Understanding ESI Contribution on Salary Increment: ESIC Rules and Guidelines

Dear All,

Please clarify the following: A person who was receiving a salary of Rs. 14,000/- gross had their salary revised to Rs. 17,000/- gross effective from July 2010. Now, at what salary will ESI contributions be made? The maximum limit is Rs. 15,000/- as per ESIC rules, and we are required to contribute both shares until the end of the ESIC return period, meaning up to September 2010. How should the calculation be done? (13,000 * 1.75/100 or 15,000 * 1.75/100 or 17,000 * 1.75/100)

Regards, Lalit

Contributions have to be made on the "ENTIRE" amount, i.e., on the revised salary of Rs. 17,000/-.

Dear Lalit,

The latest ceiling limit of ESI is Rs. 15,000 of gross salary. There is no need to pay ESI on the gross salary of Rs. 17,000. It is paid on only Rs. 15,000 until the contribution period ends, i.e., until Sep 30th. After this date, the employee is exempted from paying the ESI.

Regards,
Shreekanth.P.R

Dear Lalit,

The deduction of ESI in employee and employer share is made on ₹17,000 of his Gross Salary till September 2010.

Regards,

Palvinder Singh
Executive - Legal & HR
Aparajitha Corporate Services Ltd.
Haldwani Area

Hi Lalit,

ESI contributions will be made on Rs. 17,000/- until September '10, for both the employee and the employer. After the contribution period, there is no need to submit the contribution.

Thanks & Regards,
Sunil Sharma

Dear Lalit,

All my friends are telling the truth and correct except one. The deduction will be on 17000/-, of course, if it doesn't include washing allowance in the component factor, and it will be up to the end of the contribution period.

Regards,
KIRAN KALE

Hi All,

Adding to Lalit's case, if the salary is revised post-September, let's say in January, then what will be the consequences? Will the contribution continue until next September, or will the financial year-end have some implications on it? Please clarify.

Thank you in advance for your help.

Regards,
Shom

Dear Shom,

For ESIC contribution, a fiscal year is considered as two half contribution periods:

i.e.,
Contribution Period one: 1st Apr of 2010 to 30th Sept 2010
Contribution Period two: 1st Oct 2010 to 31st Mar 2011.

The month of salary revision in relation to the contribution period will affect our ESIC contribution. I hope this clarifies your doubt.

Dear Lalit,

As per the ESIC Act, during the Contribution Period to pay the ESIC contribution, the gross salary i.e. (contribution Period April to September & October to March), if the salary exceeds the ESIC limit, the contribution for that period needs to be paid.

With regards,

Balamurugan.L

Mr. Lalit's should be on Rs. 17,000/- up to Sep '10. Mr. Shom25, the contribution periods for ESI are as follows:

1st Contribution period - Apr to Sep
2nd Contribution period - Oct to Mar

In your case, it is up to March.

Bhaskara Rao

Hi,

The ESI ceiling limit is Rs. 15,000/- gross. However, the individual will continue to pay until September as per the old gross salary.

Regards,
Narayan

Dear all,

ESI contribution made is Rs. 17,000. You will have to pay the same contribution while the period has not finished.

ESIC period is from April to September and October to March.

Brijesh Saxena
9871196569

Dear All,

Now, I have understood that ESI will be applicable on Rs. 17,000 gross until September 10. Today, I discussed this matter with our Area Insurance Inspector from ESIC. He explained all aspects to me.

Thank you all for sharing your valuable knowledge with me.

Regards,
Lalit

As per the ESI Act, for the period from April to September and from October to March, the excess of the gross salary above Rs. 15,000 results in the obligation to pay ESIC contributions during the respective contribution periods.

Dear Lalit,

ESI contributions will be deducted on the amount of Rs. 17,000 until September, which signifies the end of the return period.

Regards,
Pulkit

Dear Shom,

ESIC Half Yearly return period:
From April to September
From October to March

You can observe from this example:
Mr. X joined recently, say in April, with 14000 INR. After two months, in July, the salary has been increased by 5000 INR, making the total salary 19000 INR. In this case, ESIC (1.75%) will be calculated on 19000 INR up to September. However, remember that the washing allowance will be excluded from the gross. After September, he/she will be exempt from ESIC.

4.75% will be remitted by the employer, while 1.75% will be deducted from the employee's gross salary. Many times, in the case of CTC, a total of 6.5% is deducted from the employee's CTC.

Cheers...

Hi Sunil,

The rules have been changed since May 2010. ESIC will be calculated based on a gross salary of 14,000/- for May and June. From July to September, it will be calculated on 17,000/-.

Regards,
Sunil