Understanding ESIC: Which Allowances Are Exempt and How Much Are They?

List of allowances not covered in ESIC

List allowances with amounts that are not covered in ESIC.

From the gross salary, you can exclude traveling/conveyance allowance paid. Similarly, if the employees are issued a uniform, then a washing allowance shall also be excluded from the salary. That does not mean that you can pay a very small amount as a basic salary and keep the majority amount as a washing allowance or traveling allowance.

Traveling Allowance and PF Exclusion

Traveling allowance will be excluded in PF. Also, will it be excluded in PF as my new joiner has a gross of 24,405, with 12,870 as basic + DA, 6,435 as HRA, and 5,100 as other allowances? He wants to be in ESIC benefit. Please guide, and can the traveling allowance amount be given along with the take-home amount that is coming after PF deduction?

Determining ESI Eligibility

For deciding whether an employee is within ESI or not, their gross salary (excluding travel allowance and washing allowance) should be taken into account. In this case, since it is above Rs. 21,000, the employee cannot be covered.

Determining PF Qualifying Salary

When determining the PF qualifying salary, the travel allowance is also excluded. For PF, you can also exclude HRA. The threshold limit is Rs. 15,000 for PF.

Allowance Breakdown

24405 as gross
12870 basic + DA
6435 HRA
5100 (traveling allowance and washing allowance)

Allowance Limits

Can these allowances be given, or is there any limit for both allowances?

For the medical policy for non-ESIC employees, is there any limit on the amount, and who will bear the cost of the policy? Will it be part of CTC or not?

Medical Policy for Employees Not Covered by ESI

Medical policy for employees who are not covered by ESI can be of any amount, and there is no limit for the amount of insurance, number of persons to be enrolled, etc., as it is purely an employee benefit at the discretion of the employer.

Allowance Breakdown and Limits

24405 as gross: 12870 basic + DA, 6435 HRA, 5100 (traveling allowance and washing allowance). Can these be given or not, or is there any limit for both allowances?

Still, the gross salary is more than Rs 21,000. He cannot be put under ESI. As already pointed out, the only allowances that can be excluded from the gross salary for coverage are washing allowance and traveling allowance. That also will depend on certain reasoning. You cannot have a traveling allowance that is unreasonable. Similarly, you can only put a reasonable amount as a washing allowance, and that also only when you issue uniforms to the employees.