Dear Seniors,
Just a liitle doubt on the ESIC deduction which i would like to share with you all for all of your views.
We have two categories of worker which falls in Executive cadre and in Staff Cadre.
Recently, before 3-4 months back we have been shifted to new compensation structure designed by renoned Mercer consultancy where maximum benefits can enjoyed by an employee.
In the past in executive w ehave basic, HRA, Conveyance, Special allowance and additional special allowance while in Staff we have BASIC+DA+VDA+CONV+HRA+LIFE STYLE ALLOWANCE.
In spite of these, we are paying them LTA (Grade based policy) in one go yearly thriugh salary and MEdical on cash Voucher.
Now after new compensation, we have make the aprt of LTA and MEDICAL as a part of monthly salary which make the salary as GROSS.
My querry is If some ones BASIC+HRA+CONVEYANCE+SPECIAL +ADDITional is below than 15,000 than ESIC will b deucted or not but if in his gross salary if we include MEDICAL+LTA than amount will go beyond 15,000/-
IF someone gross salary having heads BASIC+HRA+CONV+SPECIAL+MEDICAL+LTA >15k. Will ESIC will be deucted.
In case any other details required. please let me know.
Would appreciate your prompt views on it.
Regards
Ranjeet
From India, New Delhi
11Just a liitle doubt on the ESIC deduction which i would like to share with you all for all of your views.
We have two categories of worker which falls in Executive cadre and in Staff Cadre.
Recently, before 3-4 months back we have been shifted to new compensation structure designed by renoned Mercer consultancy where maximum benefits can enjoyed by an employee.
In the past in executive w ehave basic, HRA, Conveyance, Special allowance and additional special allowance while in Staff we have BASIC+DA+VDA+CONV+HRA+LIFE STYLE ALLOWANCE.
In spite of these, we are paying them LTA (Grade based policy) in one go yearly thriugh salary and MEdical on cash Voucher.
Now after new compensation, we have make the aprt of LTA and MEDICAL as a part of monthly salary which make the salary as GROSS.
My querry is If some ones BASIC+HRA+CONVEYANCE+SPECIAL +ADDITional is below than 15,000 than ESIC will b deucted or not but if in his gross salary if we include MEDICAL+LTA than amount will go beyond 15,000/-
IF someone gross salary having heads BASIC+HRA+CONV+SPECIAL+MEDICAL+LTA >15k. Will ESIC will be deucted.
In case any other details required. please let me know.
Would appreciate your prompt views on it.
Regards
Ranjeet
From India, New Delhi
Dear Rajeet Ji,
As I am not a senior, but still want to share my views with you. The salary structure have almost 32 different heads, in which the 'net salary' can be bifurcate. But, the esi is applicable on the gross salary, if it is Rs. 15,000/- or below. It dosen't matters that, in how much heads you have bifurcate the salary. If your gross salary is Rs. 15,000/- or below, then you have to pay the esi contribution.
From India, Delhi
As I am not a senior, but still want to share my views with you. The salary structure have almost 32 different heads, in which the 'net salary' can be bifurcate. But, the esi is applicable on the gross salary, if it is Rs. 15,000/- or below. It dosen't matters that, in how much heads you have bifurcate the salary. If your gross salary is Rs. 15,000/- or below, then you have to pay the esi contribution.
From India, Delhi
Dear Ranjeet,
As per your information in your company Monthly Medical & L.T.A amount are paying as a salary component. But generaly paying of L.T.A are done on Yearly basis since your company paying in monthly basis it will be a loss to employee as these amount will come under taxable.
Talking about EsI Act “ wages ” means all remuneration paid or payable in cash to an employee.
MEDICAL ALLOWANCE
The employees working in factories/establishments are being provided medical services in kind by the employer but in certain factories/establishments instead of providing medical services in kind, the amount spent by the employees on medical care is reimbursed while in some other organisations, employees are being paid monthly cash allowance in lieu of medical aid/reimbursement of medical expenses. Where such payments are made by the employer in lieu of the medical benefit, the same are to be treated as wages under Sec.2(22) of the ESI Act and the contribution is chargeable.
(Earlier instruction were issued vide letter No.Ins.5(5)/68-Ins.III dt. 21.8.71 & Ins.III/2(2)2/68 dated 24.6.71)
Since your company Showing Medical+LTA as a monthly salary component so IF someone gross salary having heads BASIC+HRA+CONV+SPECIAL+MEDICAL+LTA >15k. ESIC will not be deducted.
Ratikanta Rath
From India, Durgapur
As per your information in your company Monthly Medical & L.T.A amount are paying as a salary component. But generaly paying of L.T.A are done on Yearly basis since your company paying in monthly basis it will be a loss to employee as these amount will come under taxable.
Talking about EsI Act “ wages ” means all remuneration paid or payable in cash to an employee.
MEDICAL ALLOWANCE
The employees working in factories/establishments are being provided medical services in kind by the employer but in certain factories/establishments instead of providing medical services in kind, the amount spent by the employees on medical care is reimbursed while in some other organisations, employees are being paid monthly cash allowance in lieu of medical aid/reimbursement of medical expenses. Where such payments are made by the employer in lieu of the medical benefit, the same are to be treated as wages under Sec.2(22) of the ESI Act and the contribution is chargeable.
(Earlier instruction were issued vide letter No.Ins.5(5)/68-Ins.III dt. 21.8.71 & Ins.III/2(2)2/68 dated 24.6.71)
Since your company Showing Medical+LTA as a monthly salary component so IF someone gross salary having heads BASIC+HRA+CONV+SPECIAL+MEDICAL+LTA >15k. ESIC will not be deducted.
Ratikanta Rath
From India, Durgapur
Dear Bhuwan/Ratikanta.
Thanks for your valuable updates.
Section 22 states:-
Section 2(22) in The Employees' State Insurance Act, 1948
(22) " wages" means all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes 4[ any payment to an employee in respect of any period of authorised leave, lock- out, strike which is not illegal or lay- off and] other additional remuneration, if any, 5[ paid at intervals not exceeding two months], but does not include--
(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) any travelling allowance or the value of any travelling concession;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(d) any gratuity payable on discharge;
Will LTA come under the defination of Travel allowance
Regards
Ranjeet
From India, New Delhi
Thanks for your valuable updates.
Section 22 states:-
Section 2(22) in The Employees' State Insurance Act, 1948
(22) " wages" means all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes 4[ any payment to an employee in respect of any period of authorised leave, lock- out, strike which is not illegal or lay- off and] other additional remuneration, if any, 5[ paid at intervals not exceeding two months], but does not include--
(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) any travelling allowance or the value of any travelling concession;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(d) any gratuity payable on discharge;
Will LTA come under the defination of Travel allowance
Regards
Ranjeet
From India, New Delhi
Dear Ranjeet,
Generally LTA Not come under ESI ACT because most of the company give this benefit to employees after 1 / 2 year of service not in in regular monthly basis as leave travel allowance. But in your case as u mentioned earlier your company paying them as a Monthly fixed components in salary. In case of ESI ACT if any amount payable to employee monthly in a fixed manner then it will also come under ESI Wages component
So I feel it will be attracted , for better information regarding u can talk to the local ESI Enforcement Officer they will guide u much better way, what ever updates u will get kindly let us know too.
Ratikanta Rrath
From India, Durgapur
Generally LTA Not come under ESI ACT because most of the company give this benefit to employees after 1 / 2 year of service not in in regular monthly basis as leave travel allowance. But in your case as u mentioned earlier your company paying them as a Monthly fixed components in salary. In case of ESI ACT if any amount payable to employee monthly in a fixed manner then it will also come under ESI Wages component
So I feel it will be attracted , for better information regarding u can talk to the local ESI Enforcement Officer they will guide u much better way, what ever updates u will get kindly let us know too.
Ratikanta Rrath
From India, Durgapur
I would like to have clarification from Seniors on this subject. In general, the Medical, LTA are all part of CTC and such things is reimbursable in most of the companies on production of bills; because of this does not become part of wages.
Going by that general package formula, if the pay exceeds 15k with the bifurcation of Basic, DA, VDA, Conveyance, Special Allowance = 15k+, then only ESIC is not applicable.
Would like to get clarified from Seniors on this subject whether my assumption is in line.
Advance thanks.
From India, Madras
Going by that general package formula, if the pay exceeds 15k with the bifurcation of Basic, DA, VDA, Conveyance, Special Allowance = 15k+, then only ESIC is not applicable.
Would like to get clarified from Seniors on this subject whether my assumption is in line.
Advance thanks.
From India, Madras
Dear Sundar,
Yes u are 100% right Medical, LTA are all part of CTC and such things is reimbursable in most of the companies on production of bills and it is not part of wages but in Ranjeet case their company have different pay structure and they are showing Medical & LTA as a salary head not as reimbursable amt.
But your assumption is true since in your company Medical & LTA part of ctc & rembursable not as a fixed salary component.
Ratikanta Rath
From India, Durgapur
Yes u are 100% right Medical, LTA are all part of CTC and such things is reimbursable in most of the companies on production of bills and it is not part of wages but in Ranjeet case their company have different pay structure and they are showing Medical & LTA as a salary head not as reimbursable amt.
But your assumption is true since in your company Medical & LTA part of ctc & rembursable not as a fixed salary component.
Ratikanta Rath
From India, Durgapur
Dear Ranjeet, Currently i am working in a Mining Industry in Orissa. I hope my views guide u in a proper way. Ratikanta Rath
From India, Durgapur
From India, Durgapur
if LTA is paying on monthly basis it will become allowance but not be consider as LTA on reimbursement basis.
subjectied to Sec 22 of ESIC - wage defnition - categorisation of allownce --> your allowances are to be consider under ESIC gross
From India, Warangal
subjectied to Sec 22 of ESIC - wage defnition - categorisation of allownce --> your allowances are to be consider under ESIC gross
From India, Warangal
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