Confused About ESIC Deductions on My Payslip: Am I Paying More Than I Should?

I have a monthly salary of $12,000, and in my payslip, there are two deductions. One is labeled as ESIC contribution, amounting to $544, and the other is ESIC deduction, which is $201. As an employee, I believe I am only required to pay 1.75% of my salary, which is $210, towards ESIC. I also understand that 4.75% is the responsibility of my employer to cover, not me, and that they are deducting their share from my salary. Please advise me on this matter and let me know if I am mistaken in my understanding.

It would be easier for others to understand if you could attach your salary slip and annexure of appointment mentioning the CTC offered to you. Your understanding about the contribution is correct, i.e., 1.75% is the employee contribution and 4.75% is the employer contribution. Only the employee contribution is deducted from the Gross Salary in the Salary Slip. However, if your company is deducting 4.75% as well, then there has to be something attached to it.

Again, the figures you've mentioned do not align with the actual amount if your gross happens to be $12k. It would be great if you could enclose a copy of the payslip.

Regards

You are right. As per ESIC, the employee contribution is 1.75% of the basic, which will be deducted from your CTC, and the employer contribution is 4.75%, which should not be deducted from your CTC.

Thanks & Regards,
Srilakshmi Korukonda

You are correct. As per ESIC, the employee contribution is 1.75% of the gross, which will be deducted from your CTC, and the employer's contribution is 4.75%, which should not be deducted from your CTC. It should be paid separately by the employer.

Thanks & Regards,
Srilakshmi Korukonda

It seems that there is something wrong with the bifurcation and contributions stated by you. You are right that ESIC is 1.75%, but kindly check with your HR department for more clarification and also go through your offer/appointment letter properly. Hope your query will be resolved at your HR department itself.

Thanks,
Bijay

I have a monthly salary of $12,000, and in my payslip, there are two deductions. One is labeled as ESIC contribution, which is $544, and the other is ESIC deduction, which is $201. I consider that as an employee, I am entitled to pay only 1.75% of my salary, i.e., $210, and nothing else to ESIC. I also think that 4.75% is to be paid by my employer and not me, and that they are taking their part of the share from me. Please guide me in this regard and tell me if I am wrong on my behalf.

Understanding CTC and Gross Salary

Is it the CTC which is offered monthly? I think it's a CTC structure, where the employer shows the total cost of the employee to the company. So, often we see PF and ESI contributions from both sides in one pay structure. There's nothing faulty in that. But if it's gross salary, then you must talk to your HR department because from your gross salary, only the employee's contribution should be deducted, not the employer's.

Regards

You are right. As per ESIC, the employee contribution is 1.75%, which will be deducted from your gross salary, and the employer contribution is 4.75%, which should not be deducted from your salary, as it has to be contributed from the employer's end.

Understanding ESIC Contributions

1.75% is the employee's contribution deductible from the gross salary, while 4.75% is the employer's contribution. Although this 4.75% is not deductible from the employee's salary, it certainly contributes to the "COST TO COMPANY." It is essential to understand this aspect properly in terms of the offer of appointment.

Understanding Salary Deductions

Rs. 12,000 is the cost to the company (CTC), and your Gross Salary is Rs. 11,456. Employers contribute Rs. 544 as part of the CTC, and your deduction is Rs. 201 as the employee's contribution.

Employer's Share Deduction in Salary

If the employer has not issued or issued any letter of appointment to an employee and continues to deduct the employer's share (both as applicable, i.e., EPF and/or ESI), is it a wrong practice? Being an HR professional, I have come across some candidates whose salary slip reflects similar elements in the deduction column, and hence the take-home salary comes on the lower side (even if they are communicated the take-home salary—on paper if an appointment letter is issued or verbally). When asked, they convince the employee that it is also a part of their salary/CTC and it is perfectly right to deduct the employer's share in this manner. What should be done, and why is it so?

Thanks and Regards,

Thank you all for your great response. I had a look at my appointment letter, and it says my CTC is 12,000, all inclusive of company deductions for ESIC and all other taxes. So, now I understand where I went wrong. Thanks for your support.