How to show esi in form 16

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Arun (Querist)
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07 July 2013 How should the ESI contribution of 1.75% be shown in Form 16? A friend gets Rs 10000 pm, his employer showed his salary as 10178 pm without mentioning anything about ESI contribution, is this correct? So the income under salaries will be 12 * 10000 OR 12 * 10178 ?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 July 2013 You cannot show the ESI contribution in form 16. calculation you can show and deduction as well. Gross salary should be including ESI only

Arun

Arun (Querist)
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07 July 2013 Okay. Under which section can I show the deduction for the ESI contribution?

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 July 2013 Are you asking about employer contribution or employee contribution?

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Arun

Arun (Querist)
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07 July 2013 Employee contribution? So my friend should show 12 * 10178 as salary income and 12 * 178 should appear as which deduction in ITR?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 July 2013 ESI deduction cannot be claimed under Income tax. so cannot show anywhere as deduction in Income tax return

Arun

Arun (Querist)
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07 July 2013 This seems strange because this is not really an income and is not going in my bank account like salary...Although showing either ways doesn't make my friend taxable but still in my opinion either it should not be shown in Form 16 and if its shown then equivalent must be available as a deduction when declaring income

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 July 2013 ESI contribution by the employee is an expenses for his medical and benefit for him/her only,how ever in the act no where it is allowed as deduction.

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Arun

Arun (Querist)
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07 July 2013 Okay sir, thanks for the quick discussion.

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