How Do You Calculate Take-Home Salary and ESIC Contribution from a 12,000 CTC?

Calculating Take-Home Salary from CTC

I have one doubt. If anyone has a 12,000 CTC and we need to calculate the take-home salary, what will be the steps?

CTC - EMPLOYER CONTRIBUTIONS = GROSS.

But without gross from CTC, how can we calculate the employer ESIC contribution?

Kindly provide me details in the format with formula and percentage. Please reply to me urgently.

Regards,

I think you do not have basic knowledge about salary structure. Without a gross salary, how can you have CTC?

Understanding CTC

What is CTC in your understanding? Is it not the gross salary plus the employer's contributions towards ESI, PF, periodical or annual payments like bonuses, incentives, etc.? Then what is the big problem in finding out the ESI contribution since you have a gross salary with you? Or in your organization, is the salary itself not defined and is called CTC?

Regards,
Madhu.T.K

Hi Madhu, I know that without gross, ESIC cannot be calculated. That's my query. If any company offers a 1.4L package CTC, then how can I calculate gross and ESIC? I want to know.

Employer ESIC Contribution Calculation

Seniors, I have come to know that CTC * 4.317/100 = Employer ESIC contribution. Is this correct?

Kindly reply to me.

As per your understanding, you can't deduct employer ESIC from the total CTC. You have to consider the gross salary amount, and based on that, you will determine the ESIC amount. To do this, you must have a clear understanding of the CTC structure within a particular organization.

For further clarification, feel free to ask me, and I will provide the CTC structure in an Excel sheet.

Thanks & Regards,
Imran.

Please follow this simple rule to define any CTC structure.

CTC Structure

"GROSS + Employer's Contribution = CTC"

1) To define "Gross": Basic + HRA + Conveyance Allowance + Medical Allowance + Child Education Allowance + Other Allowances

2) Employer's Contribution = Employer's Contribution to ESIC (if Gross is less than 15k, then 4.75% of gross) + PF Contribution (if Basic is less than 15k, then 13.61% of basic) + Bonus (if applicable as per law & company policy) + Labour Welfare Fund (as per state law)

So, CTC = Gross + Employer's contribution

Take-home Salary Calculation

Now you will face the question of On Hand salary.

Take-home = Gross - Employees' Contribution

Employees' contribution consists of ESIC (if Gross is less than 15k, then 1.75% of gross) + PF (if Basic is less than 15k, then 12% of basic) + Labour Welfare Fund (as per state applicable law) + TDS (Income Tax) (if net payable salary is above 2.5 Lacs Per Annum)

So, ESIC contribution has nothing to do with CTC.

I hope doubts are cleared. All the best.

Understanding Wages Under the ESI Act of 1948

1. Under the ESI Act of 1948 and the rules/regulations framed thereunder, before making deductions from wages, one should examine what constitutes "wages" as defined under section 2(22) of the said Act with specific reference to their unit/factory/establishment. There is no concept of "gross salary" or "gross wages" under the said Act.

Clarification on CTC in Labor Laws

2. There is no concept of "CTC" in labor laws. It is a matter between the employer and employee only. If an employer is paying wages by referring to it as "CTC," but in reality, it is less than the minimum wages as set by the appropriate government, then the employer may be taking that risk and responsibility upon themselves.