Is Your ESIC Contribution Calculated on Bonuses Too? Let's Discuss!

Hello Seniors, Is the ESIC employee's contribution rate of 1.75% applicable to the regular gross salary (basic + HRA + conveyance + etc.), or is it also applicable to any kind of bonus received? By bonus, I mean to say half-yearly or annual bonus. If I am receiving one, then in that particular month, will the contribution be calculated on the total amount or just the regular salary part?

This January, I received an annual bonus of Rs 25,000, and to my surprise, they have calculated and deducted the ESIC contribution on the regular salary + bonus!

Thanks for your valuable inputs!

Regards, Shom

In ESI Calculation, you do not need to add Conveyance.

With warm regards,
S. Bhaskar
[Phone Number Removed For Privacy Reasons]

Dear Shom, please read...

ANNUAL BONUS:

The bonus paid to employees could not be treated as wages for the purpose of charging a contribution under Sec. 2(22), provided the periodicity of the payment is more than two months. The said issue was also considered in the meeting of the ESI Corporation held on 19.12.1968, and the Corporation agreed to the recommendations of the Standing Committee that the bonus may not be treated as wages. Hence, no contribution is payable on the annual bonus. (Earlier instructions were issued via memo No. Ins. III/2(2)-2/67 dated 8.2.1967).

As per ESI guidelines, it is mentioned that the bonus is not a part of wages, so no ESI deduction needs to be done on it.

Thank you both for your help. I have sent an email to my HR asking them to look into the matter. However, I would also like to ask, how can the process be reversed? Will ESIC be able to adjust the excess amount deducted? Approximately Rs 600 in excess has been deducted from my salary by including the annual bonus and conveyance in the contribution calculation.

Please suggest any other steps I need to take.

Thank you for your help again.

Regards,
Shom

Clarification on ESIC Contribution and Bonus

Mr. Kalpana Yadav is right. As per the present policy of ESIC, an annual bonus is not considered 'wages'. If the employer deducted contributions on the annual bonus, that amount can be refunded to the employee. The amount deducted in January is to be remitted to ESIC by 21st February, so there is still time for payment.

Even if it is remitted, since the contribution period ending on 31st March is not over, the employer can adjust the excess paid contribution during the currency of the contribution period, i.e., October to February, and only the balance can be paid for the month of March. Such adjustments are possible before the expiry of the current contribution period. Therefore, the employer can be requested to refund the amount immediately.

If an excess amount is contributed by you or the employer, it may be adjusted before filing the half-yearly return.

Regards,
Shaikh

Even conveyance allowance cannot be taken into consideration as wages, as indicated in the attached judgment copy.

With warm regards,

S. Bhaskar
[Phone Number Removed For Privacy Reasons]

Thank you all for your valuable inputs/replies. I have escalated the case with my HR, and they say that it will be adjusted over the next contribution. Thank you again for your help.

Regards,
Shom

Medical Allowance and ESIC Deduction

As per my knowledge, the medical allowance is exempted from ESIC. Therefore, if you are deducting the ESIC amount from the salary, the calculation for deduction will be:

ACTUAL GROSS - MEDICAL = ESIC GROSS

Regards

I just want to know if mobile allowance and car allowance are part of the gross income, will ESIC be applicable or not?