Hi, I have seen one of your comments related to salary breakup, in which you explained through an example. In that example, you showed the formula for calculating monthly ESIC as 1.75% of Basic. However, we are actually using a different formula, where ESIC = 1.75% of total earnings. This difference has caused some confusion for me. Could you please clarify this discrepancy?
Thank you.
From India, Mumbai
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1Thank you.
From India, Mumbai
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For the purpose of calculating ESIC contribution, it is 1.75% of total earnings, not just the basic salary, if an employee is receiving Rs. 12,000/-.
Example of Salary Breakdown
For example, consider the monthly salary breakdown of an employee as follows:
- Basic: 7000.00
- HRA: 2500.00
- Conv.: 1000.00
- Misc. Allowance: 500.00
- CCA: 500.00
- Special Allowance: 500.00
In this scenario, we need to calculate the ESIC contribution based on all the components mentioned above. The salary considered for ESI contribution will be Rs. 12,000/- not just the basic salary. The contribution amounts will be Rs. 210.00 (employee's share of contribution) and Rs. 570.00 based on the calculations (Rs. 12,000 * 1.75% and Rs. 12,000 * 4.75% respectively).
I hope this clarifies the calculation process. Let me know if you need further assistance.
Best regards,
From India, Gurgaon
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Example of Salary Breakdown
For example, consider the monthly salary breakdown of an employee as follows:
- Basic: 7000.00
- HRA: 2500.00
- Conv.: 1000.00
- Misc. Allowance: 500.00
- CCA: 500.00
- Special Allowance: 500.00
In this scenario, we need to calculate the ESIC contribution based on all the components mentioned above. The salary considered for ESI contribution will be Rs. 12,000/- not just the basic salary. The contribution amounts will be Rs. 210.00 (employee's share of contribution) and Rs. 570.00 based on the calculations (Rs. 12,000 * 1.75% and Rs. 12,000 * 4.75% respectively).
I hope this clarifies the calculation process. Let me know if you need further assistance.
Best regards,
From India, Gurgaon
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Thank you, Mr. Mukesh. I partially understood what you have explained. As you know, ESIC will be applicable to those employees whose total earnings are up to Rs. 15,000/-; previously, the limit was Rs. 10,000/-. Could you please clarify when we should use the method of calculating ESIC based on the Basic salary?
Regards,
Prajakta S. More
From India, Mumbai
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Regards,
Prajakta S. More
From India, Mumbai
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SALARY SHEET CALCULATION.xls
Employee Benefits.doc