Understanding ESI Calculation: How Do Washing and Food Allowances Affect It?

Can anyone tell me how to calculate ESI? Is there a limit for washing allowance and food allowance because these are all the components excluding ESI? I need your help.

Hi Anand,

Calculation of ESI:

1. ESI (4.75%) = Gross salary - washing allowance.
2. Contribution of Employee on ESI (1.75%) = Gross salary - washing allowance.
3. Washing allowance = 200 Rs.
I am not quite sure if food allowance is taxable or not. 🤔

Bye,
Gayatri

Total ESI contribution is 6.50% of the Gross Salary. All those employees who are getting Gross salary up to Rs 10,000 per month (Effective from 01 Oct 2006. Earlier the limit was Rs 7,500 per month) have to be covered under ESI. Out of this 6.5%, 1.75% is the employee's share and 4.75% is the employer's share.

The formula is:
Employee's Share - Gross Salary x 1.75/100
Employer's Share - Gross Salary x 4.75/100
Total ESI contribution = Employee's Share + Employer's Share

Note: Gross Salary = All the monthly cash components (Inclusive of incentives). Food allowance varies from company to company.

Thanks,
Kavitha

To my knowledge, for the calculation of ESI, we have to consider all the components of salary except the washing allowance. The employees' contribution is 1.75%, the employers' contribution is 4.75%, and the total remittance to ESI is 6.50%.

Regards,
S. Achuthanada

Hi all,

When calculating ESI, remember to round up the amount to the nearest rupee if the amount contains decimal places.

Regards

As you have asked, the washing allowance is exempted from contribution towards ESI. There is no limit on the washing allowance, but it should be reasonable.

Regards