Understanding ESIC Contribution and Wage Calculation Regulations

Dear All,
I have a query regarding ESI:
Currently the ESI contribution is deducted on upto Rs.10000/- wages. There is provision in the ESI act that the if an employee is drawing wages less than 10,000/- at the beginning of his ‘contribution period’, his contributions are payable for whole period of contribution period of six months even if in between his wages go above Rs. 10,000/-
My question is, if the wage is increased beyond 10,000/- then on what amount the ESI will be contributed. Is it on the a) old wages b) on 10,000/- or on c) The increased total increased wages.
Pls help.
Regards
Amit

Amit,

To my knowledge, I think it is calculated on the increased wages... I will go with your option C. I am not sure about this. Please verify this through someone else.

Dear Amit

Greetings!

Contribution



E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Corporation in respect of an employee shall comprise of employer’s contribution and employee’s contribution at a specified rate. The rates are revised from time to time. Currently, the employee’s contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employer’s is 4.75% of the wages paid/payable in respect of the employees in every wage period. Employees in receipt of a daily average wage upto Rs.50/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

Collection of Contribution

An employer is liable to pay his contribution in respect of every employee and deduct employees contribution from wages bill and shall pay these contributions at the above specified rates to the Corporation within 21 days of the last day of the Calendar month in which the contributions fall due. The Corporation has authorized designated branches of the State Bank of India and some other banks to receive the payments on its behalf.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under.

Contribution period Corresponding Cash Benefit period

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following



Regarding ur query : They will deduct the amount for the Increased amount.

Rgds,

John N

Hi Amit,

My answer is that the contribution will be paid based on your new salary, whether it is more than 10,000/-.

ESIC contribution is paid on the gross salary, which includes BASIC, DA, HRA, and other allowances. ESIC is also paid on overtime.

Dear Amit,

It should be Rs. 10,000. The question you are asking is not clear or mentioned in the ESI Act or Rules. If an inspector asks for the contribution based on the full wage, then you can seek clarification under the Act.

Regards

Dear Amit,

ESI will be paid on the Gross salary (which includes all components). If the person's old salary was below Rs. 10,000, you have to calculate on the original gross earnings. If the person's salary increases beyond Rs. 10,000, we need to pay on Rs. 10,000 only, not on the total increased salary. Having said that, we need to continue the contribution for the total half year. After that, he will be exempted from ESI.

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following.

Dear CITE HR Team,

As per your email, ESIC is calculated on Gross Salary. With the effect of Oct-07, if your Gross salary (including salary components) is less than or equal to 10,000, then it falls under the ESIC act. If the Gross salary falls within the contribution period as mentioned below, it will be applicable for that period. After the contribution, it will not be applicable.

Contribution Period:

- 1st April to 30th Sept.
- 1st January of the following year to 30th June.
- 1st Oct. to 31st March
- 1st July to 31st December of the following year

Thank you.

Dear sir,

If a person's salary increases by over 10,000, then ESI will be deducted on 10,000, and the contribution period will be for six months.

Regards,
Suman Singh

Let us take an example: Mr. X drew a salary of Rs. 9500 from October to March. In April, his salary was revised, and now it is Rs. 10,500. However, the increment was declared in May. He will still be under ESIC purview until September 2008. After that, it will be management's decision whether he will be continued or he will get medical allowance/reimbursement.

SC

Mr. Mohan,

ESIC roundup always in +, for example:

01) Employee's contribution = 95.01 (before roundup)
96.00 (after roundup)

02) Employer's contribution per employee = 145.01 (before roundup)
= 146.00 (after roundup)

Sudhir

Can you kindly provide me with formats for ESI registration, half-yearly returns, etc.?

Sai, Rajahmundry

Hi,

If a person's salary is increased beyond $10,000 during his contribution period, his contribution shall only be based on the ceiling amount of $10,000 but not on the increased amount. The same rule applies for the PF as well.

Thank you.

Hi,

I am trying to reply to a few questions raised:

01. If any employee's salary exceeds Rs. 10,000/-, ESIC needs to be deducted on the actual paid salary until the completion of the contributory period.
02. Rounding Off: As per ESIC, you should round to the nearest rupee.

Please correct me if I am wrong.

Regards,
Deepak.

Just as a supplementary info:

The attachment/ESI Advt may be of interest to those handling ESI-related work. This ad appeared in TOI Delhi dated 30-5-08 and can also be seen on the following ePaper edition of TOI:

[Welcome](http://epaper.timesofindia.com/Daily/skins/TOI/navigator.asp?Daily=CAP&login=default& amp;AW=1212133489671) (SELECT PAGE-25 on said webpage)

Also, more details on ESI processes can be seen on ESIC website [ESIC](http://www.esic.nic.in).

Regards,
Varghese

We have to round off nearly one Rs. any law is referring to do so. Can we round off below method, e.g., Count Rs. 1.05 = 1.10? Can anybody clarify?

By C. Natarajan 09843311468/9364243210

Travelling expenses reimbursed along with salary on a monthly basis attract ESI contribution. Does washing allowance received along with the salary on a monthly basis also attract ESI contribution?

Thambi
Manager HR

Please advise, as there is an error when generating the ESI challan. The contribution of the employees needs to be specified.