Understanding ESI and PF Deductions: How Do They Apply to a 14,000 Salary?

Can anyone tell me if ESI is deducted when an employee's salary is ₹14,000 per month? What is the maximum limit of ESI? Does it also vary from company to company, such as in IT compared to other sectors? Additionally, please inform me about the amount of PF deduction.

Thank you.

ESI Wage Ceiling and Coverage Details

The wage ceiling for ESI coverage is ₹15,000 per month, effective from May 1, 2010. Wages include Dearness Allowance (DA), House Rent Allowance (HRA), Conveyance Allowance other than Travelling Allowance, and all allowances paid on a monthly basis. You can refer to section 2(22) of the ESI Act 1948.

Wages do not include overtime allowance for coverage purposes, but ESI contributions are payable on overtime.

Regards,
V. Ramachandrarao

Please refer to the recent Chennai High Court judgment on the exclusion of conveyance from ESI coverage.

Regards, Shiva

The ESI maximum limit is ₹15,000 per month. If an employee's gross salary is ₹15,001, then they will not be eligible for ESIC.

Regards.

Wage Calculation Advisory

Please note that while calculating gross wages per month, exclude the Washing Allowance as per the departmental circular of ESI. For any further clarification, you may visit the ESI site, which will provide more insight.

Regards,
Ravi

Components of Gross Salary

The Gross Salary can be divided into:
- Basic: 35% - 50% of Gross
- HRA: 40% of Basic in Non-Metro / 50% of Basic in Metro
- Medical Allowance: ₹1,250 per month up to ₹15,000 per annum
- Special Allowance: Balance of Gross will be provided

Regarding ESI

- Employers' Share: 4.75% on Gross Salary
- Employees' Share: 1.75% on Gross Salary
- Maximum Salary limit covered under ESI is ₹15,000. If above ₹15,001 per month, ESI will not be covered.

Regards,
K. SURESH - Miyapur

Dear Sir,
The maximum limit for ESI is INR 15,000 per month. If an employee's gross salary exceeds INR 15,000, they will not be eligible for ESIC benefits.

If an employee experiences a salary increase and their gross salary surpasses INR 15,000, at what point will they become ineligible for ESIC benefits?

Thank you.

As posted above by Mr. Abbas and Mr. Madan Mohan, I would further clarify some points on ESIS. One gets covered under the ESIS if the gross salary is less than or equal to Rs. 15,000/-. In case the salary rises above or equal to Rs. 15,001/- due to any salary revision, increment, etc., he would not get exempted until he has reached the cut-out point (contributory period), i.e., April/October. This means he would still be in the ESIS coverage until the month of April or October, whichever is earlier.

Understanding Basic Labor Laws in HR

If you are in the HR stream and working, it is imperative that you put in a little effort to read and understand the basic labor laws. By doing this, you will have a strong foundation in terms of subject knowledge.

Regards,
Vasant Nair

ESI and PF Deductions for Employees

Hello, can anyone tell me when the salary of any employee is ₹14,000 per month, is ESI deducted or not? What is the maximum limit of ESI? Does it also differ from company to company, meaning is it different in IT than in others? Also, please tell me the amount of PF deduction.

Hello, can anyone tell me when the salary of an employee is ₹14,000 per month, is ESI deducted or not? What is the maximum limit of ESI? Does it also differ from company to company, for example, is it different in IT than in other sectors? Also, please inform me about the amount of PF deduction.

ESI and PF Deduction Details

The maximum salary limit to be covered under ESI is ₹15,000, and any amount above ₹15,001 per month will not be covered by ESI. Employee ESI deduction is 1.75%, and Employer ESI contribution is 4.75%. PF is deducted at 12%, and the limit is up to ₹6,500. However, it can exceed if employees wish to contribute more, but typically, it is 12%.

Regards

If a person's gross salary, excluding their food allowance and any ex-gratia/incentive payment, is more than ₹15,000 per month (i.e., ₹15,001 and above), then the ESI is not applicable. Food/tea/snacks provided to an employee will not form a part of their salary. Food subsidy and performance-linked compensation are not considered wages under the EPF Act.

Regional Provident Fund Commissioner, T.N. & Pondicherry State Employees' Provident Fund Organisation vs. Wipro Ltd. & Anr. 2009 LLR 816 (Madras H.C.); 2009 LLR 416.

With warm regards,

S. Bhaskar
[Phone Number Removed For Privacy Reasons]