Confused About ESIC Deductions? Let's Break Down the Calculation Together!

Understanding ESIC Contributions

Please help me understand how to calculate ESIC contributions from both the Employer (4.75%) and the Employee (1.75%) when the CTC of the Employee is Rs. 15,000.

I have broken down the salary as follows:
- Basic = 7500
- HRA = 3750
- Special allowance = 350
- Uniform allowance = 1500
- Medical = 1000
- Provident Fund @ 12% (Employer) = 900
- Total CTC = 15000

Kindly guide me on how to calculate ESI.

Regards,
S. Koul

In this case, the gross salary, constituting all elements like Basic, HRA, Special Allowance, Uniform (if paid as allowance), and Medical (if paid as allowance), shall be considered for ESIC deduction. There is nothing to do with CTC. PF is not part of ESIC deduction.

Regards,
P K Mishra

It is very easy to calculate ESIC based on the basic salary of a particular employee. In your case, the basic salary is 7500. Therefore, ESIC for the employer (4.75%) is 356.25 and for the employee (1.75%) is 131.25. In short, the final amount for ESIC will be 487.50.

It is correct that it is very easy to calculate the ESI contribution of an ESI employee as well as the employer's share. However, I would like to correct you that ESI contribution is payable on all the allowances, not only on the Basic Salary. It has nothing to do with CTC. For example, if your salary is Rs. 14,100/-, you will calculate the employee's share of contribution at 1.75%, which amounts to Rs. 246.75, and the employer's share of contribution at 4.75%, which is Rs. 669.75. You will then round up the paisa to the next rupee. This means that if your ESI contribution is Rs. 246.75, it will be considered as Rs. 247/-. This rounding up is applicable to both the employee's and employer's share of contribution.

I hope the above clarification addresses your query. If you require any further clarification, please feel free to ask.

Thank you.

EPF and ESI Details

Please provide me with complete details on EPF and ESI, including how to calculate ESI and EPF, how to fill the challan for EPF and ESI, and how to maintain the register for EPF and ESI. Kindly guide me through all my queries.

Regards.

If you don't have any information regarding this, please contact me. I can guide you on how to calculate the ESI and Provident Fund contributions, fill up the challan, and maintain the register accordingly.

Dear Koul, I have attached the Excel sheet that will help you in calculating PF and ESI. You need to input the data, and it will calculate automatically.

Note: Conveyance is not a part of ESI calculation, so deduct it from the gross salary. For PF, special allowance will be included.

I hope this will be helpful for you, and for more details, you may contact me.

Regards,
Shaikh

Washing Allowance Exemption from ESIC Deduction

Washing allowance is exempt from ESIC deduction if the employees draw a salary of ₹5,000.

- BA = ₹3,000
- DA = ₹900
- HRA = ₹300
- WA = ₹800
- Gross salary = ₹5,000

At that time, you deduct ESI only for ₹4,200 at 4.75%, which equals ₹199.5 from the employer and 1.75% = ₹73.5 from the employee. The remaining ₹800 washing allowance is exempt from the ESI deduction.

I heard that if conveyance is paid separately, then ESIC is not applicable. If it is part of the salary, then everything excluding the washing allowance is applicable for ESIC. If a person's Gross Salary (not CTC) is 12,000.00 (which includes basic, VDA, conveyance, HRA, washing allowance, etc.), and the part of the washing allowance is 200/-, then the entire amount excluding the washing allowance is covered under ESIC.

Please correct me if I am wrong.

Regards,
Sanjay

Hello, I have a headcount of 14 employees for coverage under ESI. However, only 6 of them draw a gross wage of less than 21,000/-. Is my organization covered under ESI? Should I obtain registration? Please advise.

Hi, As per the ESI Act, the ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishments, and the beneficiaries' monthly wage does not exceed Rs. 21,000. These employees are covered under the scheme. You need to cover those 6 employees whose salaries are less than Rs. 21,000/-.