ESIC Calculation - IS it on the Basic salary or on the Gross amount?

Dear All,

Please help me understand how to calculate ESIC. Is it based on the Basic salary or on the Gross amount?

Regards,
Bhavna

Hi Bhavna,

ESI is contributed from both sides, by the Employee as well as the Employer. It is calculated based on the Gross salary per month, and the maximum ceiling is 10,000 Rs./Month. The contributions from both sides are as follows:

Employee Side - 1.75% of gross/month
So, if the gross salary of an employee is 8,000/month, then the ESI contribution would be 8,000 * 1.75% = 140 Rupees.

Employer Side - 4.75% of gross/month
The ESI contribution would be 8,000 * 4.75% = 380 Rupees.

I hope this information helps you understand the process.

Regards,
Amit Seth

Hi Amit,

Just want to clarify, is this amount payable, or is it just to avail medical benefits? I could see our organization pays employees 2400 per annum as an additional allowance in the form of ESI.

Regards,
Deepa

Hi Deepa,

It's not true that under this Act only Medical benefits are provided. Apart from this, some more benefits are also provided, which are as follows:

1. Sickness Benefit: Every insured employee is entitled to the cash benefit for the period of sickness, certified by a duly appointed medical practitioner.

2. Maternity Benefit: A cash benefit is payable to an insured woman employee in case of miscarriage, medical termination of pregnancy, sickness arising from the pregnancy.

3. Disablement Benefit: It is also paid in the form of cash to an employee who is injured in an accident during the course of his employment.

4. Dependent's Benefit: If any employee dies as a result of any injury, his dependents shall be entitled to a benefit in the form of a pension.

5. Medical Benefit
6. Funeral Expenses
7. Payment of benefits in case of death.

Moreover, it is a rule that if your company is covered under this Act, then you have to comply with the rules, and it is required to register the company under this Act.

Regards,

Amit Seth.

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Hi Amit,

I just wanted to clarify one thing: is ESI calculated based on the Gross or Total Earnings of an Employee? As per my understanding, if an employee's earnings exceed 10,000 during a half-year term, they should still be covered until that specific period ends. Please correct me if I am mistaken.

I appreciate your assistance and would like to stay in touch with you as your guidance has been invaluable on my first day on this site.

Regards,
Amith R.

Dear,

ESI Contribution is payable on the Gross Salary. The rate of contribution is 1.75% and 4.75% for employees and employers respectively. The wage limit for ESI Contribution is Rs. 10,000/- per month.

Thanks,
Amit Kumar Tawar

Hi Amit,

ESI is calculated based on the gross salary per month. Regarding the second part, I'm not entirely sure, but in my opinion, you are somewhat correct; he remains covered under the Act until the benefit period ends.

Thank you so much; you are always welcome.

Regards,
Amit Seth.

Hi All,

What Amit says is valid. An employee will remain covered for the deduction until the end of the six-monthly contribution period. You can even check the corresponding benefit period for the ESI benefits for employees.

Regards,
Bajirao

Hi!

ESI is calculated on Basic + D.A. + All Allowances (e.g., HRA, Conv, O.T., etc.) + any other kind of earnings = Gross Amt. It is divided into two shares: 1.75% for the employee share and 4.75% for the employer share, totaling 6.5%.

All employees whose Gross Salary is 10,000 or less have to contribute towards ESI as 10,000 is the ceiling for ESI from 1st October 2006.

When you calculate it, if an amount comes in decimals, you have to round it off to the next rupee, e.g., if it is Rs 45.3, it will be taken as Rs 46.

Dear All,

It is very clear in the ESIC rules that if any employee's gross wages cross the ceiling limit of ESIC during the contribution period (i.e., April to September OR October to March), you have to continue his contribution until the end of the contribution period. He will also be entitled to benefits as per the rules for the next 9 months even if his contribution is discontinued.

Thanks,
Amit Kumar Tawar

Hi Lavleen,

I feel your question is not clear. Are you trying to know the total contribution after 5 years, or do you want to know what will be the PF amount deductible after 5 years? I think if you can reframe your question, you will get the required answer from anyone in the group, and it will be useful for others as well.

Regards,
Bajirao

Hi HR People,

Can you please provide me some clarification regarding the annual submission of ESI written. If we fail to give a temporary ESI card to the new joiner, what will be the implication to the employer? What will be the use of a temporary ESI card?

Regards,
V. Arunkumar.

Hi,

Simply ESI calculations are as follows:
Employer Contribution = 4.75% * (Basic + HRA + Special Allowance)
Employee Contribution = 1.75% * (Basic + HRA + Special Allowance)

Regards,
Barada

PF is calculated as follows:

Basic salary - 4000

PF deduction Employee Side for one month - 4000 * 12 / 100 = 480

PF deduction Employer Side for one month - 4000 * 3.67% = 146.8

Yearly - 480 * 12 (from the employee side) = 5760

Yearly - 146.8 * 12 (from the employee side) = 1761.6

Total Contribution = 5760 + 1761.6 = 7521.6

For 5 years - 7521 * 5 + 9.5% (compound interest of 5 years) =

Hi all,

Please make a note that as per the new policy, the minimum limit of ESIC has been revised to ₹15,000.

Dear Amit,

From 1.5.2010, ESIC is calculated up to a limit of 15000. ESI is contributed from both sides, by the employee as well as the employer. It is calculated based on the gross salary per month, and the maximum ceiling is 10000 Rs./Month. The contribution from both sides is as follows:

Employee Side - 1.75% of gross/month. So, if the gross of an employee is 8000/month, then the ESI contribution would be 8000 * 1.75% = 140 Rupees.

Employer Side - 4.75% of gross/month. The ESI contribution would be 8000 * 4.75% = 380 Rupees.

I hope this information helps you understand the calculation.

Regards,
Amit Seth

Dear Friend,

While giving sickness benefits to the employees, the ESI officials are not paying on Sundays. Is there any rule?

Regards,
PBS KUMAR

Dear all,

I have one query. My baby was born on 19 July 2015, and I received the form on 18 August 2015. Please let me know if it should be counted as 30 days or 31 days.