Understanding ESIC Contributions: Should They Be Deducted or Added for Tax Purposes?

Dear All, There seems to be some confusion regarding whether an employee's contribution towards ESIC is exempted under the Income Tax Act. When calculating the income earned by an employee, should the employee's contribution of 1.75% of the gross salary towards ESI be deducted or added? I would appreciate an early reply on this matter.

Regards,
J. Alexander

ESI Salary Ceiling and Income Tax Implications

Till recently, those covered by ESI and contributing towards ESI should have had a gross salary of less than Rs. 120,000, which was insufficient for an employee to be liable for Income Tax. Now, with an increase in the ESI salary ceiling to Rs. 15,000, there might be some employees who may become income tax payers. ESI, being a social security measure and similar to any other contribution towards medical expenses or medical insurance premiums, shall be allowed as a deduction. Let us wait for more inputs.

Regards,
Madhu.T.K