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ESI - 80C Deduction

rakesh (student) (32 Points)

12 May 2010

Is employees contribution to ESI, eligible for deduction under section 80C while computing the tax of employee?

If employee's salary is 20000 and employees ESI contribution is Rs 3500(JUST FOR EXAMPLE) , what will be the net total Income of the employee for INcome tax purpose?

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8 Replies

rakesh (student) (32 Points)
Replied 12 May 2010

ESI

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suresh (MBA) (46 Points)
Replied 05 June 2010

Hi Rakesh,

Employee's contribution of 1.75% towards ESI cannot be availed as a deduction u/s 80 C. And moreover ESI is applicable only if the employee's Gross salary is <=15000 pm.. So,If the employee's gross salary is <=15000 then he would not liable to pay income tax.( after considering exemptions and other deductions towards savings and Investments...

Jayachandra Naidu (Accountant) (171 Points)
Replied 23 August 2012

Dear members,

in this connection if a person drawing the salary less than 15000/- and income from business approximately more than 3Lakhs. now that ESI deduction where will we shown in tax calculating. Under which section shall we shown for this

Thanks & Regards

Jayachandra Naidu.E

email id: jayachandrayv @ gmail.com

Pradeep Yadav (ASSOCIATE) (23 Points)
Replied 04 June 2013

Hi sir,
My annual package is rs 195000. according to my package my gross salary is rs16225.00 including PF and Graduaty. My HR team is saying that esi will be deducted as follows
annual pckage is 195000
annual pf amt is 7728 (12*644)
Now deduct the annual pf amt from annual package as following-
(195000-7728=187272) and rs 187272.00 is less than annual package 193500 (Esi deduction limit)
so i am elligble for esi deduction.

I want to know, Are they following true way? If no, By which rule i can fight with them?

Please advise me.

with warm regards
Pradeep Kumar Yadav
contact no 9717016583

PRAVEEN KUMAR (MBA (Finance) B.Com.(P)) (3443 Points)
Replied 05 June 2013

Dear Friend,

Please note if your gross salary is less than or equal to 15000/- ur company will deduct TDS ( for calculating Salary usualy PF & gratuity not taken ).

You can ask ur company if you are not willing to deduct ESI then they may (if they wish) they can raise your salary to make it more than 15000/- (because anyhow they have to pay for ESI Contribution i.e. 4.45%.

but in my view you should go for ESI Deduction as this is very useful for a person & his family.

Originally posted by : Pradeep Yadav

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Pradeep Yadav (ASSOCIATE) (23 Points)
Replied 05 June 2013

Thank you Mr. Praveen Kumar.

Sir,

I have another query regarding the ESI. Can you please explain me if there is any provision in esi deduction rules about the time period. I mean if once my esi is deducted in month of april 2013 because my salary was < 15000.00 now my salary revised in may which is 16250.00 per month. HR team is saying that esi will be deducted untill september 2013. Afterthat it will not be deducted. Is is fare? Can I claim this amount?

PRAVEEN KUMAR (MBA (Finance) B.Com.(P)) (3443 Points)
Replied 06 June 2013

Dear Pradeep,

As per my experience i think they are doing this as ESI portal does not allow to delete any member id within the half year i.e. from april to september and oct to march. are two returns which is to be filed. they want to keep you in one particular half year so that they can easily delete your id or deactivate your id from ESI portal.