How Should ESIC Deductions Be Calculated When My Salary Exceeds Rs. 15,000 Due to Allowances?

I know that the Employee State Insurance Corporation (ESIC) deduction is 6.50% of the Gross Salary (1.75% for the Employee and 4.75% for the Employer, applicable up to Rs. 15,000). According to the Cost to Company (CTC), the ESIC deduction is 6.50% from the Employee only. My Gross Salary is Rs. 14,000 per month. Due to incentives, traveling allowance, and overtime allowance, my salary exceeds the Rs. 15,000 mark, reaching Rs. 20,000 in that month. How much should the ESIC deduction be in that month?

ESIC Deduction on Allowances and Overtime

Allowances are not a part of ESIC deduction, but overtime wages are a deductible part for ESIC. Your gross salary plus overtime wages, the total of which stands for ESIC deduction at a rate of 1.75% from your salary.

Understanding ESI Contributions

ESI is a statutory compliance applicable to individuals whose salary is less than or equal to ₹15,000 gross. Any additional allowances earned will not affect the ESI payable. The employee's ESI contribution is 1.75%, while the employer contributes 4.75%, regardless of the wages or allowances paid. Note that the 4.75% is not deducted from the employee's salary; instead, the employer remits its share to the ESIC account.

Regards

For the Gross Crossing 15K, the employer also has no need to pay the contributions. The employee and employer both can stop it.

Request for Advice

Please advise me on whether this is correct or not.

Regards,