Dear Seniors, Firstly, I would like to thank each one of you for providing your valuable suggestions for my posts. I am hoping that you will also offer your guidance on this query. I would like to know how components like BASIC, PF, ESI, and HRA are affected when an employee is absent for 5 days resulting in Loss of Pay (LOP). Do these components change or remain static with only the deduction reflecting LOP in the column?
Please advise me on which of the following calculations is correct:
Calculation 1:
If the Cost to Company (CTC) is Rs. 1,20,000 and the Monthly Gross pay is Rs. 10,000/-
- Basic (50%) = 5,000
- PF (12%) = 600
- HRA (50% of Basic) = 2,500
- ESI (1.75%) = 175
- Conveyance = 1,500 (fixed)
- Other Allowances = 1,000
- Total Earnings = 10,000
- Total Deductions = 2,440
- Net Pay = 7,560
Calculation 2:
If 5 days of LOP is deducted from the Gross pay per month, then it would be Rs. 8,335 (10,000 - 1,665)
- Basic (50%) = 4,168
- PF (12%) = 500
- HRA (50% of Basic) = 2,084
- ESI (1.75%) = 146
- Conveyance = 1,500 (fixed)
- Other Allowances = 583
- Total Earnings = 8,335
- Total Deductions = 646
- Net Pay = 7,689
Please advise me on the correct methodology.
Regards,
Sowmya R
From India, Hyderabad
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1Please advise me on which of the following calculations is correct:
Calculation 1:
If the Cost to Company (CTC) is Rs. 1,20,000 and the Monthly Gross pay is Rs. 10,000/-
- Basic (50%) = 5,000
- PF (12%) = 600
- HRA (50% of Basic) = 2,500
- ESI (1.75%) = 175
- Conveyance = 1,500 (fixed)
- Other Allowances = 1,000
- Total Earnings = 10,000
- Total Deductions = 2,440
- Net Pay = 7,560
Calculation 2:
If 5 days of LOP is deducted from the Gross pay per month, then it would be Rs. 8,335 (10,000 - 1,665)
- Basic (50%) = 4,168
- PF (12%) = 500
- HRA (50% of Basic) = 2,084
- ESI (1.75%) = 146
- Conveyance = 1,500 (fixed)
- Other Allowances = 583
- Total Earnings = 8,335
- Total Deductions = 646
- Net Pay = 7,689
Please advise me on the correct methodology.
Regards,
Sowmya R
From India, Hyderabad
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sowmya, when LOP takes place, you need not show the deductions for the LOP period in separate column. You can show the No. of working days in the payslip. I think No. 2 is correct. pon
From India, Lucknow
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From India, Lucknow
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Dear Sowmya, Pon is right. LOP is not required to show in Payroll. Your second option is correct.
From India, Calcutta
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From India, Calcutta
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Dear Pon and Sarkar,
Thank you so much for the suggestions. I would also like to know if an employee's pay is Rs. 16,000 per month and if he is paid for, say, 12 days. In this case, does he fall under the ESI Slab or not? According to ESI applicability, an employee earning <= Rs. 15,000 is eligible, but here I am confused.
I hope you can suggest to me how to proceed with this.
Cheers! Have a good day.
Regards, Sowmya R
From India, Hyderabad
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Thank you so much for the suggestions. I would also like to know if an employee's pay is Rs. 16,000 per month and if he is paid for, say, 12 days. In this case, does he fall under the ESI Slab or not? According to ESI applicability, an employee earning <= Rs. 15,000 is eligible, but here I am confused.
I hope you can suggest to me how to proceed with this.
Cheers! Have a good day.
Regards, Sowmya R
From India, Hyderabad
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Sowmya, The employee is not covered under ESI as he/she is above the threshold limit of 15000. LOP or any other deductions do not count for determining the applicability of ESI coverage. pon
From India, Lucknow
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From India, Lucknow
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Dear Sowmya If employees salary is above 16000/- then he is not covered under ESI. Due to LOP even if wages is lesser than 15000/- no need to cover under ESI. Regards
From India, Bangalore
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From India, Bangalore
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