Understanding ESI and PF Deductions From Salary Components

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.

Dear Arul,

P.F. is deductible on Basic+D.A. Account Number Deduction %

1 12+3.67% (P.F. Emplr + 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.) 1.75% of Employee + 4.75% of Employer

Dear Sir,

I thank you so much for your kind reply. You are very nice to put it in a short format. It's so easy to understand as well.

Thanking you once again.

Dear Arul,

Once upon a time, I was also very confused about all these things. But with the help of friends and seniors, I am developing myself.

Guru, always remember that if we help someone, we will receive help in return. Anyone who teaches will also learn from somewhere; thus, it is better for us to be the facilitators.

In my opinion, this site and its followers follow the teachings of the Geetasar: Give and Take, Take and Give...

Best regards,
Kalpesh Parekh
(MLW)

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