Please advise me on whether ESIC is deducted on arrear amounts.

Regards,
Satish

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Not sure what you are referring to by "Arrears." If this concerns amounts withheld, accounted for, and entered in the Payslip, which are now being paid, then I assume ESI deductions have already been applied.

If this relates to a wage revision or an additional amount being paid, we may need to review the headers and the accounting system. In the case of a wage revision, most calculations will be based on Basic and DA, thus attracting ESI deductions. However, if the revision pertains to allowances such as washing allowance for uniformed staff, which are exempted, ESI payments may not be necessary.

Hi all,

Can anyone suggest how to handle ESI deductions? Should Allowances (Conveyance, Medical Reimbursements, Food Coupons, which are part of CTC) be included when calculating deductions from the gross salary?

I would appreciate an early reply. Thanks in advance.

Dear Satish,

Yes, you have to deduct the PF/ESIC and also Profession Tax when there is an arrears payment due to the revision of employees' salaries based on your revised salary. However, you have to take care of those employees who cross the limit of Rs. 10,000.

Suppose your salary revision is declared in June and you have to give effect from April onwards. Now, if an employee was drawing a salary of Rs. 8000 gross from April and due to the revision, his salary has crossed the limit of Rs. 10,000, you have to deduct ESIC payment on Rs. 10,000 up to September. After the payment of September, you cannot deduct his ESIC.

We have to submit our ESIC returns for Apr-Sept in the month of October and for Oct-Mar in the month of April. You cannot withdraw any member in between these half-yearly returns. You have to deduct his contribution till the half-yearly return.

Vinay Shedge

Dear Sridhar,

ESIC is deducted on Gross Salary, not on CTC. Contributions are as follows: Employer 4.75%, Employee 1.75%. ESIC has to be deducted for those employees whose salary is below Rs. 10,000.

Vinay Shedge

Hello,

I am Sathish, working as an HR Executive in pharmaceutical manufacturing. We have Marketing field employees working all over India. How can I deduct ESI, and how do they benefit in their hometown? If I deduct ESI, where should I remit it? Can anyone please help me and inform me about non-implemented ESI areas in India?

Regards,
N. Sathish

Dear Nagi,

A company has deducted PF on amounts like 2600, 2934, etc. How can I suggest to him that PF should be deducted based on the minimum basic wage? He wants proof of PF deduction based on the minimum basic wage.

Please let me know if you need any further assistance.

Thank you.

You are right, Mr. Satish. Arrears are always calculated in gross salary. However, please note that the gross salary should not exceed Rs. 10,000 per month.

Subhash Sharma
Mgr. (P&A)

Dear Friends,

For your information, we are adding the travel reimbursement for our sales employees. In some months, our employees are receiving more than 10,000/- as gross salary. We are calculating the ESI amount inclusive of the travel reimbursement. I want to know whether the travel reimbursement has to be included when calculating the ESI amount.

Thank you.

If possible, please provide me with the government notification stating that PF should be deducted based on minimum wages, i.e., on ₹3934. Alternatively, could you explain this in detail?

Hello Sridhar,

ESI will be deducted from the Gross salary, which includes Basic, HRA, Conveyance allowance, and Special Allowance if any. Fooding & Medical Reimbursement will be excluded. Also, the Gross Salary must be less than 10,000.

Regards,
Sangeeta

Dear Sridhar,

Your query is correct. The allowances that you have mentioned will not form the Gross Salary. Additionally, Entertainment Allowance, Washing Allowance, Other Reimbursements, and any other allowance that will be paid at intervals exceeding two months will not form the Gross Salary.

Please specify your question correctly to help accordingly. I have vast experience in the subject.

Regards,
Surya