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Former Member

salary calculation and ESI eligibility

Friends

An employee joined on 02-May-2016.

The gross salary per month is Rs.16000/- and the ESI eligibile wages is Rs.14775/- (i.e Gross - conveyance amount).

ESI master record also created from his DOJ.

All the wagetypes related to ESI basis contains the amount Rs.14775/-

But ESI not deducted during the month and started deducting from June-2016 salary only.

Pl. clarify me why this happens during the first month of DOJ.

I have attached the screens containing the details.

Thanks & regards

Raghu

screen3.JPG (54.0 kB)
screen2.JPG (111.1 kB)
screen1.JPG (129.0 kB)
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2 Answers

  • author's profile photo Former Member
    Former Member
    Posted on Jul 19, 2016 at 08:26 AM

    Hi Raghuram,

    ESI Basis Wage Type (/112) - This is the actual ESI basis. This

    includes loss of pay and overtime. This wage type is calculated by the

    Gross input and storage Rule (X023). Based on the specification of

    Processing Class 20 and if the Cumulation Class 12 of the wage type is

    selected, the Gross input and storage Rule (X023) includes the value of

    the wage type in the ESI Basis Wage Type (/112).

    ESI Basis Nominal Wage Type (/113) - This wage type does not

    take into account loss of pay or overtime. Eligibility for ESI is

    calculated on the amount in this wage type. This wage type is calculated

    by the Nominal Cumulations Rule (IN72). Based on the specification of

    processing Class 72, the Nominal Cumulations Rule (IN72) includes the

    value of the wage type in the ESI Basis Nominal Wage Type (/113).

    Regard

    KKS

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  • Posted on Jul 19, 2016 at 08:43 AM

    Hi Raghu,

    The /113 in this case is INR 14775.

    Now, during ESI calculation, Nominal Pay (which is different from Nominal Basis stored in /113) is calculated as follows:

    Nominal Pay = [(Value stored in /113) * (No. of days in the month)] / (No. of days employee was active in the month).

    In your case, Nominal Pay is,

    [(14775) * 30] / 29 = 15284.48

    This Nominal Pay is greater than the ESI limit of INR 15000 and thus, the employee's ESI isn't deducted.

    Best Regards,

    Aman

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