What Are The Deductions Being Done For Esi? - XLS Download

Dear All,

Please let me know what deductions are made from an employee's salary for ESI, and at what percentage. Additionally, is it deducted from the Basic salary or the CTC?

Thank you.

Towards ESI, the only deduction from the salary is 1.75% of the gross salary paid or payable to an employee. Only employees whose gross salary does not exceed Rs 15,000 are covered by ESI. Therefore, the above-mentioned deduction is to be made from those employees who receive a salary of less than Rs 15,001. For the purpose of coverage, gross salary is taken into account. Any amount paid at intervals of more than two months is not considered. Therefore, any sum paid as part of CTC in an interval of less than two months, excluding contributions to the employer's Provident Fund, will attract ESI. The employer's share of the contribution towards ESI is 4.75%, and this amount should never be recovered from the employee.

Regards, Madhu.T.K

Dear Madhu.T.K,

My name is Ram. Thank you for the information about ESI. I have a question regarding the next steps after deduction. Where do we need to submit the documents? What is the due date? Which form should we fill out? Additionally, could you please explain the procedure for applying for ESI and the purpose for which we are applying? I am seeking comprehensive information about ESI.

Regards,
Ram

Dear Ram,

ESI stands for Employees' State Insurance and is a social security arrangement whereby the employees and their family members get medical benefits, disablement benefits, etc., free of charge from ESI dispensaries/hospitals and such other private hospitals as notified. The medical benefits include super specialty treatments as well.

For details regarding ESI, please visit the official website of ESI Corporation. For a brief idea about the returns and procedures, have a look at the PPT available on my blog.

Regards,
Madhu.T.K

Kindly check the attached file, which will help in calculating ESIC contributions for employees and employers. It takes two things into account:

1. Actual salary
2. Earning salary

Hope this will help you.

Regards,
Shaikh

It is calculated on monthly salary like Basic, ADA, Overtime, HRA, and Conveyance Allowances. We should deduct 1.75% from the Employee and contribute 4.75% from the Employer. Please also note that we have to pay before the 20th of the next month. We have to file returns once every six months.

Dear Friends,

Mr. Madhu and Mr. Kiran are correct.

First, we should know what components will be exempted from ESI:

1) Washing Allowance (Maximum amount you can put).

2) Conveyance Allowance reimbursed to employees (amount should vary from person to person - if paid monthly, also no problem - it should not be included in the total Gross Salary) (For this, you can have a separate statement prepared viz., Conveyance Reimbursement).

3) Also, you may note that Shift allowance attracts ESI, hence you may account it as Night Shift Conveyance Reimbursement, so that you can avoid unnecessary deduction of 4.75% ESI, and thus save some amount for your employer.

4) Any incentive amount (i.e., Attendance Bonus/Incentive) paid at an interval of more than two months is not taken into account. Please pay it quarterly to avoid ESI.

Secondly, we should also know what components will be exempted from PF:

Now in Chennai - Ambattur EPF Office - EOs are insisting us to have Basic Pay up to 60% of Gross Salary.

The following are exempted:

1) House Rent Allowance - Please have it up to 35% of the total Gross Salary.

2) Overtime Allowance - Just to show it to EPF authorities - please have it up to 25% of the total Gross Salary (but this salary statement should not be shown to IF authorities). They will ask various questions - whether it is double wage or single wage - what are the OT hours, etc.

All other components, whatever name you call it, will attract EPF up to a sum of Rs. 6,500/- the maximum limit prescribed by EPF authorities.

I hope that I clarified some important points. If anyone differs from the above, write to me at my mail ID: kalyangopi@gmail.com

Thanks,

K. Gopalakrishnan

Sriperumbudur

Dear Sir,

Currently, in our company, PF contributions are being deducted from employees even when their basic salary exceeds 6,500/-. According to the PF Act, the contribution limit is set at 6,500/-. Therefore, we should cease deductions for employees whose basic salary exceeds this threshold.

Yours sincerely,
Y. S. Banerjee
HR Dept.

Yes, we are a software public limited company registered under the SBI guidelines.

Regards, Banerjee

Yes, you are correct. Washing allowance is not considered for the payment of contributions under Section 2(22) of the ESI Act, 1948.

With regards,
Sanagapalli
Asst. Director (Retd), ESI Corporation

Dear Madhu,

I need your help in understanding as how ESI is calculated. Let me take up the below C2C details as an example.

Components Salary (Rs.)

Basic / Consolidated 2,000.00

*FBP 7,000.00

**Variable 3,000.00

Gross Salary 12,000.00

***Performance Allowance

(10 % of Gross Salary) 1,200.00

Total Salary 13,200.00

**** Statutory Bonus 1,200.00

Total C2C 14,400.00

* FBP – Flexible Business Plan allows planning and defining various components. This is basically for Income Tax provision.

** Variable is paid if 20 % of 1 Lakh Sales target is met

*** Performance Allowance is paid if 1 Lakh Sales target is met

**** Assuming Bonus is declared as 10 % on gross.

Now clarify the following.

1) Should I take Gross Salary or Total Salary or C2C to calculate ESI? I know that in any case ESI is applicable in this case.

2) Also the above salary can have additional earning in the form of Incentives which can make Gross or Total or C2C cross 15 K. In this scenario will be ESI applicable?

3) As per the point 1 & 2, salary can keep varying every month either below 15 K or more than 15 K. In such scenarios, should we keep including or excluding ESI every month as the case may be.

4) Also above salaries can have deductions towards PF, PT, ESI itself and as well as any advance taken. In such scenarios how to compute ESI?

5) Also assuming that all the three components of the above example crosses 15 K and due to absenteeism, it might fall under 15 K. In such scenario, how ESI is calculated?

6) What are the components that I can exclude/Include from/in ESI calculation and how do I do it.

It will be great help if you can let me know the fundamentals of ESI calculation. I am in trouble and I need to calculate ESI for more than 100 people now.

Thanks for your kind help in advance.

rgds,

Arvind

Dear Arvind,

u have displayed the salary structure and noted that this is I.T. Purpose, this is ......purpose, so, this is immaterial, u just go through what exactly ESI Act required to attract the contribution on the salary and wages.

1. It is very clear that those who are getting salary more than 15000/-p.m.are exempted.

2. those who are working in the non implemented areas are also exempted.

3. In Maharashtra those who are living in the non implemented areas are also exempted,

4.Now, let us check the components of salary/wages which attracts for the contribution under ESI,

a. Basic

b. D.A.

c. Special Allowances,

d. HRA

e. conveyance allowance,

f. any allowance like shift, cash,supervisory,typist, plant, .

computor,machine,canvassing,first aid or as u say, FBP,

PERFORMANCE, VARIABLE, ALL THESE ALLOWANCES WILL ATTRACT.

5. Statutory bonus as per Payment of Bonus Act, will not treated as salary or wages,

6. Washing allowance, Fuel expenditure allowance, leave encashment and annual commission will not be treated as salary wages,

Hope it will satisfy ur query,

Regards,

KIRAN KALE

[QUOTE=ajadhav2004;1369347]
Dear Sir,
Please tell me, what is the range of P.Tax?
What are the minimum wages in Maharashtra?

Dear ajadhav,

The Professional Tax rates in Maharashtra are as follows:
1. Up to 5000: NIL
2. 5001 to 10000: Rs. 175
3. 10000 and above: Rs. 200.

Regarding minimum wages, there are 62 scheduled employments. What are your expectations?

Regards,
KIRAN KALE