In case of PF deduction, the limit is 12% contribution (Rs.780/-) probably by both the employer and employee unless both or either want to contribute more.
Is there any provision for the maximum deduction for ESI when wages exceed the limit of Rs.15,000/- per month.
From India, Jamnagar
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Is there any provision for the maximum deduction for ESI when wages exceed the limit of Rs.15,000/- per month.
From India, Jamnagar
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Hi Dadusha,
First of all, for PF, it's not maximum or minimum; it's just 12% and not limited to Rs. 780. It's rather optional to contribute above this amount if the employee's basic is more than Rs. 6500. The employer can restrict the basic for PF at Rs. 6500, but nowadays in most companies, both the shares, i.e., the employee's share as well as the employer's share, are a part of CTC. Even the employers do not restrict it to the basic of Rs. 6500, but it is to be at 12%. The major benefit of higher contribution goes to the employee because the PF contribution is non-taxable when it comes to filing IT returns.
As far as ESI is concerned, please be informed that in a recent development, the ESIC has increased the upper limit of wages covered for ESI deduction from Rs. 15,000 to Rs. 25,000. However, in case the employee's consolidated salary reaches beyond the maximum wages, i.e., Rs. 25,000, it doesn't remain compulsory for the employer to keep contributing. The names of such employees whose wages cross the maximum salary can be shown in the next ESI returns.
Raj
From India, Delhi
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First of all, for PF, it's not maximum or minimum; it's just 12% and not limited to Rs. 780. It's rather optional to contribute above this amount if the employee's basic is more than Rs. 6500. The employer can restrict the basic for PF at Rs. 6500, but nowadays in most companies, both the shares, i.e., the employee's share as well as the employer's share, are a part of CTC. Even the employers do not restrict it to the basic of Rs. 6500, but it is to be at 12%. The major benefit of higher contribution goes to the employee because the PF contribution is non-taxable when it comes to filing IT returns.
As far as ESI is concerned, please be informed that in a recent development, the ESIC has increased the upper limit of wages covered for ESI deduction from Rs. 15,000 to Rs. 25,000. However, in case the employee's consolidated salary reaches beyond the maximum wages, i.e., Rs. 25,000, it doesn't remain compulsory for the employer to keep contributing. The names of such employees whose wages cross the maximum salary can be shown in the next ESI returns.
Raj
From India, Delhi
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Dear Sir(s),
I would like to inform you that the Ministry of Labour & Employment, Government of India, has not yet issued a notification enhancing the wage ceiling under the Central Rules framed under the Employees' State Insurance Act, 1948. Therefore, the wage ceiling under the ESI Act, 1948, as of today, remains Rs. 15,000/-.
The contributing member mentioned above may kindly review this information and provide guidance if I am mistaken.
With kind regards,
From India, Noida
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944I would like to inform you that the Ministry of Labour & Employment, Government of India, has not yet issued a notification enhancing the wage ceiling under the Central Rules framed under the Employees' State Insurance Act, 1948. Therefore, the wage ceiling under the ESI Act, 1948, as of today, remains Rs. 15,000/-.
The contributing member mentioned above may kindly review this information and provide guidance if I am mistaken.
With kind regards,
From India, Noida
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The PF contribution of 12% of the salary is the minimum percentage. However, the employee and also the employer, if he wishes, can contribute over and above the rate of 12%. One can contribute up to 20% of the salary after completing certain formalities with the PF Office. In short, there can be a higher percentage of contribution, and the contribution can be over and above Rs. 6,500.
As regards ESI, I have sent a suggestion to the ESI Office to formulate the policy in such a way that all employees working in an establishment should be covered. However, the contribution shall be restricted to the maximum limit of the salary (presently Rs. 15,000, but likely to raise to 25,000). In other words, what I have proposed is that if an employee is deriving a salary of, say, Rs. 40,000 per month, then he should be covered under the ESI Scheme, but his contributions should be restricted to the limit, i.e., Rs. 15,000. So, he will be entitled to benefits of ESI up to 15,000 only. However, I have not received any reply from the ESI Corporation.
From India, Kolhapur
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As regards ESI, I have sent a suggestion to the ESI Office to formulate the policy in such a way that all employees working in an establishment should be covered. However, the contribution shall be restricted to the maximum limit of the salary (presently Rs. 15,000, but likely to raise to 25,000). In other words, what I have proposed is that if an employee is deriving a salary of, say, Rs. 40,000 per month, then he should be covered under the ESI Scheme, but his contributions should be restricted to the limit, i.e., Rs. 15,000. So, he will be entitled to benefits of ESI up to 15,000 only. However, I have not received any reply from the ESI Corporation.
From India, Kolhapur
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ESIC is computed on gross salary, not on a salary with a limit. Once the salary limit of 15000 is breached, the contribution will stop at the end of the 6-month contribution period. However, while it is paid, it will be on the actual limit.
From India, Mumbai
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From India, Mumbai
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Please, if you people cannot guide anyone, then stop sending these types of confusing posts. Who told you that ESI ceiling is enhanced to Rs 25000/-? Do you think that this website is the only platform to show that you are an all-rounder in HR? Enhancement is proposed, but the notification is not yet published. As far as my knowledge is concerned, so please do not confuse our friends, dear. You people are about to kill our friends who are seeking your valuable comments. His/her employer will kick him/her out if he proposes his/her employer to follow your rule. My dear friend RAJ.
From India, Kolkata
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From India, Kolkata
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Please do not circulate wrong information to new members or people who do not know about the subject matter. As Mr. Kamal Dutta said, it is still 15000. There should not be any confusion in this regard. Notification regarding the new ceiling is awaited.
From India, Delhi
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From India, Delhi
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Dadusha, do you want to inquire about the maximum limit of ESI coverage? If yes, then there is a maximum limit of Rs. 15,000 in the law. Individuals earning more than a gross salary of Rs. 15,000 are not eligible for ESI benefits. However, you may want to wait until the upcoming budget as this limit could potentially be increased to Rs. 25,000.
From India, Delhi
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From India, Delhi
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Dear Sir(s),
I would like to further clarify that the enhancement of the wage ceiling in Rule 50 of the ESI (Central) Rules, 1950 is carried out solely by the Ministry of Labour & Employment, Central Government, following the issuance of an intention notification for a period of 30 days. After the elapse of the 30-day period, the final notification is expected to be issued by the Central Government.
Based on the information available to me, it appears that the said Intention Notification has not yet been issued by the Central Government. Therefore, the enhancement of the wage ceiling under the ESI Act is anticipated only after the intention notification has been issued. I have noted in my remarks to be corrected if there are any errors.
With kind regards;
From India, Noida
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I would like to further clarify that the enhancement of the wage ceiling in Rule 50 of the ESI (Central) Rules, 1950 is carried out solely by the Ministry of Labour & Employment, Central Government, following the issuance of an intention notification for a period of 30 days. After the elapse of the 30-day period, the final notification is expected to be issued by the Central Government.
Based on the information available to me, it appears that the said Intention Notification has not yet been issued by the Central Government. Therefore, the enhancement of the wage ceiling under the ESI Act is anticipated only after the intention notification has been issued. I have noted in my remarks to be corrected if there are any errors.
With kind regards;
From India, Noida
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please provide information me on 360 degree performance apprisal with clear regsards rahul yadav
From India, Mumbai
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From India, Mumbai
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Dont you think you should have separate thread for this topic
From India, Mumbai
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From India, Mumbai
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Any one can tell me that the recent amendment in ESIC deduction up to 250000/- gross is implemented. Regards, Vinod Kumar
From India, Delhi
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From India, Delhi
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Position at a progressive institute offering opportunity for advancement based upon achievement and contribution to the institution Willingness to work hard anywhere in the country.
From India
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From India
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Dear Friends,
ESIC calculation is purely based on gross earned salary, i.e., 1.75% from the employee and 4.75% from the employer. There is no provision for additional deductions in ESIC.
If an employee's salary is fixed at 15000 per month, they are eligible for ESIC benefits; otherwise, not.
For employees whose salary is less than 15000 and receive incentives or other performance-based bonuses, those amounts also need to be deducted when calculating ESIC.
Example:
An employee with a fixed salary of Rs. 12000, receiving an Rs. 8000 incentive, will have ESIC calculated on the total of Rs. 20000, not just Rs. 12000.
Note: Annual bonuses will not be included in ESIC calculations.
There are other types of ESIC calculations based on fixed assets/installations from outsiders, calculated as follows:
The total invoice amount is divided into 60% material and 40% labor. The 40% labor amount incurs a 6.5% ESI charge.
Example: Assuming the total invoice value is 100000
- 60% material: 60000
- 40% labor: 40000
ESIC calculation will be on 40000 * 6.5%, i.e., Rs. 2600. This Rs. 2600 is referred to as Job work, which should be deducted from the invoice value and paid in the Omitted wages option in the ESIC portal.
Thanks and Regards,
JOYSON BAPTIST PEREIRA
Sr. HR Executive
Automobile
joyjeni87@gmail.com
From India, Bangalore
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ESIC calculation is purely based on gross earned salary, i.e., 1.75% from the employee and 4.75% from the employer. There is no provision for additional deductions in ESIC.
If an employee's salary is fixed at 15000 per month, they are eligible for ESIC benefits; otherwise, not.
For employees whose salary is less than 15000 and receive incentives or other performance-based bonuses, those amounts also need to be deducted when calculating ESIC.
Example:
An employee with a fixed salary of Rs. 12000, receiving an Rs. 8000 incentive, will have ESIC calculated on the total of Rs. 20000, not just Rs. 12000.
Note: Annual bonuses will not be included in ESIC calculations.
There are other types of ESIC calculations based on fixed assets/installations from outsiders, calculated as follows:
The total invoice amount is divided into 60% material and 40% labor. The 40% labor amount incurs a 6.5% ESI charge.
Example: Assuming the total invoice value is 100000
- 60% material: 60000
- 40% labor: 40000
ESIC calculation will be on 40000 * 6.5%, i.e., Rs. 2600. This Rs. 2600 is referred to as Job work, which should be deducted from the invoice value and paid in the Omitted wages option in the ESIC portal.
Thanks and Regards,
JOYSON BAPTIST PEREIRA
Sr. HR Executive
Automobile
joyjeni87@gmail.com
From India, Bangalore
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Dear Mr. Pereira,
I have read the information furnished by you regarding the treatment of 40% of wages out of total bills for ESI compliance. However, for discussion's sake, I would like to inform you that there may be old instructions issued by the ESIC authorities in support of your information. In actual practice, these instructions are not followed, resulting in the claim that 100% of the bill amount should be treated as wages for claiming ESI contributions on such omitted wages.
In my opinion, the safe practice is that when the employer appoints any person as a contractor or casual labor for job work, the employer should insist on the maintenance of Attendance & Wages Registers for such contract/casual employees and pay ESI contributions based on actual wages. Payment of ESI contributions on an actual basis and compliance based on the actual basis for such contractor/casual employees will also entitle these employees to various benefits under the Employees' State Insurance Act, 1948, and the rules/regulations framed thereunder.
Furthermore, I believe that accepting 40% as wages out of a bill for job work, as mentioned by you, is also not within the jurisdiction of the appropriate Social Security Officer in your area.
If you have any doubts, I suggest confirming the position with the appropriate Regional/Sub-Regional Office of ESIC.
With regards;
From India, Noida
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I have read the information furnished by you regarding the treatment of 40% of wages out of total bills for ESI compliance. However, for discussion's sake, I would like to inform you that there may be old instructions issued by the ESIC authorities in support of your information. In actual practice, these instructions are not followed, resulting in the claim that 100% of the bill amount should be treated as wages for claiming ESI contributions on such omitted wages.
In my opinion, the safe practice is that when the employer appoints any person as a contractor or casual labor for job work, the employer should insist on the maintenance of Attendance & Wages Registers for such contract/casual employees and pay ESI contributions based on actual wages. Payment of ESI contributions on an actual basis and compliance based on the actual basis for such contractor/casual employees will also entitle these employees to various benefits under the Employees' State Insurance Act, 1948, and the rules/regulations framed thereunder.
Furthermore, I believe that accepting 40% as wages out of a bill for job work, as mentioned by you, is also not within the jurisdiction of the appropriate Social Security Officer in your area.
If you have any doubts, I suggest confirming the position with the appropriate Regional/Sub-Regional Office of ESIC.
With regards;
From India, Noida
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Hi friends,
We registered one of my employees in ESI 4 months ago, but recently we discovered that the person was already registered with ESI and also had a PAN card. This month, I entered his IP in the ESI website. The issue arises when we try to pay the challan as both IPs are showing for contributions. We have been making payments for the new IP for three months, but now I need to pay for his registered IP that is associated with his PAN card. What should I do about the other IP?
From India, Madgaon
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We registered one of my employees in ESI 4 months ago, but recently we discovered that the person was already registered with ESI and also had a PAN card. This month, I entered his IP in the ESI website. The issue arises when we try to pay the challan as both IPs are showing for contributions. We have been making payments for the new IP for three months, but now I need to pay for his registered IP that is associated with his PAN card. What should I do about the other IP?
From India, Madgaon
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Dear sir’s, Pls help me on the topic of maximum EL leave taken in a row.
From India, Lucknow
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From India, Lucknow
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Dear Mr. Harsh,
ESI contributions under the contract depend on the bill. If materials and labor are mentioned separately in the bill, ESI is paid on the labor portion at a rate of 6.5%. Otherwise, it will be 40% of the total bill at 6.5%.
If the contractor is not covered by ESI but the factory of the principal employer is covered under the act, then the employees would be considered covered under the principal employer. In this case, the principal employer will deduct 6.5% (1.75% from the employee and 4.75% from the employer) and pay it to ESIC.
You mentioned registers for employees. What if the contract is only for a day or a week?
Thank you.
From India, Bangalore
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ESI contributions under the contract depend on the bill. If materials and labor are mentioned separately in the bill, ESI is paid on the labor portion at a rate of 6.5%. Otherwise, it will be 40% of the total bill at 6.5%.
If the contractor is not covered by ESI but the factory of the principal employer is covered under the act, then the employees would be considered covered under the principal employer. In this case, the principal employer will deduct 6.5% (1.75% from the employee and 4.75% from the employer) and pay it to ESIC.
You mentioned registers for employees. What if the contract is only for a day or a week?
Thank you.
From India, Bangalore
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What if we pay ESI for an employee earning more than 15,000 p.m. from the start of contribution period. Can the ESIC say that he is exempt employee, hence not elgible for ESI benefits !
From India, Jamnagar
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From India, Jamnagar
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Sir,
As an employer or HR professional dealing with ESI matters, one may cover any employee under the ESI Act, 1948, and rules/regulations framed thereunder. However, at the time of claiming cash benefits, the eligibility of insured persons is verified by the appropriate Branch Office of ESIC. If it is found that the employee was not entitled to coverage due to wages exceeding the coverage limit as laid down in the ESI (Central) Rules, 1952, then no benefits are payable, and in such an eventuality, the benefits wrongly availed earlier are all recoverable under section 70 of the said Act.
In addition, the employee or employer is liable for prosecution under section 84 of the said Act. The employee can also be barred from receiving any benefits for certain periods under Rule 62 of the ESI (Central) Rules, 1952. Please also refer to Regulation 40 of the ESI (General) Regulations, 1952, regarding the refund of contributions erroneously paid.
From India, Noida
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As an employer or HR professional dealing with ESI matters, one may cover any employee under the ESI Act, 1948, and rules/regulations framed thereunder. However, at the time of claiming cash benefits, the eligibility of insured persons is verified by the appropriate Branch Office of ESIC. If it is found that the employee was not entitled to coverage due to wages exceeding the coverage limit as laid down in the ESI (Central) Rules, 1952, then no benefits are payable, and in such an eventuality, the benefits wrongly availed earlier are all recoverable under section 70 of the said Act.
In addition, the employee or employer is liable for prosecution under section 84 of the said Act. The employee can also be barred from receiving any benefits for certain periods under Rule 62 of the ESI (Central) Rules, 1952. Please also refer to Regulation 40 of the ESI (General) Regulations, 1952, regarding the refund of contributions erroneously paid.
From India, Noida
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Hi Harsh,
The next question pertains to the liabilities under the Employees' Compensation Act, which are very high, reaching a maximum of about 100 times the monthly salary. It can be quite tedious to take out policies as most companies charge a 6% premium. Moreover, there are chances of delays in receiving timely relief for employees, whether they are on-site or remote, especially when dealing with private players such as MAX LIFE or IFFCO-Tokio. (Note: This note only reflects my concerns, not any direct experiences with the mentioned companies!)
What would you suggest as a reasonable way to ensure that employees, beyond ESI coverage, are protected under some medical and accident compensation scheme? We are an SME with approximately 30-50 employees, most of whom are covered under PF and ESI.
Thank you.
From India, Jamnagar
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The next question pertains to the liabilities under the Employees' Compensation Act, which are very high, reaching a maximum of about 100 times the monthly salary. It can be quite tedious to take out policies as most companies charge a 6% premium. Moreover, there are chances of delays in receiving timely relief for employees, whether they are on-site or remote, especially when dealing with private players such as MAX LIFE or IFFCO-Tokio. (Note: This note only reflects my concerns, not any direct experiences with the mentioned companies!)
What would you suggest as a reasonable way to ensure that employees, beyond ESI coverage, are protected under some medical and accident compensation scheme? We are an SME with approximately 30-50 employees, most of whom are covered under PF and ESI.
Thank you.
From India, Jamnagar
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Dear Sh. Dadusha,
I understand the problems relating to coverage of employees of medium and small-scale establishments with the agencies of commercial insurance and getting timely benefits from said companies in case of any situation that arises. However, the issue of the continuance of ESI facilities to the insured person and their family members even after crossing the wage limit is an issue relating to policy matter.
Therefore, it is difficult to suggest anything in the matter since the same pertains to the domain of policy-makers. You are well aware that the proposal to further enhance the wage ceiling under the ESI Act, 1948 has not so far been finalized.
From India, Noida
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I understand the problems relating to coverage of employees of medium and small-scale establishments with the agencies of commercial insurance and getting timely benefits from said companies in case of any situation that arises. However, the issue of the continuance of ESI facilities to the insured person and their family members even after crossing the wage limit is an issue relating to policy matter.
Therefore, it is difficult to suggest anything in the matter since the same pertains to the domain of policy-makers. You are well aware that the proposal to further enhance the wage ceiling under the ESI Act, 1948 has not so far been finalized.
From India, Noida
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Notification Regarding enhancement of Wage ceiling for ESI w.e.f. 01st May 2010.pdf
ESI NOTIFICATION CEILING LIMIT 10000 TO 15000 w.e.f.1-05-2010 .doc