Understanding ESI and PF Deductions: Which Salary Components Are Affected?

Clarification on ESI and PF Deductions

Dear All Seniors, please inform your juniors about ESI and PF deductions. Specifically, clarify from which components of the salary breakdown ESI and PF will be deducted.

Looking forward to your response. Thank you, dear all.

Regards

Clarification on ESI and PF Deductions

Dear Arul, P.F. is deductible on Basic + D.A.

Account Number Deduction %
• 1: 12% + 3.67% (P.F. Employer + Employee)
• 2: 1.1% (Admin. charges)
• 10: 8.33% (Pension)
• 21: 0.5% (E.D.L.I.)
• 22: 0.01% (E.D.L.I. Inspection Charges)

ESI is deductible on Gross Salary (i.e., Basic + D.A. + medical + HRA, etc.) at 1.75% for Employee + 4.75% for Employer.

Regards

Dear Arul,

The Security Agency supplies two guards. Please advise if this is correct according to his working:

- Salary: Rs 6000/-
- Employee PF @ 12%: Rs 480/-
- Employee ESI @ 1.75%: Rs 115/-
- Employer PF contribution paid by client @ 13.6%: Rs 544/-
- Employer ESI Contribution paid by client @ 4.7%: Rs 313/-
- Sub Total: Rs 7452/-
- Service Charges: Rs 1250/-
- Total: Rs 8702/-
- Service Tax 10%: Rs 870/-
- Cess on Service Tax @ 3%: Rs 26/-
- Total: Rs 9598/-
- Total for two guards: Rs 19196/-

If we pay by cash, we do not pay all these taxes, etc., but a flat sum of Rs 12000/- for two guards. If we pay by cheque, then it has to be Rs 19196/- for two guards.

The question is, we pay such a lot for services, etc., then why are we to pay the Employer's share of the PF and ESI? The pay packet of the Security Guard carries a different figure from the above.

We are paying Rs 12000 plus Rs 846 covering PF and ESI, totaling Rs 12846/-. We pay the agency Rs 3000/- as his commission for tax, etc. He refuses to take this by cheque and wants cash Rs 15846/-, failing which we have to pay as per his above working.

Please advise as we can see this as sheer corruption.

Thank you