Understanding ESI: What Allowances Count Towards Your ESI Calculation?

Types of Allowances Included in ESI Calculation

While calculating ESI, what types of allowances are included in the salary on which ESI is calculated?

Actually, ESIC is calculated on the gross salary of the employee. The employer's contribution is 4.75%, and the employee's contribution is 1.75%. PF is calculated on the basic salary of the employee.

Thank you.
Regards

ESIC Calculation and Gross Salary

ESIC calculation includes the gross salary, which comprises any type of benefit (allowances) provided to the employee. These are calculated as part of the gross salary.

Regards,
Hardik

But my question is different. I want to ask: Are we calculating the ESI on CTC? Or do we strike off allowances from CTC and then calculate the ESI? My CTC is Rs. 15,000/-

Hi Kapoor, Actually, ESIC is calculated on the gross salary of the employee. In this calculation, the employer's contribution is 4.75%, and the employee's contribution is 1.75%. On the other hand, PF is calculated based on the basic salary of the employee.

Thank you, Priyanka...

Clarification Needed on ESI Calculation

However, my question is different. I want to ask: Do we calculate the ESI on CTC? Or do we strike off allowances from CTC and then calculate the ESI?

Regards,
Priyanka

Of course, we would calculate it on gross. For a proper answer, please send a copy of your salary statement so that I may be able to explain to you about the gross amount in your salary statement.

Regards,
Hardik

ESI Deduction on CTC

How is it that the question of ESI deduction on CTC arises? The CTC components already include ESI contributions. The ESI deduction on gross salary can be adjusted slightly, such as gross salary minus washing allowance (if uniforms are provided) minus reimbursement of conveyance allowance.

Regards,
S. Sethupathy.

As per the rule, we have to calculate ESIC on gross salary only. Only deduct ESIC when the salary limit is >15,000/-; never calculate ESIC on CTC.