Confused About ESI Calculation? Let's Break Down What Counts in Your Salary

Hello, I am not sure how to calculate ESI. I am aware that the employee pays 1.75%, and the employer pays 4.75%, but on what? I have the following breakup in my salary - Basic, HRA, Medical Allowance, Conveyance Allowance, Ad-hoc Allowance, Special Allowance. I have the following questions:

1) On what are all of the above items is ESI calculated?
2) What is the salary range on which ESI is calculated? Is it up to 15,000 per month?
3) There is another part of the salary that is a variable salary (performance-based). Should ESI calculation include that too?

Thanks in advance for helping me out.

Let me clarify that ESI is always calculated based on the gross salary, regardless of your basic salary, cash in hand, or CTC. The limit in terms of gross salary should be ₹15,000.

Regards

1. ESIC is deducted from employees who have a gross salary of less than ₹15,000.
2. All the breakups mentioned by you will come under Gross Salary.
3. Employee contribution is 1.75% of gross salary, and Employer contribution is 4.75% of gross salary.
4. All the fixed parts of the salary will be considered as gross salary, and ESIC will be deducted; even the incentives if they are fixed incentives per month.
5. Any incentive or allowance which is variable in nature and varies from month to month won't be considered in Gross Salary.
Regards.