Dear Seniors,
My company is going to apply the KRA (Key Responsibility Area) system from April 2017, in which employees will receive increments in the form of incentives. For example, if an employee, A, is earning 10000, then he will receive 10% of his salary as an incentive if he fulfills all targets. However, the incentive will be provided on a quarterly basis. This means that the incentives for April, May, and June will be credited in the June month's salary.
My question pertains to how I should reflect this in the monthly salary and how to calculate ESI. Additionally, I am curious if ESI is applicable to incentives. What is the best way to display incentives on the payslip? It's possible that an employee may receive an incentive in one month, while in the next month, it could be zero.
Thank you.
From India, Delhi
Acknowledge(0)
Amend(0)
30My company is going to apply the KRA (Key Responsibility Area) system from April 2017, in which employees will receive increments in the form of incentives. For example, if an employee, A, is earning 10000, then he will receive 10% of his salary as an incentive if he fulfills all targets. However, the incentive will be provided on a quarterly basis. This means that the incentives for April, May, and June will be credited in the June month's salary.
My question pertains to how I should reflect this in the monthly salary and how to calculate ESI. Additionally, I am curious if ESI is applicable to incentives. What is the best way to display incentives on the payslip? It's possible that an employee may receive an incentive in one month, while in the next month, it could be zero.
Thank you.
From India, Delhi
Acknowledge(0)Amend(0)
If incentives are paid monthly, then ESI will be attracted to the incentives as well. If it is paid quarterly, half-yearly, or annually, then it will not have an effect. However, it is better to pay incentives separately and declare them as incentives.
From India, Bangalore
Acknowledge(0)Amend(0)
From India, Bangalore
Acknowledge(0)Amend(0)
Dear Monika,
If the incentives are paid as a part of the salary, then it will surely attract ESIC contribution. Thus, it is advisable not to pay them along with the salary to avoid ESIC. However, it will be considered a part of their annual income, so it will come under their taxable income.
Acknowledge(0)Amend(0)
If the incentives are paid as a part of the salary, then it will surely attract ESIC contribution. Thus, it is advisable not to pay them along with the salary to avoid ESIC. However, it will be considered a part of their annual income, so it will come under their taxable income.
Acknowledge(0)Amend(0)
Increment and incentive are two different things altogether. Incentive is not a salary component and hence not required to be shown in a payslip or salary sheet, as stated by the above members. On the other hand, an increment is a salary hike and has to be paid monthly, which is deductible for all statutory applicable.
From India, Ahmadabad
Acknowledge(0)Amend(0)
From India, Ahmadabad
Acknowledge(0)Amend(0)
Hi,
We are giving employees incentives every month in cash, but this month we have decided to add incentives to their salary. Is ESI applicable for incentives added to the salary every month?
Kindly advise on this matter.
Regards,
Arun
From India, Chennai
Acknowledge(0)Amend(0)
We are giving employees incentives every month in cash, but this month we have decided to add incentives to their salary. Is ESI applicable for incentives added to the salary every month?
Kindly advise on this matter.
Regards,
Arun
From India, Chennai
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
SC 09 ESI IMP on Applicability.p df
Changes in the Applicability and Coverage of ESI Scheme under the Code on Social Security.doc