Hi Meetu Singh,
The ESIC is not deducted from the Gross Salary. You have to review the breakup of salary components. Make an addition of all those components that constitute "wages" under the act. It is this wages (amount) on which ESIC contribution is to be deducted or paid from both sides, i.e., Employee [1.75%] + Employer [4.75%].
If the employee is monthly paid (monthly rate, paid for the actual month days), then wages are for the month days (30, 31, 28, 29 as the case may be) irrespective of holidays, authorized leave, etc., except LWP should be taken. The Act prescribes a different calculation for days for different kinds of workers, i.e., piece-rated, badli, time-rated, etc.
In your case, here Rs. 14500 (which is < 15000) is taken as the full monthly salary (time-rated), i.e., 22 (worked days) + 4 (paid leaves) + weekly off (if any) = 22 + 4 + 4 (suppose) = 30 days (total month days).
Employees: 14500 * 1.75% = 254
Employer: 14500 * 4.75% = 689
Total Contribution = 943
May this help you.
Regards,
Naresh
From India, Pune
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4The ESIC is not deducted from the Gross Salary. You have to review the breakup of salary components. Make an addition of all those components that constitute "wages" under the act. It is this wages (amount) on which ESIC contribution is to be deducted or paid from both sides, i.e., Employee [1.75%] + Employer [4.75%].
If the employee is monthly paid (monthly rate, paid for the actual month days), then wages are for the month days (30, 31, 28, 29 as the case may be) irrespective of holidays, authorized leave, etc., except LWP should be taken. The Act prescribes a different calculation for days for different kinds of workers, i.e., piece-rated, badli, time-rated, etc.
In your case, here Rs. 14500 (which is < 15000) is taken as the full monthly salary (time-rated), i.e., 22 (worked days) + 4 (paid leaves) + weekly off (if any) = 22 + 4 + 4 (suppose) = 30 days (total month days).
Employees: 14500 * 1.75% = 254
Employer: 14500 * 4.75% = 689
Total Contribution = 943
May this help you.
Regards,
Naresh
From India, Pune
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Ms. Parul Gupta,
- I am afraid you are confused, and you are confusing others too.
- ESI Act nowhere mentions how to calculate monthly salary and which number of days to be considered while calculating salary.
- Please note that there are no two different kinds of salaries—one that is paid and one calculated for the purpose of ESI contribution.
- ESI Contribution is payable on the actual gross salary paid to the employee.
From India, Pune
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- I am afraid you are confused, and you are confusing others too.
- ESI Act nowhere mentions how to calculate monthly salary and which number of days to be considered while calculating salary.
- Please note that there are no two different kinds of salaries—one that is paid and one calculated for the purpose of ESI contribution.
- ESI Contribution is payable on the actual gross salary paid to the employee.
From India, Pune
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I don't understand why you people are creating confusion by using the phrase "actual working days." ESI is to be deducted from gross salary regardless of the number of working days if the gross salary is less than 15,000/-. This is an example of how a simple issue can be turned into a confusing one. Please refrain from making such comments on trivial matters, especially when directed at the HR department of the company.
From India, Noida
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From India, Noida
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Dear friend,
Forget everything. Deduct the ESI at 1.75% as an employee contribution from the total gross salary earned (22 days worked, 4 days of leave with wages). Regarding the balance days, is it considered as LOP or paid weekly off? If it is a weekly off, you have to deduct for the whole month.
Regards,
Alphonse
From India, Madras
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Forget everything. Deduct the ESI at 1.75% as an employee contribution from the total gross salary earned (22 days worked, 4 days of leave with wages). Regarding the balance days, is it considered as LOP or paid weekly off? If it is a weekly off, you have to deduct for the whole month.
Regards,
Alphonse
From India, Madras
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Hello,
Now, ESIC is calculated online on their website. We just need to create an Excel sheet where we specify the total number of working days of employees in a month and the total salary given for the same month. Then, upload the file to their website. All calculations will be done automatically in their system.
Regards,
Yash
From India, Gurgaon
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Now, ESIC is calculated online on their website. We just need to create an Excel sheet where we specify the total number of working days of employees in a month and the total salary given for the same month. Then, upload the file to their website. All calculations will be done automatically in their system.
Regards,
Yash
From India, Gurgaon
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Dear Sir,
There is confusion in the deduction of ESI when employees work for 24 days, have 5 days of rest, and are absent for 2 days out of 31 days. His salary details are as follows: Gross - 14000, Basic - 7569, HRA - 30% of gross = 4200, Conveyance = 1600 (fixed), Other = 631.
Could you please advise on the amount that is taxable under ESI?
Regards,
Vipan Kumar Jogi
From India, Jalandhar
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There is confusion in the deduction of ESI when employees work for 24 days, have 5 days of rest, and are absent for 2 days out of 31 days. His salary details are as follows: Gross - 14000, Basic - 7569, HRA - 30% of gross = 4200, Conveyance = 1600 (fixed), Other = 631.
Could you please advise on the amount that is taxable under ESI?
Regards,
Vipan Kumar Jogi
From India, Jalandhar
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Dear Meetu Singh,
Firstly, you should have knows these things-
##Average daily wages (Central Rule):
(A) "Average daily wages during a contribution period" in respect of an employee, means the aggregate amount of wages payable to him during that period divided by the number of days for which such wages were payable;
(B) “Average daily wages during a wage period” means-
(a) In respect of an employee who is employed on time-rate basis, the amount of wage which would have been payable to him for the complete wage period had he worked on all the working days in that wage period, divided by 26 if he is monthly rated, 13 if he is fortnightly rates, 6 if he is weekly rated and 1 if he is daily rated;
(b) In respect of an employee employed on any other basis, the amount of wages earned during the complete wages period in the contribution period divided by the number of days in full or part for which he has worked for wages in that wage period:
Provided that where an employee receives wages without working on any day during such wage period, he shall be deemed to have worked for 26,13, 6 or 1 days or day if the wage period, be a month, a fortnight, a week or a day respectively.
## WAGES: How wages are computed for payment of contribution?
The following wage components are taken into account for computation of wages for payment of contribution-
a) Basic Pay,/Wages/Salary;
b) D.A/ HRA/ CCA/ Overtime/ officiating allowance/ Night shift allowance/ efficiency allowance/ Heat, Gas, Dust allowance/ Education allowance/ Food & Tea allowance/ conveyance allowance;
c) Wages/ salary/ pay for weekly off and public holidays;
d) Commission paid to sales staff;
e) Subsistence allowance paid to an employee during the period of suspension;
f) Attendance Bonus or incentive or ex-gratia in lieu of Attendance Bonus or production incentive;
g) Regular Honorarium or salary or remuneration paid to a Director;
h) Collection Bhatta paid to running staff.
i) Actual payments made towards leave salary, lay off compensation, or wages for strike period.
j) Any other remuneration paid or payable in cash to an employee if the terms of contract of employment, expressed or implied were fulfilled.
As per your above statement that employees is on paid leave i.e. he is eligible to full month salary without LOP. In this case Employee's ESI Contribution will be 1.75% of Rs.14500(gross salary).
If company paid salary with 4 days LOP then gross salary will be divided by 26 days and in this case Employee's ESI contribution will be 1.75% of 22 days gross salary.
Regards,
Amit
From India, Surat
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Firstly, you should have knows these things-
##Average daily wages (Central Rule):
(A) "Average daily wages during a contribution period" in respect of an employee, means the aggregate amount of wages payable to him during that period divided by the number of days for which such wages were payable;
(B) “Average daily wages during a wage period” means-
(a) In respect of an employee who is employed on time-rate basis, the amount of wage which would have been payable to him for the complete wage period had he worked on all the working days in that wage period, divided by 26 if he is monthly rated, 13 if he is fortnightly rates, 6 if he is weekly rated and 1 if he is daily rated;
(b) In respect of an employee employed on any other basis, the amount of wages earned during the complete wages period in the contribution period divided by the number of days in full or part for which he has worked for wages in that wage period:
Provided that where an employee receives wages without working on any day during such wage period, he shall be deemed to have worked for 26,13, 6 or 1 days or day if the wage period, be a month, a fortnight, a week or a day respectively.
## WAGES: How wages are computed for payment of contribution?
The following wage components are taken into account for computation of wages for payment of contribution-
a) Basic Pay,/Wages/Salary;
b) D.A/ HRA/ CCA/ Overtime/ officiating allowance/ Night shift allowance/ efficiency allowance/ Heat, Gas, Dust allowance/ Education allowance/ Food & Tea allowance/ conveyance allowance;
c) Wages/ salary/ pay for weekly off and public holidays;
d) Commission paid to sales staff;
e) Subsistence allowance paid to an employee during the period of suspension;
f) Attendance Bonus or incentive or ex-gratia in lieu of Attendance Bonus or production incentive;
g) Regular Honorarium or salary or remuneration paid to a Director;
h) Collection Bhatta paid to running staff.
i) Actual payments made towards leave salary, lay off compensation, or wages for strike period.
j) Any other remuneration paid or payable in cash to an employee if the terms of contract of employment, expressed or implied were fulfilled.
As per your above statement that employees is on paid leave i.e. he is eligible to full month salary without LOP. In this case Employee's ESI Contribution will be 1.75% of Rs.14500(gross salary).
If company paid salary with 4 days LOP then gross salary will be divided by 26 days and in this case Employee's ESI contribution will be 1.75% of 22 days gross salary.
Regards,
Amit
From India, Surat
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